What do recent production rate changes mean?

By: Richard Evans published in flightglobal.com, Nov 21 2014

We have seen two production rate changes announced recently, so it seems a good time to summarise the current production outlook from Airbus and Boeing. Individual programmes will have specific drivers of change, but it is also worth reviewing how the airframers’ plans stack up against overall market numbers.

Production rates are often described as Rate 5 or Rate 10, for example, which simply refers to the number of aircraft manufactured per month. For Boeing products, the annual production is 12 times this figure. At Airbus, because of the summer holiday period, the quoted rates are maintained for 11 or 11.5 months a year. For example, Rate 10 on the A330 programme equates to an annual production of 110 aircraft.

The first announcement was made by Boeing on 2 October, when it said that it “will increase production on the 737 programme to 52 airplanes per month in 2018 in response to strong market demand from customers worldwide”. Once this increase is implemented, more than 620 airplanes per year are expected to be built under the 737 programme, “the highest rate ever”.

Boeing is currently building 42 737NGs per month, and had already said this would be increased to 47/month in 2017. The primary reason behind the latest announcement appears to be the need to create additional slots for the 737 Max. The slots are valuable because the 737 Max is running about two years behind the competing A320neo, making availability an issue in key strategic campaigns.

This means that based on production rates, Boeing will maintain a delivery advantage over Airbus in the single-aisle sector for the rest of the decade. In 2018, the implication is that Boeing will have a delivery market share of about 54%, building 620 737s versus 500 A320s. This is despite the fact that Airbus has a firm backlog of 4,721 A320s to Boeing’s backlog of 4,011 737s, giving Airbus a 54% share. Taking only firm orders, Airbus has a 59% share of the re-engined variants.

IMPLICATIONS FOR SINGLE-AISLE DELIVERIES

The increased delivery slot availability from Boeing gives it more flexibility to go out and win new customers for the 737 Max, but slots alone will not determine the eventual market share. It remains to be seen if Airbus will respond with an increased rate on the A320neo. Ascend assumes that Boeing would have switched over production entirely to 737 Max by early 2019, so the new rate is also a challenge for CFM, which will have to ramp up Leap-1B production from zero in 2016 to about 1,400 engines three years later.

A320 and 737 production rates, when combined, will mean about 1,200 deliveries in 2018/19, up from 933 last year. The chart below shows how this compares to the Flightglobal Fleet Forecas for single-aisle aircraft.

It can be seen that the combined Airbus and Boeing production closely matched the overall single-aisle forecast before the latest Boeing announcement, but it now exceeds our forecast by 5-10% – or more should Airbus also raise rates. Airbus’s own forecast for single-aisle deliveries is 22,000 over the next 20 years, which averages at 1,100 per annum. Boeing has a slightly higher forecast of about 1,250 a year.

This is arguably within the margin of error of any top-down forecast, but the implication is that there is no room for the delivery plans of the new entrants, the Bombardier CSeries, Comac C919 and Irkut MC-21. Programme delays may give greater opportunity to Airbus and Boeing here. However, it is entirely possible that aircraft retirements could be the balancing figure to enable these deliveries to happen. With a current fleet of 13,000 aircraft, growing to around 18,000 by the end of the decade, it is not difficult to imagine that a few hundred extra retirements will occur, balancing supply and demand in the process. This would have a limited impact on average retirement age and, hence, residual values.

The Flightglobal Fleet Forecast also takes the view that Airbus will win a market share of >50% against the 737, based on the current firm backlog, and we will only change this if customer orders move in favour of Boeing in the next few years.

A330 AND 777 CHALLENGE

The increased delivery slot availability from Boeing gives it more flexibility to go out and win new customers for the 737 Max, but slots alone will not determine the eventual market share. It remains to be seen if Airbus will respond with an increased rate on the A320neo. Ascend assumes that Boeing would have switched over production entirely to 737 Max by early 2019, so the new rate is also a challenge for CFM, which will have to ramp up Leap-1B production from zero in 2016 to about 1,400 engines three years later.

