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Pre Paris Air Show tidbits

2013-06-14T07:43:00.003-04:00

The Air Show is only three days away now and we have the first flight of the A350. So, no wonder that we see a lot of news stories coming out. Here are some of them:

1. Enders expects orders for "hundreds" of Airbus aicraft: As I wrote earlier I always thought that John Leahy and Tom Enders were overly pessimistic with their forecast of "only" 700 orders, later expecting 700-750 orders, later upping that number to more than 800. At the end of May there were 517 net and 493 net orders. Add 102 orders for Lufthansa (30 A320ceo, 70 A320neo and 2 A380), then add Air France for 25 A350-900, add 100 A320 for Air China and Shenzen, another 18 A330 and 42 A320 for CASC and you already have 804 net orders - all these orders are announced. Then add the "hundreds" we will see next week and Airbus will easily have more than 1,000 net orders for the year with the Dubai Air Show still to come...

2. Airbus is now (again) the front runner at easyjet. We will see how that campaign ends up. I guess it is not over yet and I do not expect the deal to be finished during the Paris Air Show. Profit margins for the winning manufacturers (aircraft and engines) will probably be dismal.

3. Not unexpected: Boeing will launch the B787-10 at PAS13. This was in the "rumour mill" for a long time now. Boeing will kick-start the B787-10 with a bunch of orders from Singapore Airlines (which already came forward), United, ALC and British Airways. I could imagine one or two other "surprise" customers.

4. Rany Tinseth thinks that this will be the Show of the Widebodies. Hmm, read that somewhere before I think. He should definitely be right about that!

Embraer EJets G2 launch at Paris Air Show

2013-06-12T05:09:00.002-04:00

Embraer will host a press conference regarding commercial aviation during the Paris Air Show next week on Monday (see the press release here). My strong guess is that this is where we will see the official launch of the EJet G2 Series.

And I guess Embraer will not only announce the official go-ahead but also will announce one or more first customers for the three-member strong family.

There are a lot of potential candidates:

If you read this 10-Q statement from jetblue carefully, you see that there is a potential order in it. Hint: page 11 and 23 Although it is unlikely that jetblue will act again as a launch customer, according to CEO Barger.

Flybe deferred delivery for 16 E175 by three or four years to 2017-2019. We have to wait until Monday probably, if that leaves the possibility to take the G2 version of the E175, as Flightglobal suggested here. According to a pre-show briefing by GKN Aerospace, the E175G2 would be available from 2019. This would be too late, as only a few of these 16 deferred E175 could be taken in the G2 version. Interestingly the chart shows that the E190/E195 are expected in 2017 and 2018, whereas Embraer previously said that the EJets G2 are scheduled to enter the market in 2018.

Steven Udvar-Hazy praised the G2 version and could be an early customer.

Republic Airways as the largest operator of EJets worldwide would be a natural candidate as well as Azul as the largest customer for the E195.

Lufthansa also has a sizeable fleet of E190 & E195 but also has the CS100 and CS300 on order (through Swiss). Rumors are there that the options for 30 more CSeries will be converted into firm orders sooner or later.

New scope clauses at United Airlines allow for more 70 seater regional jets, if a “new small narrowbody” (90-120 seats) will be introduced for the mainline fleet. This “new small narrowbody” could either be the CS100 or the E190&E195. If it is the CS100, the CS300 would make sense also as a replacement for the A319 and the B737-700.

Other large customers are Hainan (50 E190) and Air Canada (15 E175 & 45 E190). The E175 are now in the process of being turned over the Sky Regional though.

I would not be surprised if Embraer has more orders for the reengined E190 and E195 at the end of next week than Bombardier has for the CSeries. But as the EJets already have a position with a large customer base in the market, the CSeries still has to find their customer base and is closer to the Airbus and Boeing models, thus has to fight with more “brutal enemies”. So one should not see more orders for the EJets than for the CSeries as a bad sign for the CSeries.

A320neo engine orders at Paris Air Show

2013-06-06T04:11:00.001-04:00

The ever-entertaining story about market share on the A320neo family goes into another round at the Paris Air Show. Two years ago CFM hit back hard at P&W during the Air Show. P&W had won the first round of orders back then with ILFC first committing to the PW1100G for 60 of their 100 aircraft strong A320neo order. Also Indigo choose the Geared Turbo Fan as well as Lufthansa.

Then CFM came back after redesigning the LEAP-1A with another (7th) stage of low pressure turbine and a slightly larger fan (78" instead of 75") to gain SFC. CFM then won SAS, Republic, Air Asia, GECAS (no surprise here), the remaining 40 aircraft from ILFC and Virgin America and was in a comfortable lead. During the last two years each of the two manufacturers won a deal here and there and the CFM consortium is still ahead with about 53% of the engine orders. So let's take a look at the A320neo orders which do not have an (announced) engine decision yet and how the picture could change after the Paris Air Show.

One very obvious decision would be that Air Asia will order the LEAP-1A for their second round of A320neo orders (64 aircraft). Outcome: CFM wins!

The largest open decision is that of Lion Air. There were rumors over at leeham.net that Lion choose the GTF, but as Lion Air CEO Rusdi Kirana said that he also thinks about leasing some of the aircraft on order to other airlines a split order would also be a possibility. Anyway, an order for the GTF would be a bit of a steal for P&W, giving that as of now Lion is (of course) a really big CFM customer. Outcome: open!

The next one (from a volume perspective) is American. The pending merger process with US Airways will probably delay things here after the merger is completed, but anything seems possible here after AA ordered the CFM56 for the A319ceo and the V2500 for the A321ceo. Outcome: open!

Pegasus should choose the PW1100G if they want to hold on their deliveries starting in 2015, but they said that the final delivery schedule will depend on the engine selection. Outcome: small advantage for P&W

Lufthansa for their next round of 70 aircraft should choose again the PW1100G if they really want to streamline their fleet in the future. But they also have both engines on their current A320 fleet...outcome: open!

Air China and Shenzen just committed to a combined 60 A320neo's. Both airlines operate fleets with both current engines, so I would guess they will also split their order for the neo engines. In the end the Chinese want to learn from both engines.

Turkish Airlines is a current IAE/V2500 customer for their A320 fleet, but of course also a large CFM customer as they have an almost equal number of B737NG's in their current fleet. The B737MAX order could benefit CFM in the neo engine negotiations...outcome: open!

Norwegian: already selected PW1100G for 50 aircraft - as there are rumors that Norwegian wants to start in the leasing business they could go for the LEAP-1A for the remaining 50 (see Lion Air). Outcome: open, depending on what Norwegian really wants to do with all their aircraft on order. CFM has an edge IF the A320neo are destined (at least in part) for leasing.

ALC: this will very likely be a split between both engines.

