Re: Singapore Airlines The A340 vs 777 saga continues

Date:         27 Aug 99 03:08:20 
From:         jmweber@goodnet.com (James Matthew Weber)
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On 07 Aug 99 01:22:30, Stephen H. Westin wrote:
>Niels@nospam.demon.co.uk (Niels Sampath) writes:
>> Meanwhile,  objective reports say that AA, UAL, BA, and CX
>> have all expressed much displeasure at the GE exclusivity deal
>> on the 777X.
>
>Then perhaps AA, UAL, BA, and CX are ready to commit to firm orders
>for the 777X powered by a hypothetical engine from a different
>manufacturer?
>
>As I understand it, all manufacturers are leery of building a bigger
>engine for this plane. None believes that the market is big enough for
>three competitors. Boeing coaxed GE into making the plunge by offering
>exclusivity, which might make it pay. The choice isn't between three
>engines or one: it's between one engine or no airplane.

GE demanded the exclusivity actually. In fact I think RR was the only
vendor who didn't.

But the underlying issue of the product not being able to support 3
engine makers is probably accurate. Best guess is the market in the
first 5 years for a 777X is on the order of a few hundred, and it
would cost almost a billion dollars to build all 3 engines, most of
which would fall on PW, as they really need an all new engine. For RR
it is major work. The bad news for Boeing in the RR offering is that
it is a big stretch to get there, and leaves essentially nothing left
in the core for further growth. No matter how you look at it, 400
engines sharing a billion USD R&D cost, that with financinng costs and
time value of money puts the cost at more like 2 billion, puts an R&D
price tag of $5 million per engine.. OUCH!!

By almost all accounts the GE90 is capable of providing the 115,000
pounds thrust, and then some. It is probably the only offer that was
also capable of providing an engine with an in-service date that would
be competitive with the A340-500/600. It also offers better fuel
economy than the RR or current PW products. On an ultra long range
aircraft, fuel economy is a major issue. GE also has a much better
developed service/support organization to look after  the engine,
which should reduce the pain that non-GE operators see if they buy the
aircraft.

My own belief is GE got the business in part because the other choices
were not especially viable in the eyes of Boeing... PW was almost
certain to have problem with In-Service Date, RR didn't provide any
growth capability, which would effectively lock the aircraft into a
1999 configuration indefinitely.

My views anyway.