A320 and 737 production rates, when combined, will mean about 1,200 deliveries in 2018/19, up from 933 last year. The chart below shows how this compares to Ascend’s Flightglobal Fleet Forecast for single-aisle aircraft.

The second announcement was of Airbus reducing A330 manufacturing from Rate 10 to Rate 9 from Q4 2015. This should not have come as a major surprise given the decline in book-to-bill ratios in the last few years. Indeed, the backlog for the A330 has been declining ever since 2008, and now stands at 230, compared with 425 at the beginning of 2009.

The launch of the A330neo has been a huge positive for the overall A330 programme, and we expect the letters of intent (LoIs) signed to be converted to firm orders shortly. However, the new variant, with first delivery in December 2017, has created quite a production gap to fill.

In addition to successfully converting LoIs, Airbus would need to secure up to 150 further orders for the A330ceo in order to fill the gap before entry of the A330neo, assuming Rate 9 is continued. Our fleet forecast implies that further production rate cuts are likely, down to an eventual production of about six per month from 2019 onwards. Any delay to entry into service (EIS) or ramp-up of the A330neo will increase the challenge.

The 777 has arguably an even greater challenge to “bridge the gap” to the 777-X. EIS is not until 2020, over two years later than the A330. The current GE90-powered versions still have an impressive backlog of 275 aircraft, but that has declined from 356 at the end of 2012.

In order to maintain the current level of production, Boeing would need to win around 330 new orders (including 90 option/LoI conversions). There is no plan as yet for a 777-X freighter version (although a version of the -8 is expected in the 2020s), so the 777-200 Freighter is part of the solution to bridging that gap, but the cargo market remains in the doldrums. Hence the vast majority of additional orders must come from 777-300ERs. The Ascend forecast indicates that a production rate cut is highly likely, perhaps down to Rate 6 between 2017 and the EIS of the 777-X.

Growing Concerns About Aircraft Demand

By: Jens Flottau, published in aviationweek.com, Sept 29, 2014

Airline demand for civil aircraft is strong, financing is readily available for almost any kind of operator, and manufacturers are asking themselves whether they have to build even more aircraft. All is well. Or is it?

In spite of many good signs, aircraft financiers and other industry leaders are voicing concern that the industry could be in for a rude awakening. While the civil aerospace boom is unlikely to suddenly go bust, a number of industry executives attending last week’s International Society of Transport Aircraft Trading (Istat) Europe conference here expect some kind of downward correction to demand with a corresponding rise in aircraft cancellations or postponements.

“Somehow the stars are aligned; something has to happen,” says Gordon Welsh, director of aerospace at U.K. Export Finance.

Christian McCormick, managing director and global head of aviation finance at Natixis, says he is “a little bit concerned.” He notes that “we still have to really figure out whether this is double-counting”—several airlines ordering aircraft for the same markets.

Airbus and Boeing have been remarkably adept at buffering themselves from downturns by overbooking orders. But even John Leahy, Airbus’s chief salesman and normally one of the industry’s cheerleaders, is sounding a note of caution.

“Three airlines tell us they’re going to improve their market share by 10-15%,” he says. “But someone is going to be very successful, someone very unsuccessful and someone in the middle. So two or three don’t need all the planes they ordered.”

And Leahy would not be Leahy if he did not take a poke at Boeing and its plan to raise production rates for the 737 eventually to 52 aircraft per month, up from 42 now and a planned rate of 47 in 2017. “What worries me is this whole ‘Field of Dreams’ concept: ‘Build it and they will come,’” he says.

Randy Tinseth, Boeing vice president for marketing, counters that his company takes “a very thoughtful and measured approach” to aircraft output. “We have worked very hard to ensure that demand for these planes is real,” he says. “And we make rate decisions on the assumption that we’ll continue producing at those rates for a substantial period of time.”

Forecasting future demand remains tricky because there are still no concrete indications that increasing capacity is the wrong decision. In fact, Airbus is considering boostingA320 rates to 50 per month, up from 42 currently. Leahy says Airbus has the orders to support such a robust rate, but he concedes that delivery positions 7-8 years out are less certain.