LATAM will probably make a joint decision for their two separate orders from former LAN and TAM. As both former separate airlines have both ceo engines in their fleet, the outcome of the decision is completely open.

As for Spirit Airlines it is a must-win for P&W as Spirit is a loyal V2500 customer. All airlines in which Indigo Partners have a stake ordered the V2500. The only unknown is the outcome of the bidding process for Frontier Airlines - if Indigo Partners succeed here and Spirit and Frontier will be merged that could change the picture: Outcome: advantage for P&W.

Interjet: currently operates an CFM56 powered A320 fleet, so CFM should be in the frontrunner position. Outcome: advantage CFM!

Volaris: see Spirit - a must-win for P&W!

BOC Aviation: split buy! Same of ICBC and Avolon. And I would expect ACG to order the PW1100G for their remaining 12 aircraft on order.

Kuwait Airways operates CFM and GE powered aircraft today, so CFM should have an edge.

Philippine Airways: rumored to have chosen the GTF. Would be a steal if true!

Transaero has a large B737NG fleet today, so CFM should have it's grip on that deal. Advantage CFM!

Of course I don't know which of these open decisions will be announced at the Paris Air Show. Most of the decisions look like to be completely open and as some of the deliveries are still far out some of the customers still have plenty of time to choose!

B737MAX vs. A320neo: Backlog Comparison

2013-05-31T04:17:00.003-04:00

Boeing and TUI Travel today announced a commitment for 60 B737MAX (-8 and -9 versions) with an option for a further 90 aircraft. Boeing now has 1471 firm orders and commitments for the B737MAX. Airbus has, including the to-be-firmed order from Air China and Shenzen Airlines for a
combined 60 A320neo (and 40 A320ceo) 2273 firm orders and commitments for the A320neo family (see order lists for both aircraft here or at pdxlight). What looks like a comfortable lead for Airbus looks a little bit different when the 2 year lead in production for the A320neo is considered. Two years of production at 42 aircraft per month means that Airbus will have produced roughly 1000 of the reengined aircraft more once both production lines at Airbus and Boeing are producing the A320neo and B737MAX at full capacity. In the case of Airbus, the new production line in Mobile could add extra capacity for 4 aircraft a month in the final assembly, although it is not clear if all suppliers could produce the parts to build these extra 4 aircraft. But Boeing is also looking at producing more than 42 B737 a month, although production at Boeing will only hit that target next year. So with a difference in orders and commitments of 802 aircraft right now, the backlog at Airbus would be burned down earlier than at Boeing. That means in turn that Airbus has - theoretically - an "earlier availability" advantage - although having significantly more orders.
We will see how that picture maybe changes after the Paris Air Show, where traditionally Airbus announces the majority of orders. The maybe most awaited order might not be ready for the Paris Air Show though, as easyjet already said that the order would come in the second half of the year.
There are more fleet decisions looming. Jet Airways has maybe already placed an order for 50 B737MAX (or maybe not but will place an order). Reports from CAPA that they will also order 50 A320neo for JetKonnect were (somehow) disputed.
Flydubai is also in the hunt for new narrowbody aircraft but common sense is that they will announce their order at the Dubai Airshow in November. As discussions for all these (possible) orders began months or in some cases years ago, delivery slots should not play a big role here, but if an airline is starting discussions now, early availability could play a role. Airbus might have an edge here for the reengined mode. On the other side, Boeing should have an edge if the airline wants an aircraft in 2014 or 2015. B737NG's should be still available in pretty good numbers (at 2005 prices if you negotiate long and hard enough...).

Southwest launches the B737MAX-7

2013-05-16T03:07:00.001-04:00

Yesterday Boeing and Southwest Airlines announced that SWA will be the launch customer of the B737MAX-7. The launch of the B737MAX-7 with an order for 30 aircraft of that type comes with

a cancellation of 30 orders for the B737-700NG
Southwest substituting 5 -700NG to the -800NG variant
Southwest firming 5 options for the -800NG
the cancellation of 5 options for NG aircraft

Southwest will therefore take 146 B737NG between 2013 until 2018 (137 aircraft from today as 9 have already been delivered this year), 25 less than planned before. Southwest says they are saving $500million by that, implying a price of $40 million per aircraft (no surprise here...).

So Boeing now has a launch customer for the -MAX7. Of course we can't know the exact wording of the contract, but, anyway, the customer is the king and here is my two cents worth of thoughts for that:
Could it be that Southwest agreed to be the -MAX7 launch customer only to get rid of "surplus" B737NG (in particular -700NG) orders? Is there some provisioning in the contract to switch these -MAX7 orders to the -MAX8 variant just as Southwest now is constantly switching -700NG orders over to the -800NG? And even if there is no provisioning in the contract today - the possibility to do so was integrated into the current -NG contracts just about 2 years ago.
Southwest has taken only few -700NG's since the first -800NG arrived: 11 in 2012 after 19 in 2011, They won't take any in 2013 and 2014. In contrast Southwest integrated 30 -800NG into the fleet in 2012 and 9 this year with another 9 to follow until December and another 36 in 2014.
The reason to prefer the -800Ng is clearly unit cost! With 175 seats the fixed costs like pilot salaries are shared by 27% more seats that can be filled. Most of the low cost competitors are flying larger aircraft than the -700NG, like the A320 (Jetblue, Virgin America, Spirit). Also the A319 is a little bit larger than the -700NG, so it has a competitive disadvantage.

First delivery of the B737MAX-7 is planned for 2019, so we have to wait about 6 years to know if yesterdays order for the -MAX7 will really lead to deliveries of that aircraft.

Another "first" here is that Boeing agreed to convert orders for the -NG to the -MAX. Airbus until today refused to convert existing orders for the A320ceo to the A320neo and at least officially there is no case known until today where Airbus did that. Now that Boeing has a first exemplar of order conversion it is possible that more customer will ask for a conversion.

UPDATE. I have to stand - at least partially - corrected: Southwest also said that they will buy 10 used B737-700NG for delivery in 2014 and 2015. My strong guess is that these will come from WestJet.

Paris Air Show 2013 - The Widebody Show

2013-05-06T09:29:00.000-04:00

After the 2011 edition of the Paris Air Show was dominated by the A320neo, this year seems to be the show of the Widebodies. The usual suspects as Emirates and Qatar will surely play a major role here, as we can read here (as for Qatar) and here (as for Emirates). Although the B777X is not mentioned in the first article we can be sure that Qatar will also be one of the first customers for the then largest twin. Probably not only the B777X will get it's first orders but also the B787-10 will see a formal launch with a first wave of orders. Airbus, of course, will try not to stand by and have it's own order book filled, mainly that of the A350.
The future of the A380 could play a role in conjunction with the launch of the B777X as the seat costs of the double decker will come under pressure once the B777-9 will enter service. So we might hear what Airbus has on it's plate for 2020 and beyond, as also Ben Sandilands suggests - although he thinks that might need a little bit more time.

