post-Farnborough comments

Date:         21 Sep 98 00:31:33 
From:         Chuanga@cris.com (H Andrew Chuang)
Organization: Concentric Internet Services
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The past 18 months have not been kind to Boeing, and Airbus's newly
gained prowess has once again overshadowed Boeing at the Farnborough
Air Show.  OTOH, Boeing had accumulated a sizable backlog over the past
years.  Thus, if one looks at future deliveries, Boeing should still be
able to maintain the 60% market share as long as they can turn the tide
around, soon.

At the air show, Airbus announced its intent to launch the A318 with
Pratt & Whitney's new PW6000 engine.  However, I think the Airbus
100-seater will only be launched if they can secure an order from
Northwest.  IMHO, the A318 only makes sense to two large carriers with
a need of 100-seater, namely Northwest and Air Canada, because both
carriers are also operating the A320 family of aircraft.  Northwest
appears to have established a solid relationship with Airbus, I think
Airbus is quite optimistic of NW launching the A318.  Nevertheless,
IMHO, the B717 is already an oversized regional aircraft, the A318 is
even worse.  I seriously doubt it will sell well.  For Boeing, they
have failed to secure further B717 orders before the air show.  I find
a recent rumor of TWA possibly ordering the B717 to be quite
interesting.  Earlier this year, TWA ordered 24 MD-80s.  Hence, the
B717 might actually be a sensible choice for TWA.

The hot-selling A330-200 appears to have cooled down a little bit.
Only an order for one plane by Emirates was unveiled at the air show.
However, Airbus has gained additional A340-500/600 sales for a total
of 11 units of firm order and an additional of 15 options (ILFC ordered
5+5 and Emirates 6+10).  EVA Air has officially withdrawn its previous
committment to buy up to 12 A340-500/600s due the Asian financial
crisis.  Including Singapore Air's order (of which the contract has not
been signed), Airbus has a total of 16 -500s and 34 -600s on firm
order.

Boeing is supposed to refine the B767-400ER to better match the
A330-200 capabilities.  I think this is the reason why the B767-400ER
backlog has stalled for a while, but GE Capital did order three -400s
at Farnborough.  On the B777X front, I finally read something (in this
week's Flight International, 16-22 Sept) that makes sense: GE might
offer a 112K lb-thrust GE90 for the B777X.  My impression (which has
been confirmed by various reports and Boeing's proposal to use the APU
for additional takeoff thrust) that a B777X with two 102K engines will
be seriously underpowered and will have very poor takeoff performance.
IMHO, the "unexpected" appearance of the US$3b A340-500/600 has forced
Boeing to go a step further in order to be competitive.  GE did not see
a big market for a 102K engine and decided to withdraw its earlier
offer.  I guess GE was right; and Airbus has been snatching away
potential B777X launch customers.  If the engine requirement does go up
to the 110K range, the GE90 might have a big advantage over the
competition.  I seriously doubt the PW4000 can go much beyond its
latest 98K engine.  the Trent 800 can probably be grown beyond 100K with
some work.  With the monopoly on the A340-500/600, it won't hurt R-R
too badly even if they can't grow the engine.

Since I am talking about engines, I might as well make a few comments
on the engine companies.  Rolls-Royce had a tremendous showing at
Farnborough.  R-R and its American subsidiary, R-R Allison, have
garnered most of the engine orders at Farnborough.  GE made a
respectable showing, but two of the three big orders it "received" at
the air show were from (surprise, surprise) GE Captial Aviation Services
for 30 A320s and 12 B767s, and the other big order was from Varig, from
whom GE Engine Serices acquired 95% of Varig's engine overhaul operation.
Nevertheless, GE is going after the aftermarket business in a big way.
It has projected US$5b revenue this year from its aftermarket opeartion
or nearly 50% of GE Aircraft Engines' sales!  (Rolls and P&W combined
aftermarket sales are about 50% of GE's.)  Other than the announcement
of PW6000 being selected for the A318, Pratt & Whitney left Farnborough
nearly empty-handed!