Boeing is ramping up production rates for the 787 to a planned 14 aircraft per month and Airbus is bringing the A350 into service, with first delivery due by year-end. And the planned A320 and 737 narrowbody rate increases come in spite of the fact that both are transitioning to reengined models during the next few years. That should, in theory, have an impact on demand for the old versions. At around the turn of the decade, Boeing will be shifting from the 777 to the 777X.

The debate about optimal production rates gained momentum after UBS published a study signaling caution just days before the Istat event. While its sees a rough balance of supply and demand in the narrowbody market until 2018, production rates for long-haul aircraft need to be cut by up to 30%, it says.

The disconnect: While current widebody production plans suggest that demand will increase 6% a year until 2018, UBS is forecasting a more modest 4% rise. If UBS is correct, Boeing and Airbus would be producing 200-250 more aircraft per year than the market could absorb. The bank’s analysts suggest cutting A330 output to four per month from 10, decreasing the 777 rate to four from 8.3 per month, and freezing the 787 rate at 10 per month rather than raising it to 14. But UBS makes the most radical recommendation for the largest jets: Airbus should cut production of the A380 to one a month—from 30 per year—and Boeing should stop building the 747-8 altogether.

That, of course, is unlikely to happen, at least in the short term. Both manufacturers have pledged to keep production as stable as possible, although Airbus has conceded that A330 rates are likely to come down somewhat. UBS believes Airbus will build only 40 A330s in 2018, down from this year’s high of 110. But introduction of the A350 should more than compensate for that 70-aircraft reduction.

In fact, Leahy is more concerned that Airbus may not deliver as many A350s as would be in demand because of its conservative production ramp-up. “We are being prudent, but it bothers me,” he says. Airbus might soon decide to go for higher production rates, though: “I believe this will be decided sometime next year,” he adds. By year-end, the aircraft maker plans to be building three A350s per month, up from two now; by the end of 2015, it targets producing five A350s per month; and by 2018, 10 per month.

The UBS analysts forecast that Boeing 777 production will decline to 60 per year in 2018 from 96 now, and 747 and 767 rates will settle to one per month in 2016. By 2018, 140787s will be built per year, they project, up from 108 this year. Airbus will deliver 529 narrowbodies in 2018 (up from 483 this year), the analysts expect, and Boeing deliveries will increase by six aircraft to reach 490 over four years, UBS estimates.

UBS is not alone in its concerns. Earlier this year, Bank of America Merrill Lynch analysts issued similar warnings (AW&ST July 14, p. 24). And Thomas Hollahan, managing director at Citi, says that “this industry is still subject to event risk and it is always good to assume another one is around the corner.”

Welsh says that the U.K. Export Finance program is now typically receiving around 80 bids by banks for its business per transaction, compared to 2-3 only a few years ago. He says that some of the banks coming in with financing proposals for aircraft transactions are hardly known.

The availability of cheap financing is a key ingredient of the marked changes the aircraft business has undergone in the last several years. It is a function of the proliferation of new financiers in the market, including private equity, and it raises questions for banks established in aircraft financing and lessors. However, Air Lease Corp. (ALC) Chairman/CEO Steven Udvar-Hazy thinks many of the new entrants will disappear when the next crisis hits.

Adam Pilarski, senior vice president at Avitas, has been warning for some time that airlines are overordering. “If Middle East and low-cost airlines succeed, someone else has to fail,” he says. Boeing and Airbus have to assume “a huge number of retirements” in order not to end up in an overcapacity situation, he says. On the other hand, he concedes that both manufacturers have become sophisticated in overbooking narrowbody production, which is making shifts in delivery schedules easier to handle.

Pilarski also notes the unique set of conditions the industry has been operating in for some years: High fuel prices have led to the development of new aircraft such as theA320neo and the Boeing 737 MAX, which airlines can afford to buy in large quantities because financing is so cheap and easily available. But, he asks, what if one or two of the underlying parameters such as high fuel prices or cheap financing change over time?