Geared Turbo Fan Backlog Secrets

2013-04-26T04:04:00.001-04:00

The P&W press release revealing the selection of the PW1133G for the A321neo for Hawaiian Airlines states that the Geared Turbo Fan Family now has more than 3,500 announced and unannounced orders and options. I wondered how much unannounced orders there are and tried to do a breakdown of the announced orders.

PW1100G
This is the A320neo engine. If I am right, this is what the flying and non-flying public knows as of today:
Indigo       150 A/C - 300 engines
GoAir        72 A/C - 144 engines
ILFC           60 A/C - 120 engines
ALAFCO    50 A/C - 100 engines
Qatar           50 A/C - 100 engines + 30 A/C options
Norwegian 50 A/C - 100 engines + 50 A/C options
jetblue         40 A/C - 80 engines
Lufthansa    30 A/C - 60 engines
Cebu           30 A/C -   60 engines
CIT             30 A/C - 60 engines
Hawaiian    16 A/C -   32 engines + 9 A/C options
Transasia    12 A/C - 24 engines

This is 1,180 engine in total - plus spares, so maybe we should add 5% for around 1,239 engines.
The 89 A/C options would count for another 187 engines including options for a grand total of 1,426 engines.

PW1500G
The CSeries engine. According to Bombardier there are 148 firm orders and commitments for 69 more (32 from Ilyushin Finance, 12 from Porter, 15 from an Unnamed Customer and 5 from Atlasjet). Altogether 217 aircraft or some 456 engines including 5% spares. If I am right there are options for another 142 aircraft and these would be "worth" another 298 engines including spares.

PW1200G
The MRJ has 165 firm orders. 15 (+10 options) from ANA, 50 (+50 options) from Trans States and 100 (+100 options) from Skywest - some 347 engines including spares or 683 including options and their 5% spares.

PW1400G
The Irkut MS21 part of the story is the most difficult. I only know that Ilyushin Finance choose the PW1400G so far for their 50 aircraft, so let's count 105 engines including spares.

So now we have:

PW1100G     1,426
PW1500G        754
PW1200G        683
PW1400G        100
Sum               2,963

That's far away from the stated 3,500 orders for all members of the Geared Turbo Fan Family. Let's wait for the Paris Air Show - maybe there is more clarity about the "unannounced" orders then...and I guess we will hear about first customers for the PW1700G and PW1900G for the 2nd generation EJet Family.

Lion Air Accident

2013-04-15T04:07:00.000-04:00

On Saturday a B737-800 crashed into the sea just before reaching the runway of Bali.
Some "analysts" and "experts" were quick to question Lion Air's safety in the light of the quick expansion and rapid growth of the airline. They did not care to wait for what the pilots had to say about the accident and what had caused it. As we can read here the pilot has about 15,000 flight hours and is a flight instructor and the co-pilot, who was in charge, has about 2,000 flight hours so I would rule out any reason relating to inexperience of the flight crew. It appears that the reason was weather related, heavy rain and a wind shear or a downdraft might have caused the crash.
As safe as today's aircraft are - there isn't any powerful force than mother nature. We should never forget this! Even the safest airline can't be "safe" enough not to be prone to the forces of nature.

Why is Leahy so pessimistic?

2013-04-09T10:15:00.001-04:00

Airbus Salesman John Leahy seems not to be too optimistic about selling a lot of aircraft at this year's Paris Air Show. He still expects to sell around 750 aircraft this year. At the end of March there were sold 431 aircraft according to the published Excel Sheet on their website. Additionally, we know that Lufthansa will buy another 100 A320 and 2 A380, Turkish will buy 83 A320 and Mandala 18 A320 through Tiger Airways exercising options (although Mandala will probably then cancel their old order for 25 A320's).
Before cancellations this would be then 633 orders. Knowing that there are a lot of decisions still looming this year and that not only the Paris Air Show but also the Dubai Air Show is coming, I would be surprised if the orderbook for 2013 would only see 750 orders. But maybe Leahy was talking about net orders and he already knows that Kingfisher will cancel all their outstanding orders this year. Also, there are outstanding orders for United and Northwest (now Delta of course) for A320's and I do not expect them to be filled. Mexicana is now defunct and their 4 open orders will sooner or later also disappear.

Turkish Airlines orders more Narrowbodies

2013-04-09T08:25:00.001-04:00

As I envisioned here, Turkish Airlines will not just rely on Airbus for their future narrowbody fleet. Today THY announced that they placed orders for 20 B737-800, 40 B737MAX-8 and 10 B737MAX-9. THY also placed 25 options. On March 15 Turkish Airlines announced to buy 20 A321, 4 A320neo and 53 A321neo and placed 35 options for further A321neo.

Airbus and Boeing Narrowbody Market Share

2013-04-08T09:24:00.002-04:00

Scott Hamilton just posted an article comparing the narrowbody market share of Airbus and Boeing, also comparing the subtypes. One aspect that is always missing when the backlogs of the A320neo and the B737MAX are compared is that the neo will be on the market two years earlier and what that means for "early availability".
Airbus and Boeing will both produce about 42 narrowbody aircraft a month when the reengined aircraft come to market. That means both will produce roughly 480-500 narrowbodies a year. That being said and assumed that the ramp up from the first production model to full production of the new model will be at the same pace at both manufacturers means that Airbus has an (at least theoretical) "early availability" advantage for the A320neo as long as the backlog is not between 960-1000 aircraft larger than that of the B737MAX. In detail that depends on the exact delivery dates for the individual airline customers, of course.
Right now Airbus has 2,068 firm orders, but counting the orders from Turkish Airlines and Lufthansa, which will probably be firmed up in the next weeks, there will be 2,198 firm orders.
Boeing meanwhile counts 1,185 firm orders for the B737MAX, so the difference is just about two years of full production now and in theory there is no "early availability" advantage for Airbus anymore. Let's see where the difference is after the Paris Air Show in June.

More narrowbody orders

2013-03-26T05:01:00.000-04:00

As forecasted, we have already seen quite impressive narrowbody orders this year, although the Paris Air Show is still ahead of us.

For example, there are already orders for 461 more A320neo family aircraft – remarkably most of the for the A321neo – this year. In 2012 we saw 478 firm orders, some of which had already been announced at the Paris Air Show in 2011.

The B737MAX had it’s big year in 2012, so we cannot expect that we see more than the 949 orders from 2012 in 2013 again. So far the B737MAX got 121 orders this year.

But I expect more big orders for both narrowbodies in 2013. I already wrote about China and the needs of the airlines there, but now it becomes clearer. According to CAPA (Centre for Aviation) , the China Times writes that chinese airlines will order about 500 narrowbodies from both Airbus and Boeing in 2013. About half of these orders would be for the neo and MAX models. This would not only be a(nother) boost for both reengining programs, it would also fill further the remaining delivery slots for the current models.

