A320 NEO ENGINE SELECTION AN INDEPENDENT ANALYSIS ENGINE LEASING TRADING AND FINANCE 2018 LONDON, UK

Transcription

1 A320 NEO ENGINE SELECTION AN INDEPENDENT ANALYSIS ENGINE LEASING TRADING AND FINANCE 2018 LONDON, UK

2 ABOUT WAML

3 SOME QUESTIONS? Using the EIS of the CEO engines as precedent will there be a less desirable sub-fleet of early engines Will the large numbers of NEO orders mean that pre-pip engines will represent a large group - so less risk? Is ordering CEOs and deferring NEO orders for (say) 5 years a smart move? How did the OEMs cope with early CEO problems? Did they support the operators / owners? Who has the most to lose from making the wrong decision lessor or airline? Will OEM PBH programs solve the airline s problems? Are the quoted fuel burn reduction figures realistic?

4 POPULATION COUNT OF Neo AIRCAFT NOT ENGINES *INSTALLED ENGINES ONLY NOT INCLUDING DELIVERED SPARES. SOURCE: FLEET ANALYZER AS OF 19/04/2018

5 P&W HAVE 7% MARKET SHARE ADVANTAGE ON HIGHEST THRUST AIRCRAFT (A321NEO) CFM HAVE 18% MARKET SHARE ON A320NEO CURRENTLY BUT 42% OF ORDER BOOK STILL UNDECIDED SOURCE: FLEET ANALYZER 19/04/2018

6 PW1000G DELIVERED/ORDER BOOK BY REGION Africa Asia Pacific Europe Latin America Middle East North America Unassigned LEAP PW1000G Unannounced LEAP-1A HAS CURRENT MARKET SHARE IN ALL REGIONS MAJORITY IN ASIA PACIFIC AND MIDDLE EAST EUROPE / NORTH AMERICA / LATIN AMERICA RELATIVELY EVEN SPLIT UNCONFIRMED OPTIONS WILL INFLUENCE REGIONAL MARKET SHARE SIGNIFICANTLY SOURCE: FLEET ANALYZER 19/04/2018

7 CURRENT MARKET SHARE? OEM LOYALTY? INDIVIDUAL ORDER STATUS? MARKET UPTAKE OF NEO TECHNOLOGYCURRENT? IMPACT ON CEO AIRCRAFT? RESIDUAL VALUES?

8 PW1100G UNIQUE DESIGN FEATURES? IS GTF AN UNTESTED TECHNOLOGY? EXISTING PW TECHNOLOGY? REDUCED NUMBER OF STAGES GTF FAN PERFORMANCE? PERFORMANCE IMPROVEMENTS? LLP COUNT? MATURE ESV COSTS?

9 LEAP-1A AN EVOLUTION OF THE CFM56-5B? ADVANCED FEATURES? LEAP FAN PERFOMANCE? PERFORMANCE IMPROVEMENTS? LLP COUNT? ESV COSTS?

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11 CFM56-5B LEAP 1A Fan Dia 68.3" Fan Dia 78" Bypass ratio 5.7 : 1 Bypass ratio 11.0 : 1 Width M Width M (maximum envelope) Length M (flange to flange) Length M (flange to flange) Weight Tonnes (dry) Weight 2.99 / Tonnes (with fluids) Fan / 4-stage LPC / 9-stage HPC / 1-stage HPC / 4- stage LPT Layout Fan / 3-stage LPC / 10-stage HPC / 2-stage HPT / 7 stage LPT Published fuel savings ~15% V2500-A5 PW1100G Fan Dia 63.5" Fan Dia 81" Bypass ratio 4.8 : 1 Bypass ratio 12.5 : 1 Width M Width 2.224M (Fan case) Length M Length 3.284M (flange to flange) Weight Tonnes (dry) Weight Tonnes (dry) Fan / 4 Stage LPC / 10 Stage HPC / 2 Stage HPT / 5 Fan / reduction gearbox / 3-Stage LPC / 8-stage HPC / 2-stage Layout Stage LPT HPT / 3 Stage LPT Published fuel savings ~15%

12 PW1100G CARBON SEAL - #1 REMOVAL DRIVER TO DATE COMBUSTOR LINER 2 ND LARGEST REMOVAL DRIVER HPC REAR HUB KNIFE EDGE SEAL BATCH PROBLEM FAN BLADE DISBONDING SLOW STARTS