Udvar-Hazy has concerns of a different nature. “There is a good symmetry between the backlog and production rates,” he says. “But our deeper concern is about how the very complex supply chain will deal with production.” While Airbus and Boeing are increasing output, other players such as Bombardier (with its CSeries), Comac and Mitsubishi are entering the market, and Udvar-Hazy worries that “some suppliers will have difficulties.” He adds that “galleys and seats have the longest lead times I have ever seen in my career. . . . We are reaching a point of saturation.” Therefore, ALC is urging manufacturers to not overbuild, he says, “because they may not be able to meet their contractual obligations.”

In terms of airline demand, Udvar-Hazy is less concerned. “We will see a massive shortage of certain types, and in other cases we will see a steady degradation of values,” he says. Overall, “Airbus and Boeing have sold more aircraft than they can build,” he notes. The ALC portfolio of orders, at least, is allocated to a large extent to replacing older aircraft rather than growing fleets.

Philip Scruggs, president and chief commercial officer of AerCap, says he is primarily concerned about careful management of production. If Airbus and Boeing are not vigilant, they could run into lead time and supply issues, he argues.

UBS Aircraft Delivery Forecast
	2014	2015	2016	2017	2018
Airbus
A320 family	483	483	523	529	529
A330/A340	110	100	70	55	40
A350	2	20	50	70	100
A380	30	30	30	30	30
Total Airbus	625	633	673	684	699
Boeing
737	484	490	490	490	490
747	14	16	12	12	12
767	11	12	12	12	12
777	96	96	72	60	60
787	108	120	120	140	140
Total Boeing	713	734	706	714	714
Total Large	1,338	1,367	1,379	1,412	1,481
Widebodies	371	394	366	379	394
Narrowbodies	967	973	1,013	1,033	1,087
Total Regional	263	264	280	282	263
Regional Jets	153	159	175	182	163
Turboprops	110	105	105	100	100
Total All	1,601	1,631	1,659	1,694	1,744
Sources: Company reports and UBS estimates

Al Jazeera Investigate : Interview – The fired engineer

Published in aljazeera.com, Sep 10, 2014

In September 2009, Boeing hired John Woods as a Manufacturing Engineer at its 787 “Dreamliner” factory in Charleston, South Carolina.

Just over a year later, Boeing fired him. The company said he was working too slowly.

Woods said he was fired for raising safety concerns. He filed a whistleblower complaint with the US aviation safety regulator, the Federal Aviation Administration (FAA), alleging seven serious violations. The FAA substantiated only one of the seven: that Boeing used “inadequate manufacturing planning documents that lacked revision control and were missing inspection steps”.

Woods also appealed to Boeing’s Ethics Department, claiming he was being harassed. After 91 days, Boeing rejected his complaint. The Labor Court upheld the company.

A worker has 90 days from the point at which they believe they have been retaliated against to make a complaint with the Department of Labor. For Woods, because he had waited for Boeing’s Ethics Department, he could not turn to the Department of Labor.

At the time he was hired, Woods had declared to Boeing that he had psychiatric conditions: Attention Deficit Disorder, Obsessive-Compulsive Disorder, and mild depression.

The words below are taken from an interview recorded with Mr Woods in 2014.

Working for Boeing

---

I was very proud to be working at Boeing, the biggest and best commercial aircraft manufacturer in the world and to have the opportunity to work on the first all-composite fuselage for a commercial aircraft. I drank the Boeing Kool-Aid. I was thrilled to be there. Every time the store came around, I bought all my souvenirs.

I was hired to focus on repair of the carbon epoxy material whenever it’s damaged or whenever there’s a manufacturing defect. If there’s damage, we have to remove the material and replace the material to the point where it’s at least as strong as its original design. I was the first manufacturing engineer that was to be dedicated to that position.

I would write the work instructions for the technicians on the floor to how to do the repair.

Quality and production

---

There was some animosity between quality and production. I would bring up a quality concern and they would say, well, that’s not helpful to production.

In a couple of meetings, there were several … managers screaming at me to dumb down my work instruction. – John Woods

On several occasions, I would go check out these repairs while they were being done and after. There are inspection points all throughout the repair process where an inspector is supposed to come over and check something and mark it down that he checked it.