Adam Pilarski from AVITAS still thinks that we see a bubble with all these narrowbody orders. He could be right – if we would see an economic crisis hitting South East Asia and China, a lot of these orders would quickly disappear. But as long as these economies are thriving, Airbus and Boeing (and in the long run probably also Bombardier and Embraer) have nothing to fear but not being able to quickly enough deliver the ordered aircraft.

The Boeing - Ryanair deal

2013-03-19T04:39:00.000-04:00

It looks like Ryanair and Boeing will today announce their deal for (according to the latest information) 170 B737-800NG’s.

This deal will help both parties:

Ryanair can grow further. They currently do not have any aircraft on order after the last was delivered in December 2012
Boeing can fill a lot of open slots for the B737NG until the B737MAX arrives. I wrote about that earlier…

Rynair’s outspoken boss Michael O’Leary is (until today) not positive about the B737MAX, naming the aircraft a “dog’s dinner of a design”. Ordering new-built NG’s now means that Ryanair faces (for example) Norwegian as a competitor who then flies the B737MAX. The B737MAX is advertised by Boeing as burning 13% less fuel than the B737NG.

What does that mean? Knowing how Michael O’Leary likes to do deals one could imagine that he demands a purchasing price for the NG’s that is lower by the amount the NG’s are costing more in operating cost as they burn more fuel.

From the latest company presentation (Q3 2013) I got the following information:

- Fuel is hedged at approx. $1000/ton

- The $ is hedged at 1.32€

- The cost per pax ex fuel is 27€

- Revenue per pax is 51€

- Load factor is 81%

For the average sector length I found several information (not directly from Ryanair) indicating it should be something like 1165km or 629nm.

Now I calculated the fuel burn for a 629nm sector with 153pax (81%*189 seats). Fuel burn was calculated at 8,951lbs or 4,060kg. Fuel costs are then $4,060 or 3,075€ per flight. Per passenger this is $26.53 or 20.10€.

Total costs per passenger and flight is then (27€+20.10€)=47.10€. Ryanair therefore makes a profit of 3.90€ per passenger – not bad!

Now what would happen if Ryanair would switch to the B737MAX? Fuel burn would be 13% less, about 17.50€ per passenger in other words: profit per passenger would be 2.60€ or nearly 53% higher! Here you have the answer why both the A320neo and the B737MAX are (and will be) so popular with Low Cost Carriers in particular.

If MOL wants to have the fuel burn difference as a lower purchase price upfront we simply multiply the number of passengers one aircraft carries over a year, multiply that with 2.60€ and with the number of years the aircraft stays in service with Ryanair typically. You can get answers here and I found out that seven years is a good number.

The summary of the Q3 2013 presentation says that with the current fleet of 305 B737-800NG Ryanair will carry about 79million passengers this year. Per aircraft this is 259,000 passengers. For seven years this is 4.713m.€ or $6.13m. worth of fuel costs versus a B737MAX. We can expect that this is the “extra discount” that MOL demanded from Boeing compared to the deal that Norwegian got for their B737MAX order last year – and we can expect that Norwegian already got a good deal as they have been the European launch customer for the B737MAX.

Good days for the A320!

2013-03-18T05:16:00.001-04:00

What a week for Airbus! John Leahy predicted at the beginning of last week during his presentation at the ISTAT conference that until the end of March Airbus will have more than 2000 orders for the A320neo. While the number itself is technically just as good as 1900 or 2100, it justifies once more the decision to go ahead with the neo program in December 2010. Boeing, as it seems, was really caught by surprise, despite Airbus was talking about the possible launch for months before deciding to launch the neo program.

Lufthansa

The Lufthansa order was not a big surprise. I wrote about that in an earlier post. Nico Buchholz, VP

Fleet Planning, said last year that the fleet in the whole Lufthansa family should be comprising less aircraft families and with the initial order for 30 A320neo in 2011 it was clear that the A320neo will be the future narrowbody aircraft, at least for the 150+ seat market. The CSeries has a good chance to get more orders, too. Swiss will get 30 CS100 starting in 2014 and there are 30 options, which can also be converted to the larger CS300.

There was a remote chance for the B737MAX, however, as this would have given Lufthansa Technik a better chance to get a slice from the MRO market for the aircraft itself and the LEAP-1B engine. So I would not rule out that there will be a B737MAX order in the future, but it seems even more unlikely now.

Turkish Airlines

This order was expected to be signed during Angela Merkels visit to Turkey in February, but was held up due to industrial reasons. We don’t know if now more Turkish suppliers will be involved in the A320 program.

With the order heavily focusing on the A321ceo/neo I see a future order for the B737MAX-8, as it would be unusual to have the smallest narrowbody in the fleet with around 180 seats. The four A320neo maybe will serve for government needs? Who knows, but four aircraft barely makes a sub-fleet…

I could also imagine an order for the CS300 to round up the narrowbody fleet in the lower seat count segment.

Lion Air

Well, this order floated around in the blogosphere and rumor mills for how long now? Finally it’s there. And as with the Boeing order politics play their part, of course. Many people will question is Lion needs so many aircraft, but let’s do the math: at the end of February Lion had 123 open orders for the B737NG. Malindo, the new malaysian subsidiary, will alone get another 26 aircraft until the end of 2014. Batik Air, another start-up this year, also will get some aircraft from Lion’s orderbook. Lion itself got 24 aircraft last year. So if Lion wants to grow steadily in the next years and also wants Malindo to effectively play against AirAsia in their home market, they need more aircraft. And this is exactly what this order is about.

All in all, Airbus now has 301 new firm orders for the A320neo family and 115 new orders for the A320ceo family in one week. Together with orders from AA and ALC Airbus booked 475 orders for the A320neo already this year – with the Paris Air Show still to come…

Next to order a bunch of aircraft is Ryanair - rumors are ranging from 170 to 200 B737NG! Not a bad year for narrowbodies!

A new chance for the A330neo?

2013-03-07T05:05:00.000-05:00

Qatar Airways ever communicating Akbar Al Baker yesterday told the press that Airbus would drop the A350-800. Airbus instantly denied, so nobody can tell for sure what is the fate of the smallest model of the A350 family.