13 LEAP-1A HPT SHROUD COATING - #1 REMOVAL DRIVER TO DATE HPT STG 2 DISK BATCH ISSUE BOOSTER PERFORMANCE ISSUE REDUCED TOW

14 EIS ISSUES ARE NORMAL GEARBOX ON PW1000G FOCUS OF ATTENTION PRIOR TO EIS - RELIABILITY SO FAR VERY GOOD. COMMON MISCONCEPTION TO CONSIDER LEAP-1A ENGINES AS EVOLVED FROM CFM56 FAMILY ENGINE DESIGN MORE REFLECTIVE OF GENX. BOTH ENGINES MEETING HEADLINE PRE-EIS MILESTONES. MATURE DMC ADVERTISED BY BOTH OEMS AS SAME AS PREDECESSOR ENGINES MATURE PHASE TOW ENGINE REMOVAL DRIVERS OVERALL MCPH SHORT TERM SPARES COVERAGE

15 THRUST CAPABILITY / RANGE FUEL BURN COMMERCIAL TECHNICAL EVOLUTION / COMPLEXITY TECHNICAL UNIT COSTS / VALUES / LEASE RATES FINANCIAL OEM FINANCIAL SUPPORT MAINTENANCE COSTS / MRO NETWORK / MR RATES OEM AFTERMARKET CONTROL / SUPPORT DECISION EIS SUPPORT (TRAINING / MANUALS / PROVISIONING) LLP STACK COSTS / VALUES SPARE ENGINE COSTS / CONFIG (THRUST / QEC)

16 BRENT CRUDE

17 WARRANTIES ENGINE DEFECTS OR FAILURES PART DEFECTS (INCLUDING LLPS) MAINTENANCE TERM BASED PAY AT SHOP VISIT LLP SUPPORT AOG SUPPORT (SPARE ENGINES) ETOPS GUARANTEE GUARANTEES IFSD ATB SV RATE FUEL BURN / RETENTION EGT DETERIORATION AOG SUPPORT (SPARE ENGINES) DELAYS & CANCELLATIONS LLP ULTIMATE LIFE SPARES 3 RD PARTY LEASE POOLING ARRANGEMENT OWNED SPARES IAFTERMARKET A HEALTHY INDEPENDENT SECTOR TO SUPPORT RESIDUAL VALUES

18 MARKET SHARE CURRENTLY IN FAVOUR OF THE LEAP ENGINE BUT A LARGE PROPORTION OF ORDER BOOK UNDECIDED. EIS TECHNICAL ISSUES ARE EXPECTED TO LEVEL, BUT MATURE COST OF OWNERSHIP IS TOO DIFFICULT TO PREDICT TOO MANY UNKNOWNS AT THIS POINT LARGEST COST INFLUENCER (FUEL BURN) BOTH ENGINES ARE COMPARATIVELY EQUAL MEETING OEM MILESTONES MITIGATE AGAINST EIS RISKS VIA SECURITY OF STRONG WARRANTIES AND GUARANTEES, SPARES PARTS AND (WHERE APPROPRIATE) RISK TRANSFER MAINTENANCE PROGRAMS. THE DECISION MAKING PROCESS IS COMPLEX - AFFECTS ALL ASPECTS OF THE OPERATION SO SHOULD INVOLVE ALL DEPARTMENTS INEXPERIENCED AIRLINES SHOULD SEEK EXTERNAL EXPERT ADVICE

19 FINALLY EXTERNAL CONSULTANT CAN PROVIDE A FULLY MODELLED COMPARATIVE REVIEW OF ALL ASPECTS OF THE COMPETING ENGINES PRIOR TO PURCHASE INCLUDING: RELIABILITY & TECHNICAL CONSIDERATIONS FUEL BURN PROCUREMENT COSTS & OEM CREDITS MAINTENANCE AND OPERATING COSTS SPARE ENGINE REQUIREMENTS DETAILED CONTRACTUAL TERMS AND CONDITIONS PRIOR EXPERIENCE OF MANAGED ENGINE SELECTIONS, ENABLES BASELINES FOR NEGOTIATION WITH OEMS BESPOKE FINANCIAL MODELLING OF EACH OEM PROPOSAL SUPPORT CAN BE PROVIDED THROUGHOUT ENTIRE PROCESS A COMPLETE SOLUTION ENSURES AIRLINE SECURES LOWEST POSSIBLE COST OF OPERATION FOR CHOSEN POWERPLANT

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