You’re never supposed to go past an operation that’s not checked off. I would see a defect and I’ll look at the inspection sheet and there was no note of it, and I know in the specifications that all anomalies, even small anomalies, are supposed to be recorded in the inspection.

So I would bring an inspector over and show it to him and say, “Could you please note this down in your inspection?” And they say okay, so I’d walk away. Then I’d come back later that day or the next day and it’s still not noted.

So then I would go mention it to the supervisor and go back another couple of days and still not noted. It became very frustrating on several occasions, to the point where people were angry at me for bringing it up.

Dumbing down

---

In a couple of meetings, there were several, a group of managers screaming at me to dumb down my work instruction.

And then when it hit the floor, there was pushback because they don’t want to do all this extra work, so then they come back to me and ask me to – that I put too much in there and I need to dumb it down.

The requirements that I had in there were supposed to be in there. The specifications tell you what the requirements are and you have to tell the technicians what the requirements are.

You have to identify what are the key requirements that are significant enough to put in your work instructions, and sometimes the spec will say that you may do something or you shall do something or you must do something, so just things like that go into your judgment on whether or not – how important it is.

Concerned

---

Given what I’ve seen, working at the South Carolina plant, doing structural repairs for the Boeing 787, I definitely would be concerned about flying on it myself. I don’t feel safe flying on the 787.

There’s no doubt there are bad repairs going out the door on the 787 aircraft.

I am worried that sooner or later, there’s going to be a structural failure on the fuselage.

These are structural parts, and this is a jumbo jet carrying a couple of hundred human beings, and the structural fuselage has to be solid. The nature of composite materials is the damage grows, and then eventually you get failure. In my view, sooner or later, there will be a fuselage event on the 787 I’m guessing within a couple of years, but that’s just a guess.

I’m concerned about flying on that aircraft. When you know how many times it’s been repaired before it’s even delivered to the customer, you don’t realise that you’re buying damaged. Your aircraft has been damaged and repaired already when you think it’s new.

Fired

---

I had written a repair work instruction for repairing the stringers. They started using it, and then they realised it’s got these new requirements.

They’re telling me I wrote too good of a procedure, so to speak, that’s got too much requirements in it that doesn’t all need to be in there. And they got very upset, even standing up by their chairs and yelling at me.They were furious because they had expected me to take the stuff out already.

A week later, I was terminated.

The subject matter of the [FAA] complaint was my own area. And when it came back from the FAA with only substantiating one of my seven points, I was very surprised because I know I could’ve myself substantiated all of them, but it’ll be easy for me because that was my subject matter. But I certainly expected a lot more than one to be substantiated. In fact, one is kind of a joke.

Speaking out

---

My reasons for speaking out about the quality problems on the 787 are because I’m truly concerned about the manufacturing quality of this first-of-a-kind composite aircraft.

Boeing did not have adequate quality controls in place when it comes to repairing structural composites. I wasn’t going to let that continue on my watch.

They encourage you to speak out, and where did it get me? It got me fired.

So instead of saying thanks for doing a good job, because I thought I was doing what I was supposed to be doing, I had to leave in shame really. I was embarrassed with my own family.

Six weeks since I’ve been terminated, and then here I am unemployed with termination on my record. And I have to try to find someone to hire me after being fired from Boeing and it’s very hard to do. It took me a year-and-a-half.

It shouldn’t be this hard to do the right thing.

CSeries buoyed by long-delayed fly-by-wire upgrade

By: STEPHEN TRIMBLE, published in flightglobal.com, Sep 10, 2014

After sitting idle for 100 days, the CSeries fleet returned to the air with a 30min flight by FTV-2 on 7 September and another 3h test mission on 9 September.

Bombardier still has much to prove in the air and around airline boardroom tables with the CSeries programme, but the return to flight following a 29 May engine failure and minor component redesign marked a key step in getting back on track.

“It was a great day for the CSeries,” a breathless, Bombardier vice-president Rob Dewar said in a company video online shortly after the 7 September flight, just before the CSeries programme manager took off for Zurich to meet launch customer Swiss International Air Lines.

“So after, I would say, a very productive summer finding a solution, and we’re good to go,” Dewar says. “That’s great news.”