Air Asia’s chief Tony Fernandes is a long time proponent of the so-called A330neo and at the same time dismisses the A350-800. The A330 has a slightly larger capacity, according to Airbus. But this is based on a 9 abreast layout and I would suggest that AirAsiaX will fly their A350-900 with a 10 abreast layout as they are flying the A330-300 today in a 9 abreast layout, squeezing in 377 passengers (12 in C, 365 in Y). So the capacity of the A330-300 and the A350-800 is comparable with the A350-800 having 362 passengers in a theoretical AirAsiaX layout (12 in C, 350 in Y). But the A330-300 is lighter at OEW. The A330neo would feature GEnx or Trent1000 engines from the B787 instead of the more powerful, but also larger and heavier Trent XWB on the A350. The Trent XWB on the other side should be about 2% better in SFC than the Trent1000, although with the introduction of the Trent 1000TEN the difference in SFC should shrink.

The 787-8 and 787-9 would seat 309 resp. 372 seats in a AirAsiaX layout, the A350-900 will have more than 400 seats according to the original press release when AirAsiaX announced to buy 10 A350-900. I calculated 418 seats with still 12 seats in C.

And this is what I got for a 4,000nm mission.

The A350-900 and the B787-9 are, not by any surprise, the most efficient aircraft. Although the B787-9 is smaller in size, it is on par with the A350-900.

What is more important though is that the A330neo would be more economical than the A350-800. It burns more than 5% less per passenger. And even if we correct for size, the A330-300neo burns 3% less than the A350-800. This should Airbus thinking about if Akbar Al Bakers statement should be proven wrong…

Norwegian leases A340-300 to bridge the B787 gap

2013-03-06T06:43:00.001-05:00

Norwegian will wet-lease two A340-300 from HiFly to bridge the gap until the B787-8 will arrive after the battery problem is solved. How will that impact their operations? Interestingly, the two A340 are from a batch originally flown by Singapore Airlines, then given back to Boeing in exchange for B777’s. Boeing sold them to BBAM and they leased the aircraft to Emirates. The two A340-300 are now due to arrive at HiFly. So in the end Boeing has to lease Airbus aircraft to airline customers to make up the problems with the B787.

But what does that mean for Norwegian?

First, the A340-300 is considerably larger than the B787-8. The B787 in the Norwegian configuration will get 291 seats. 32 seats in a 2-3-2 configuration and 46” pith and 259 seats in a 3-3-3 configuration and 31” pitch. The A340-300 could offer an additional 45 seats in economy in a 2-4-2 configuration and actually wider seats.

But there comes of course a higher fuel burn with the A340-300: using the full PIANO 4.1 version on my iMac, I get a fuel burn of 96,568lbs for the 3,187nm great circle route from Oslo to New York.

The B787-8 for Norwegian are not from the first batch of aircraft but still are overweight by probably around 4 metric tonnes . The engines (RR Trent 1000 in this case) are probably Package B standard, short of the original SFC target by around 2%. The result: 68,761lbs.

So the A340-300 burns 40% more fuel than the B787-8, carrying 15% more passengers.

Per passenger, the A340-300 burns 287.4lbs or 42.9 gallons of fuel. At a cost of $3.20 per gallon, the fuel bill per passenger is $137.30.

The B787-8 burns 236.3lbs or 35.3 gallons of fuel. This is $113 per passenger. The difference is $24.3.

This is all for a 100% load factor. With a more realistic (but still very good) load factor of 90% we get the following figures:

A340-300: 93,267lbs total fuel burn; 46.1 gallons per passenger (302 passengers).

B787-8: 67,568 lbs total fuel burn; 38.5 gallons per passenger (262 passengers).

The difference per passenger is the same:7.6 gallons or $24.3. The question now is: who will cover the cost? Most probably: Boeing.

As mentioned, the A340-300 will be wet-leased from HiFly. HiFly is leasing the aircraft from Boeing and this would then by a dry-lease. Leasing rates for an A340-300 are between $150k and $440k, another source puts the price per month between $230k and $600k. As the aircraft in question are rather old I would suggest a price at the lower end. Let’s say the dry lease rate would be $250,000. The difference for the wet-lease is more or less the operating cost (fuel, crew and maintenance).

On the other hand, a dry lease for a B787-8 is calculated at approximately $1million per month.

Without having flown a mile, the A430-300 is “cheaper” by a quarter million dollars per month. But for every passenger flown from Oslo to JFK or vice versa, the A340-300 looses $24.3 against the B787-8. So how many passengers are flown in a month? The aircraft will fly once back and forth per day, so with the 90% load factor the A340-300 would carry 30 x 2 x 302 passengers = 18,120 passengers per month. The extra cost for fuel is 18,120 x $24.3 = $440,316. So after fuel costs the A340-300 is still almost $310,000 cheaper. Maintenance costs will eat into this, also higher landing fees, but in the end it could be cheaper for Norwegian.

For Boeing, on the other hand, it could be expensive. ILFC will probably demand at least the “profit portion” (what stays at ILFC after what they pay for their financing the aircraft) of the $1m lease rate it does not get from Norwegian monthly as long as the aircraft are not delivered. Let’s say ILFC has a profit margin of 10% or $100k per month (ALC reported pre-tax profit magi of 24% in 2011!). Now image Boeing has to pay for every B787 not delivered $100k during the battery crisis $100k per month. Also airlines with B787 already in the fleet will demand compensation. This could end up with a big number…

Pricing pressure on the B737NG

2013-03-05T08:41:00.002-05:00

Boeing for the first time acknowledged pricing pressure for the B737NG yesterday, when Ray Conner, CEO of Boeing Commercial Airplanes spoke at the JP Morgan Aerospace Conference. A synopsis can be found here at Leeham News and Comment. Read also the comment to get an insight of what readers think about how Boeing handles the battery problem of the B787.

Conner also said that there was (and is, I suppose) pricing pressure on the B737MAX, but this is normal for new aircraft entering the market.

Where the pricing pressure comes from gets clear when we look at the number of open orders and the orders Boeing has to fill until the B737MAX enters service in late 2017 and until the B737MAX
will take over full production. This will take about two and a half years if we take the transition phase of the A320neo as an example.

We are now 56 months away from EIS of the B737MAX. Right now (March 2013)builds the B737NG at a rate of 38 a month. In the first half of 2014 the build rate will reach 42 a month.

At January 31,2013, Boeing had 1958 unfilled orders for the B737NG.

In the 11 remaining months of 2013, Boeing will build 418 B737NG.

Given that rate 42 is reached in June 2014, Boeing will build 480 B737NG in 2014.

In 2015 and 2016 Boeing will then build 504 B737NG each.

Until December 2017, when the first B737MAX should enter airline service with Southwest Airlines, 462 aircraft will be build.

Altogether: 2388 B737NG until December 2017. So Boeing has to sell another 430 B737NG to fill all slots until the first B737MAX arrives. Another 700 slots are to be filled until June 2020, when the B737MAX should take over full production.

Now compare this to the A320ceo/A320neo situation:

At January 31,2013, Airbus had 1846 unfilled orders for the A320ceo.

Airbus will build another 445 A320ceo in the remaining 11 months of 2013.