Dewar had more good news to share with the Lufthansa subsidiary, which placed an order for 30 CSeries aircraft in 2009.

As the CSeries test fleet sat on the ground all summer awaiting a Pratt & Whitney engine modification, Bombardier’s software team and suppliers stayed busy. The programme used the downtime to install the Build 3 version of the flighteck software, enabling the test team to “soon” activate a critical feature of the aircraft’s fly-by-wire control system.

One of the biggest mysteries surrounding the programme since FTV-1 achieved first flight on 16 September last year has been the status of the fly-by-wire system. Since March, company officials have simply declined when asked to provide updates about its status.

Bombardier now confirms that the programme has still not activated the normal law of the fly-by-wire system in flight, despite accumulating more than 300 flight hours in a year. In normal law, the fly-by-wire system activates flight envelope protections that prevent the aircraft from stalling or over-speeding. It is the fly-by-wire mode of most interest to certification authorities, as the aircraft will almost always operate in normal law during commercial service.

Instead, the CSeries test fleet has operated to date in flight in a degraded mode called direct law. In this mode, the software still interprets the pilot’s control inputs and sends commands to the flight control surfaces, but it does not provide flight envelope protections.

Although necessary to achieve many test points, such as the aircraft’s stall recovery profile, direct law often yields to normal law operations as early as possible in a flight test programme. Airbusactivated normal law on the A350-900, for example, on that aircraft’s first flight in June 2013.

Last February, then-Bombardier Aerospace chief Guy Hachey said that the Build 3 software would be installed in the flight test aircraft the following month. Asked for a status update in March, Hachey indicated no further updates would be forthcoming during the flight test programme.

Bombardier officials, however, did say that the Build 3 software had been installed in an elaborate ground-based simulator called the integrated systems test and certification rig. In the months since March, the programme’s fly-by-wire team has fully tested the software on the ground, a Bombardier spokeswoman says.

The Build 3 software also was loaded into the FTV-2 flight control computer during the 100-day hiatus caused by the 29 May engine failure, she says. Normal law was not activated during the first two flight tests, but it will come online in flight shortly, she adds.

Bombardier has estimated that the CSeries must complete at least 2,400h of flight testing to complete all certification requirements. At the time of the grounding on 29 May, the progrgamme had completed slightly more than 300.

“The next steps are to get the other FTVs back in the air and let’s really get the flight test going,” Dewar says.

FTV-4 is scheduled to be the next test aircraft to resume flying. FTV-3 will return to later flight later “this fall”, Dewar says, following return to flight of the damaged FTV-1.

On 29 May, P&W test crews were conducting stationary maintenance checks on the left-hand PW1500G, a geared turbofan engine. A problem in the lubrication system triggered the failure of a stage in the low-pressure turbine section. Small pieces of the engine escaped containment and punctured the left-side, carbonfibre wing of FTV-1.

As P&W worked to redesign the oil system to prevent the lubrication problem from happening again, Bombardier’s structural engineers got early practice repairing the carbonfibre skin of the CSeries, Dewar says.

The CSeries is the second aircraft – following the Learjet 85 – in Bombardier’s portfolio to use carbonfibre wing panels manufactured using a resin transfer infusion process developed by the company’s Short Brothers division in Belfast, Northern Ireland.

Bombardier did not expect to face a serious carbonfibre repair job until after the CSeries entered service. The test incident offered a rare opportunity for the company to come to the grips with a real-world damage problem during the flight test stage.

“The repairs are going very well,” Dewar says in a separate video released by the company two days before the return to flight of FTV-2. “They are nearing completion as we speak. It was also a good opportunity for our team from Belfast to repair a carbonfibre wing.”

The last aircraft in the flight test programme for the 110-seat, CS100 variant of the CSeries family is FTV-5, which will be the first test aircraft to be equipped with a representative passenger cabin.

Bombardier announced in March 2013 – 18 months ago – that FTV-5 had entered final assembly. In July 2012, Dewar described a plan to roll out the five test vehicles at a rate of one per month following first flight of FTV-1. Twelve months later, the cabin demonstrator remains inside Bombardier’s final assembly hangar in Mirabel, Canada. FTV-5 is now scheduled to join the flight test programme by the end of this year, Dewar says.