In 2014 Airbus will build about 485 A320ceo.

Until October 2015, when the first A320neo should be delivered to Qatar Airways, Airbus will have build another 365 A320ceo.

Altogether: 1295 A320ceo until October 2015. Another 700 A320ceo delivery positions remain until the A320neo takes over full production in the middle of 2018. This leaves Airbus with around 150 delivery positions to fill. EADS said in December of last year that there are about 300 positions left. I suspect that there are some cancellations build into these 300 positions. The most obvious candidate is Kingfisher. There are 67 open deliveries from Kingfisher and Kingfisher Red. Another suspect is Delta: they inherited 7 open deliveries from Northwest Airlines, which they can cancel without penalty. United Airlines also has 42 unfilled orders for the A320ceo family. If I add these, I am at 262 open slots, not too far from what EADS said.

Now to the pricing pressure on the B737NG: as long as there are open slots either for the A320ceo or A320neo, the pricing pressure from Airbus will persist. But the pressure could also come from another side: the lessors. Even if there are no open slots at Airbus, airlines might find lessors which have A320neo slots available. Especially ILFC as the first leasing company to buy the A320neo should have plenty of aircraft available. The only airlines so far openly committed to take A320neo from a lessor is Spirit Airlines.

But lessors could also compete with the B737MAX against the B737NG. Right now leasing companies have ordered 250 B737MAX. ALC for example gets their 80 B737MAX between 2018 and 2022. If an airline manager has a choice between buying an aircraft which is from the “last-of-the-line “ batch with probably not so good residual value and to lease the new model which burns something like 13% less fuel, I would negotiate very hard with both!

Good deals could be ahead in the coming years for airlines…

Good day for Bombardier CSeries!

2013-02-21T02:34:00.000-05:00

It was a good day for the Bombardier CSeries yesterday (Feb. 20th).

The PW1500G, P&W’s first Geared Turbo Fan, was certified by Transport Canada. As the development of a complete new engine is always a risk, now one major risk on the whole CSeries program isn’t one anymore. It is also good news for Embraer, planning to use the same engine with slight changes to the externals dubbed as PW1900G, for the upcoming and still-to-launch E190G2 and E195G2. Embraer can now bank on an engine that is proven in service for a few years when the G2 EJets enter service. That might have been one reason to choose the GTF over the NG34 and LEAP engines from GE and CFM.

But back to the Bombardier CSeries. The aircraft program got also a major commercial boost yesterday, when Ilyushin Finance signed a firm order for 32 CS300 plus 10 options. The original LoI called for 3 CS100 and 7 CS300 with ten options and ten purchase rights, so Ilyushin Finance upped their original commitment substantially.

Now the whole aerospace world is waiting for the first flight of the CSeries (and as well for the first flight of the A350 and London bookmakers are taking bets who is first).

Later today there will be the conference call for results of the fourth quarter and fiscal year ended Dec. 31^st. Maybe we will hear more on the progress of the program.

ICAO's new noise and CO2 regulations a miss!

2013-02-15T03:50:00.003-05:00

The International Civil Aviation Organization’s (ICAO’s) Committee on Aviation Environmental Protection (CAEP) proudly tells us that they achieved agreements for future CO2 and noise regulations. Nothing particular is said about the CO2 standards, although they were already heavily criticized by Dimitro Simos, author of the Aircraft Performance Software PIANO when a draft of the plan was outlined in mid 2012.
Future noise standards, effective from 12/31/2017, puts the current noise level down by 7 EPNdB (equivalent perceived noise in dB). Now, what does that mean? Will we see less noisy aircraft in the future as we would have seen without that new regulation? Will aircraft and engine companies have to put more resources to optimize the aircraft/engine system regarding noise levels? Let's have a look at a chart that was published in the "ICAO Environmental Report 2010":

The report states that these values of noise levels relative to Chapter 3 represents "today's best practice aircraft" to "understand the current state-of-the-art (...) aeroplane noise technology."
The current Chapter 4 is 10dB below Chapter 3, so the proposed Chapter 5 would be -17dB in the chart. As we can see, the only aircraft type that is marginal relative to Chapter 3 -17dB would be the "Short and medium range jets with two engines", i.e. the A320/B737 category (in the future also CSeries, C919, MS-21).
According to the french noise certification database, the B737-900ER certified as of today has a margin relative to Chapter 3 of 11.7 EPNdB (highest -900ER MTOW version). Therefore it would not be compliant with Stage 5, missing the target by 5.3EPNdB. The A321 as the member with the highest MTOW of the A320 family would also miss the new standard, showing 12.8 EPNdB margin (with V2533-A5) resp. 11.6 EPNdB (CFM56-5B2/3). But that does not mean you can't fly these aircraft anymore in 2018. It does not even mean you can't sell/by them after 12/31/2017. The new standard only affects aircraft/engine combinations certified after that date. But by that date all A320neo variants and the B737MAX ( at least the first variant, either the -8 or the -9) will be certified - at least that is the plan of the manufacturers. These aircraft are marketed by the manufacturers as to be 15-20 EPNdB below Stage 4, so that would be 8-13dB below the new Stage 5.
There is another chart in the ICAO report from 2010, showing what independent experts thought would be achievable by 2018 (when Stage 5 comes into play) and in 2028 (Stage 6?).

The goal for the A320/B737 category then was Stage 4 -21+/- 4.6 EPNdB, so the minimum goal was Stage 4 -16.4 EPNdB. The new regulation now calls for Stage 4 -7 EPNdB. To say it clear: this is no regulation at all, this just showing what has been state-of-the-art before.
As for the A320/B737 category, the real successors (A30X, B797?) are maybe 15-20 years away so they would probably affected by a Stage 6 regulation (if that would be any). The chart above now can give us an indication where Stage 6 could be. As the 2018 minimum goal was reduced by almost 10 EPNdB and the 2028 minimum goal was -(23.5-5.5)EPNdB = -18 EPNdB I could imagine we will see a further reduction of 5-7 EPNdB, so that Stage 6 would be 12-14 EPNdB below Stage 4. This is what A320neo and B737MAX (and their engines) will have achieved by 2017 anyway. Ridiculous I say! Airports all over the world should cry foul immediately - and airlines with them. Look at Europe in particular: Munich does not get a 3rd runway in the next few years, Heathrow will probably never get one...and why: it's all over noise! If ICAO does not get proactive on the noise issue, growth will be prohibited in the future.
The only reason I see for these new regulations is the hope for an Open Rotor to get certified on day. All experts say (at least until today) that an Open Rotor can not be less noisy than today's turbofans (like CFM56 and V2500), so any future strict regulation would prohibit the Open Rotor from the beginning. But the hope for an Open Rotor to become a viable alternative for the generation of advanced and geared turbofans now in development is fading anyway - if you talk to airport managers, they will tell you about it...
An opportunity for a future path of growth in aviation, accepted also by the public, was missed - let's hope for the next one!