The combined test fleet must average more than 130 flight hours per month to meet Bombardier’s goal to deliver CS100 to an undisclosed launch operator by the end of next year.

Inducting all five aircraft in the flight test programme will help ease the pressure, but the fleet must resist a year-long tendency to make progress very slowly. In addition to the 100-day grounding that began on 29 May, there was a 27-day flying hiatus that started within two weeks of FTV-1 first flight last year.

It then took Bombardier four months to complete more than 100 flight test hours, a period stretching from September to the end of January. As FTV-3 and FTV-4 entered the test fleet in March and May, flight hours doubled over the next three months. The fleet now will have to maintain that pace and grow significantly to stay on track with Bombardier’s current schedule.

The engine problem required 100 days to fix, but Bombardier and P&W discussed redesign options for several weeks. In the end, the new design should prevent a recurrence, but without sacrificing performance. The PW1500G still is on track to meet the programme’s thrust, fuel burn and emission goals, Dewar says.

“Of course, we never like to have these events,” Dewar says, “but that’s why we do flight test.”

Bombardier’s CSeries Faces Increased Skepticism

By: Jens Flottau, published in Aviation Week & Space Technology, Sep 8, 2014

Bombardier’s answer to when CSeries flight tests will resume is: In the coming weeks. That has remained constant since the test fleet was grounded more than three months ago. But there are clear signs from customers and analysts that the manufacturer’s assurances are no longer working.

Last week, Goldman Sachs downgraded Bombardier stock because of the CSeries issues that were caused by a severe engine failure on FTV-1 May 29. Malmo Aviation, which was to have been the launch customer, wants to delay deliveries to avoid having to deal with the expected teething problems of early aircraft. It says the troubles “may cause another delay to the CSeries introduction.” And another important CSeries customer says that it suspects another schedule disruption “will come for sure.”

Bombardier is still sticking to its official guidance that the first CS100 will be delivered in the second half of 2015. Although that guidance is flexible enough to compensate a delay of up to several months, Goldman Sachs analyst Noah Poponak believes that margin will not be enough. He calculates that if flight tests were to resume in September, Bombardier would need to reach an average of 160 flight-test hours per month to still make 2015 deliveries. “We see that as very unlikely given the pace achieved before grounding, momentum (not just time) lost during grounding, and the high risk of new problems occurring other than this engine incident,” he writes.

Malmo Aviation has decided to delay deliveries of Bombardier’s CS100s. The airline was to have been the launch customer. Credit: Bombardier Concept

Poponak projects that the “CSeries will negatively impact Bombardier’s financial results and create negative catalysts for the next several years.” He reduced his price target from C$3.20 to C$3 ($2.94 to $2.75) for Bombardier shares.

Bombardier, which recently announced the departure of Guy Hachey, its top aerospace executive, has moved a lot of ground testing forward to limit the time lost. It is also telling customers that the larger CS300 is not affected by previously announced delays for the CS100 and that the current engine issues are not a major concern.

Malmo Aviation nonetheless no longer wants to be first in the row. Its parent, Braathens Aviation, said in a regulatory filing: “We have informed Bombardier that we will not assume the role of formal launch operator of the aircraft type.” The company added that “due to increased uncertainty we are discussing other possible changes to the aircraft delivery schedule with Bombardier.”

Malmo is the Swedish domestic division of Braathens Aviation. The carrier has ordered five CS100s and five CS300s. Most of the CS100s are understood to be due for delivery next year; the CS300s are set to follow in 2016.

The decision is further complicating an already fluid situation. The test fleet is still grounded. Pratt & Whitney has delivered modified engines to Bombardier and those are in the process of being installed on the flight-test aircraft.

 

Based on its current orderbook, Bombardier does not have a long list of airlines willing to take the first few aircraft. The most obvious candidate is Lufthansa, which has signed for 30 CS100s for its subsidiary Swiss International Airlines. The carrier urgently needs to replace its aging fleet of 20 Avro Regional Jets. Swiss has decided to remove an initial four Avros from service before year-end, in spite of the fact that a long-term replacement is not yet available. The airline is leasing four Embraer 190s from Helvetic Airways to bridge the gap until the CSeries arrives.