Media hype about B787 test flights

2013-02-11T02:51:00.001-05:00

The recent media hype about the test flight(s) now allowed for narrowing the cause of the two battery incidents of the Japan Air Lines and ANA B787 is quite funny in one way. On the other side, it is a little bit sad to see that so many articles are out there in the (written) press and in the Internet and that people find it important to twitter from starting the engines from landing (God thanks!) safely again - as if now every minute the aircraft could come down because every battery could fail every minute. This coverage is not just a little bit exaggerated - it's a hype. The same people could easily comment every minute that an A380 that did not get the wing fix yet is still up in the air...
The problem for Boeing is not to keep the B787 in the air during the test flights - the problem is how to come out of the dilemma: how do they want to make FAA 1000% certain that the aircraft and the battery is safe without changing the design of the battery and surroundings or changing to another battery type. At the end there are just those two options, I guess. And then there are the "How long will it take..." questions:

How long will that take to get the new design or a new battery?
How long will it take to get hardware to put it into one of the test aircraft?
And how long will it take to recertify the aircraft with that?
How long will it take to ramp up production for the new hardware?
How long will it take to incorporate the change into the 50 aircraft that are delivered?
How long will it take to change the aircraft that are now ready for delivery but are waiting for the fix?
How long and how many aircraft on the production line have to wait to get the new hardware?

I think that from those questions it gets immediately clear that Boeing has a serious problem in getting the B787 to customers waiting for the aircraft - it won't be just a few weeks that deliveries will restart.

Narrowbody Outlook 2013

2013-01-28T04:11:00.000-05:00

After Boeing and Airbus unveiled their final order and delivery numbers for 2012 it is now time to turn to what is ahead. What will 2013 bring us in the narrowbody segment?

Let’s begin with deliveries – this is quite easy:

· Airbus stabilizes their output rate at 42/month and will deliver 480-485 A320 family aircraft (ca. 11.5*42 as we have to take the summer break into account)

· Boeing will increase the delivery rate towards 38 B737NG’s per month and therefore deliver between 450-460 narrowbodies.

· Bombardier will deliver the first CS100 in 2014, so A & B are (probably for the last time) alone.

But what is more interesting is: how many orders will they see – both A & B, but, of course, also Bombardier.

The forecast from Airbus is for 700 gross orders. For 2012 the original forecast was for 600, the upped to 650 orders and at the end there were 914. The question is: was John Leahy too pessimistic or did he give a low target to the public in order to be an “overachiever”?

I don’t know what Boeing’s ales target is – maybe we hear something on Wednesdays Q4 Earnings Call. But let’s look at what we know (or thing to know) what is coming in 2013 in terms of narrowbody orders:

· There is still the “elephant in the room”: Lion Air with the rumored order of 100, 200 or even more A320’s.

· There is Turkish Airlines, shopping for more than 100 narrowbodies. I could imagine a split order between Airbus and Boeing here, as one manufacturer alone might not be able to satisfy the THY’s appetite in time. But if THY wants to have closer ties with Lufthansa in the future, they could be drawn to the Airbus side, as Lufthansa wants to streamline purchasing through harmonizing the fleet through it’s own airlines and ideally inside the Star Alliance.

· American Airlines can now form up their order for 130 A320ceo, 130 A320neo and 100 B737MAX. (the order for 100 B737NG was firmed in 2011 already). We so not know if the A320ceo will end up as a new order in the books as in 2011 Airbus and AA said that these aircraft could come from lessors with existing orders.

· TUI is looking for a renewal of their fleet and could place an order for 60 aircraft soon. Boeing is the clear front runner here.

· Vueling is in the process to order narrowbodies - any number between 30 and 60 would be a good guess. The size of the order probably depends on Vueling’s role in the IAG. Airbus as the existing fleet provider is in the lead here, but Vueling is also looking at Boeing and Bombardier.

· easyjet is looking for around 100 narrowbodies. Airbus is the natural candidate, although it was Airbus with an irresistible offer displacing Boeing in 2002, so why shouldn’t Boeing try to do the same now? And easyjet is also talking to Bombardier about the CSeries. although the CS300 seems to small for today’ needs at easyjet, as they are moving from the A319 to the A320. But the order could also be postponed as easyjet has some options which they could firm up with Airbus, providing more time to decide and to bargain (and to delight shareholders). If the announced step-down of CEO Rake has something to do with the planned order lies in the dark. The last message is though that management is looking for shareholder approval for the order in June.

· India: IndiGo and GoJet both ordered large numbers of the A320neo. SpiceJet and Jet Airways are the other two large low cost airlines competing in the market (Air India seems to be focused on their problems with the B787 (both technically and financially). I would not be surprised to see orders for the B737MAX from SpiceJet and Jet Airways, as both are B737NG operators.

· FlyDubai: the airline expressed interesting the B737MAX short after it’s announcement in July 2011. More than half of it’s original order for 50 B737-800NG are delivered now – in less than four years. So if they want to grow further after the delivery of the last NG they might have to act now.

· Lufthansa: LH is one of the initial customers for the A320neo – but they ordered “just” 30 of them. If one looks at the current A320 fleet, which is one of the oldest, the conclusion is that they need more. Not just for the Lufthansa fleet itself, but also for Swiss (their narrowbody fleet is somewhat younger though), Austrian and Brussels. The Bombardier CSeries, especially the CS300, could have a future here, too. Let’s wait for the first flight of the CS100 (in June?) and we might see some more orders for the CSeries anyway…

· Air France: same as Lufthansa, except that they did not order any of the new narrowbodies so far, due to financial restrictions. The oldest A320 from the -100 series already left the fleet, but there are still some 1989 vintage models left…

· China: the Chinese airlines are somewhat behind in ordering new narrowbodies – this has something to do with the budgetary planning in China. But I guess that there are at least some LoI, MoU or something like that which we will see firmed up this year. Also for the CSeries???

Oh, and then there is Ryanair, of course. Will they order 200 B737NG’s towards the end of this year or not? No guess and no comment from my side – a guess here would be as meaningful as predicting a CSeries order from Qatar…

All in all I think we will see again more orders than the official target from Airbus. Remember the target is the overall number, not the one for just narrowbodies. And there are still a number of A330, A350 and maybe A380 deals in the pipeline. Likewise for the B787, B777 and B747-8I (F), of course.

So far, so good: it's all speculation for now – let’s wait for the real deals!