In addition to the aircraft planned for Malmo, other parts of the CSeries backlog look shaky for economic or political reasons. The manufacturer has orders from IlyushinFinance Co. and Iraqi Airways, among others. U.S. regional carrier Republic Airways, which holds the largest order—40—has indicated some uncertainty, although it has not publicly raised the possibility of canceling the order or deferring deliveries.

In a Bloomberg Businessweek interview last May, CEO Bryan Bedford said: “We are focused on our fixed-fee business. There is no place to operate the CSeries in that model. The question we will have to address is whether the aircraft purchase agreement has value or not and, if it does, then it becomes an asset and assets can be sold.” Republic’s order is for the larger CS300. Bedford also voiced concerns about an insufficient orderbook that would put pressure on residual values and make remarketing more difficult.

Bombardier lists 203 firm orders for the CSeries, including 63 for CS100s. A firm order for two CS300s from Falcon Aviation (United Arab Emirates) was logged in July, but has not yet been added to its official list. Several letters of intent for a total of 60 CSeries were announced at the Farnborough air show in July, but have not yet been turned into firm commitments. 

Comac gears up on C919 iron bird work

By: MAVIS TOH, published in Flightglobal.com, Sept 2, 2014

Comac has installed over 90% of the necessary structures and systems on the C919 iron bird test rig, as it works towards an end-2015 first flight target for its narrowbody programme.

In an exclusive tour of its iron bird facility, a Comac official tells Flightglobal the airframer has been actively installing parts on the iron bird in the last quarter of 2014.

These parts includes the aircraft’s landing gear, rudder, horizontal stabilisers, elevators, slats, flaps, ailerons and spoilers.

Mavis Toh/Flightglobal

The C919 iron bird test rig is housed at Comac’s Shanghai Aircraft Design and Research Institute in the new Pudong area. More than 50 test engineers and technicians are involved in the iron bird works.

The official explains that Comac is now conducting verification tests on the parts that were installed last year, and making adjustments to ensure they are functioning as expected.

Thereafter in November, certification tests involving cockpit control will begin. This will be followed by functional tests of the aircraft’s flight control, hydraulic and landing gear systems.

The official adds that the iron bird is scheduled to undergo two cycles of tests before the C919’s first flight.

Comac has secured 400 orders for its C919, mostly from local airlines and leasing companies.

MRJ gears up for static strength tests

by Mavis Toh, Flightglobal

 

Mitsubishi Aircraft has rolled out the first ground test aircraft for its MRJ regional jet programme, as it prepares to start static strength tests.

The aircraft, MSN 90001, was transferred from Mitsubishi Heavy Industries’ Komaki South plant, where final assembly of the MRJ is underway, to the strength test station at a facility near the Nagoya Airport, a Mitsubishi spokesman tells Flightglobal.

Images provided by Mitsubishi show a near complete airframe, although the static strength aircraft lacks its horizontal stabiliser. It also has an unoccupied engine pylon under each wing.

Mitsubishi Aircraft

Mitsubishi says static strength tests will start in the summer of 2014. These airframe tests are necessary in order to achieve type and airworthiness certifications, and will be conducted in the presence of Japan’s Civil Aviation Bureau, it adds.

Mitsubishi will be using seven test aircraft for the certification of its MRJ regional jet. Five aircraft will be used for flight tests, while another two will be used for static strength tests and fatigue strength tests.

The programme’s first flight test aircraft, MSN10001, is also taking shape. Last month, the airframer said that the tail cone section as while as its right wing have been delivered to the Komaki facility for final assembly.

Delivery of the first Pratt & Whitney PW1200G geared turbofan engines, originally due to arrive in late April, has however been delayed, says the spokesman. The first engines are now expected to be delivered “in several weeks”, he adds.

The Japanese made regional jet is scheduled to take its first flight in Q2 2015, after three delays to the programme’s schedule.