Narrowbody Review 2012 Part 2

2013-01-17T06:00:00.000-05:00

After the Airbus Press Conference is over we now have the long awaited numbers of orders and deliveries from Airbus for 2012. It reads as follows:

A320ceo: 305
A320neo: 478
A330      :    82
A350      :    40
A380      :      9
Gross      : 914
Net          : 833

Cancellations:
A320      : 44
A330      : 22
A340      :   2
A350      : 13

And here are the delivery numbers:
A320: 455
A330: 101
A340:      2
A380:    30
Sum :  588

Most discussed these days is the narrowbody market. So let's remember the Boeing numbers:

Orders (Gross only):
B737NG:     223
B737MAX: 961

Deliveries:
B737NG:    415

So, orderwise we have the following picture for narrowbodies:

A320ceo:     15.5%
A320neo:     24.3%
B737NG:     11.3%
B737MAX: 48.9%

A320ceo vs. B737NG    : 58% - 42%
A320neo vs. B737MAX: 33% - 67%

A320Family vs. B737Family : 40% - 60%

Enough numbers and I am not going to interpret these as everyone takes out of these numbers what we wants to see in them anyway and there are already enough who do that publicly.

The rumoured Lion order for 100, 200, 220 or even more A320's did NOT materialize.

Anyway, the real big story today is the grounding of the B787...

B787 grounded...

2013-01-17T03:50:00.003-05:00

It is not clear yet what the grounding by FAA and others means for the whole B787 program as nobody knows how long the grounding will last and what consequences will come out of the
investigations from FAA, NTSB and maybe other non-US authorities:

“The FAA will work with the manufacturer and carriers to develop a corrective action plan to allow the U.S. 787 fleet to resume operations as quickly and safely as possible.”

This could mean everything from days to check to batteries and cables to months when a redesign of the batteries or another type of batteries will be required.

In any case, it is very bad news for Boeing. Boeing just became the largest aircraft manufacturer again for the first time since 2002 and also took in more orders than Airbus for the first time since 2007. Customers of the Boeing 787 were happy – at least until last week, when a series of mostly little and not really worrisome incidences, but also the battery fire at JAL’s 787 in Boston happened.

Moreover, Boeing and the SPEEA are in a fight over a new contract, but the SPEEA engineers are badly needed to solve the issue(s) around the B787, as Scott Hamilton points out. He has also just published more thoughts about the impact of the grounding.

Orders, orders, orders...

2013-01-15T05:34:00.001-05:00

Starting early last week we see another MoU firmed up (MEA, Avolon), a new MoU (Hawaiian) or even a completely new order (Citilink) for the A320neo. An exception was last Friday, when Airbus and Singapore announced the order for 5 more A380 and 20 more A350-900.
I am now sure that John Leahy will tell the audience on Thursday that he now has (more than) 2000 orders and commitments for the A320neo. Maybe even 2000 or more firm orders.
Today's order came from BOC Aviation for 25 A320neo as well as 25 A320ceo, further filling the remaining delivery positions for the "ceo".
I wonder who is featured in Leahy's 5th season show tomorrow. And who is going to be the rabbit jumping out of Leahy's hat on Thursday.
That leads me to...Lion! They reportedly will order or have ordered more than 200 A320's. I believe it when I see it...Scott Hamilton reports also that they selected the GTF for this order - if this is all true, it would be a huge blow for both Boeing and CFM.
The firmation of the AA order is subject to cout approval now (as is the MAX and B787 order).

Embraers choice is the GTF

2013-01-09T05:25:00.002-05:00

Embraer yesterday revealed that it has selected Pratt's GTF family for the yet to be officially launched EJet revamp, due to enter service in 2018.
The E175G2 will get the PW1700G, which is a derivative of the PW1200G, powering the Mitsubishi MRJ70 and MRJ90 (and eventually the MRJ100 now under consideration).
The E190G2 and E195G2 will be powered by the PW1900G, essentially a PW1500G, which powers
the Bombardier CSeries CS100/CS300, but customized for the Embraer EJets.
On the same day, just hours before, Embraer was downgraded by JP Morgan, citing less deliveries for commercial aircraft in the coming years than forecasted previously. In fact the backlog of the EJets decreased dramatically since it's highest level in 2008, prior to the Lehman debacle, when 466 firm unfilled orders were in the books. Since then the backlog declined to just 178 in the 3rd quarter of 2012 and likely declined further until the end of the year.
Embraer lost the last large campaign against Bombardier when Delta ordered 40 CRJ900 with further options. and Skywest opted for the MRJ90 and ordered 100 of them with an option for up to 100 more (they will be delivered starting in 2017, so it would not have helped to up production short term).
More campaigns are looming at American and United, so there are some opportunities for Embraer to bridge the (time) gap. Especially as in 2014 there is a midlife upgrade named Plus coming to market. This should better fuel burn by some 5% on the E175 and 3% on the E190 and E195. New winglets and some aerodynamic cleanup will do the trick here. Also maintenance intervals for A- and C-Checks will be increased to lower maintenance costs. A new cabin will also increase passenger comfort.
But as Teal Group Vice President Richard Aboulafia points out, an EIS in 2018 seems a litte late: the Bombardier CSeries will now enter service in mid 2014, the MRJ in late 2015, the A320neo in 2015, the B737MAX in late 2017.
So with only just a little bit of production overlap between the first and the second generation of EJets (say one year), Embraer would need orders worth six years of production - at the current (2012) level of production around 600 orders. But Paulo Cesar de Souza e Silva, Head of Commercial Aviation at Embraer says there would be a three to four year overlap. Personally I highly doubt that we will see a CF34 powered EJet delivered in 2022.
Embraer claims to have a further 468 options for the EJets, but I guess not too many of them will be turned into form orders as these stem from pre 2008 times, where there was a boom (if not a bubble) in orders.
So why did Pratt win the engine competition: Embraer VP Silva said that this was due to "commercial and technical considerations".
The technical superiority of the GTF concept is not really a surprise. There are some doubts about the LEAP concept of GE, as the larger bypass ratio means more LPT stages and the smaller core higher temperatures. And RR seems to be too far behind in the development of a new two spool engine, as they concentrated on the big three spool engines lately.
The question is why GE was not able to beat PW financially, especially as GECAS is an important customer for the EJets today.
Maybe it was a matter of "risk management": the GTF development and testing is now in full swing, with the PW1500G for the CSeries close to certification. The PW1200G is "waiting" for the airframe, but also tested on ground and in flight. And the first PW1100G for the A320neo is also in the test phase. So the two competitors to the EJets, the MRJ on the lower side and the CSeries on the upper end, will at least not fail because of the engines. But what if Embraer would have chosen an engine that has not yet shown that it works and potentially fails (even if it would be better than the PurePower family engines on paper)? The EJets would be dead immediately. So taking the same engines as the competitor is the safe way to go - and it worked previously when Embraer chose the CF34-8 for the E170/E175, competing with the CRJ700/CRJ900 with the same engine.

Illustration of 2nd gerneration EJet (Credit: Embraer)