Engine Finance Rountable Managing an engine€¦ · Managing an engine. April 2009, London . Engine Finance Rountable. ... (eg compressor top casing on CFM56 engines) WATOG: World
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General Electric Snecma
CFM: a long time partnership…
> 7,500 commercial and military aircraft worldwide > 415 million engine flight hours in service
CFM International is a Joint Company of Snecma & General Electric Co. Established in 1974
Simple Sales & Customer Support Sharing
SALES,PRODUCT SUPPORT
CFMI CINCINNATI,OHIO, U.S.A.
SALES, PRODUCT SUPPORTCFMI VILLAROCHE,
FRANCE
CFM split the world into 2 regions to better support customers on a coordinated basis.
… and here to stay
GE/SNECMA 50/50 partnership extended to 2040.
– Commitment to develop the next-generation engine
– Commitment to develop integrated services offerings
We have always delivered…
We will keep on …walking…
NEVER MIND 20:20 OUR VISION GOES BEYOND 20:40.
Production milestones
• 19,189 CFM engines produced as of the end of in 2008
• 2009 production volume: 1,250 engines– Monthly average: approx. 104 engines– Weekly average: 24 engines over 52 weeks– 5 to 6 engines per working day
• 20 ,000th engine schedule to be produced in October 2009
• 2,000th -7B/3 & 1,000th -5B/3 engines to be produced in 2009
Single Aisle Market In Services, March 2009 – Aircraft/Operators
Source : ACAS, March 09
B737 CFM
A320 IAE
A320 CFM
1368
1075
399
1576
425
389
251
97
196
78
69
65
195
52
34116
33
126 1072380
327
11
8215
3012
6
3212
5
13983
49
271418 6 7
5
81
27
24
46562131
1536
World Market Share398163
124
Source: Ascend, OAG, Snecma & GE analysis
North America
3420 A/C24%
South America1350 A/C
9%
Europe & CIS
4160 A/C29%
Africa720 A/C
5%
Asia-Pacific (*)1350 A/C
9%
Middle-East480 A/C
3%
Narrowbodies Delivery Forecast 2008-2027 14,400 A/C Worldwide
(*) excluding China & Indian Sub Continent
China
2400 A/C17%
Indian Sub Cont.520 A/C
4%
Total Asia Pacific
4270 A/C30%
The turbine drives the compressorThe turbine drives the compressor
The fuel brings the energy to the systemThe fuel brings the energy to the system
CompressorCompressor CombustorCombustor TurbineTurbine
FuelFuel
The Jet Engine Principle
Increase in by-pass ratio improves SpecificFuel Consumption (SFC)
Increase in by-pass ratio improves SpecificFuel Consumption (SFC)
11 AirAir
33
33
22
22
By-pass ratio = Mass flow / Mass flow
By-pass ratio = Mass flow / Mass flow33 22
The Jet Engine Principle
WHEN THE LARGEST BUYERS OF AIRCRAFT ENGINES DO THEIR CALCULATIONS THEY ALWAYS GET THE SAME ANSWER.
Calculating Engine Calculating Engine MaintenanceMaintenance
Acronyms
A/F AirframeATO Aircraft Take OffsD&C Delays & CancellationsDMC Direct Maintenance CostECO Engine Cost OwnershipEGT Exhaust Gas TemperatureEMO Engine Management Opimization ®IFSD In Flight Shut-DownsLLP Life Limited PartsLRU Line Replaceable UnitNPV Net Present ValueOATL Outside Air Temperature LimitSV Shop VisitSVR Shop Visit RateSVC Shop Visit Cost
Acronyms
T/O Take OffTOC Total Operating CostTOW Take Off WeightUSG US GallonsVSV Variable Stator VanesW/S Work Scope
Aircraft Direct Operating Cost Breakdown
DIRECTOPERATING COST
INDIRECTOPERATING COST
OPERATINGCOST
RELATEDCOST
♦ Depreciation♦ Loan Interest♦ Insurance
♦ Fuel♦ Cockpit Crew♦ A/F maintenance♦ Engines maintenance
♦ Navigation♦ Landing Fees♦ Handling
♦ Administration cost♦ Ground equipment♦ Cargo related
TOTAL OPERATING COST
ACQUISITIONCOST
CASH DIRECTOPERATING COST
TOC
DOC IOC
SNECMA DEFINITIONS
The world is changing very quickly…
?
0
20
40
60
80
100
120
140
160
Jan-1999
Jan-2000
Jan-2001
Jan-2002
Jan-2003
Jan-2004
Jan-2005
Jan-2006
Jan-2007
Jan-2008
Jan-2009
51% 43%
6%
36%60%
4%
All OtherEngine maintenanceFuel Cost
Generic single-aisle aircraft (160 passengers)800 nautical mile rangeSource: Internal analysis
Airline direct cash operating costs
Influencing factors
EMO, Engine Management Optimization is a Registered Trade Mark of Snecma
• Fuel burn– Design: engine architecture, thermodynamic cycle– Engine age: engine deterioration
• Reliability– Design: engine architecture, mechanical margins, EGT margin– Usage: sector length, T/O derate, environment severity
• Maintenance– Design: engine architecture, mechanical margins, EGT margin– Usage: sector length, T/O derate, environment severity– Fleet management: spare engines, water wash, EMO– Shop visit workscope management & LLP
Engine DMC Breakdown
THE COST TO KEEP AND RESTORE ENGINE SERVICEABILITY CAN BE SPLIT BETWEEN:
• Line Maintenance cost
• Shop maintenance cost
LINE MAINTENANCE REPRESENTS ABOUT 7 % OF ENGINE MAINTENANCE COST
Engine DMC Breakdown ( cont’d )
LINE MAINTENANCE :
• Line Labor :• Inspection• Troubleshooting• Replacement of Line Replaceable Units ( LRU’s )• Test
• Line Material• Consumable parts (items which must be scrapped at every maintenance action )
• Repair of equipment removed on line
SHOP MAINTENANCE REPRESENTS ABOUT 93 % OF ENGINE MAINTENANCE COST
Engine DMC Breakdown ( cont’d )
SHOP ACTIVITY :
• Routine Labor: assembly / disassembly, cleaning, inspection of modules and parts
• Repair of parts ( including LRU’s )
• Material: cost of parts and material replaced during the shop visit
• Fees, Tests, Transportation
Shop Visit Rate - Definitions
SHOP VISIT :
• “An engine Removal is classified as a "SHOP VISIT" whenever the subsequent engine maintenance performed prior to reinstallation entails separation of pairs of major mating flanges or removal of a disk, hub or spool. (WATOG definition)”
• Some maintenance operations performed on wing or on a stand may not be defined as a SV (eg compressor top casing on CFM56 engines)
WATOG : World Airlines Technical Operations Glossary
Shop Visit Rate – Definitions (cont’d)
SVR is a measure of the engine reliability parameter which may be expressed in 2 ways
• DILUTED (“POPULAR”) SHOP VISIT RATE SVR– Ratio of the number of shop visits in a fleet to the total fleet flying time (expressed in thousands hours) within a given period– it represents the aging process of the whole fleet
• NON DILUTED OR RESTORED SHOP VISIT RATE RSVR– Ratio of the total number of shop visits having occurred within a period to the total number of hours flown by the involved engines since their last shop visit. It may be measured by SV ranking. – it represents an average time on wing between removals– Average on-wing time = 1000 / RSVR
Shop Visit Rate – Definitions (cont’d)
Popular SVR = 2x1000 / 20130 = 0.099
Calculation exampleYearly utilization
20130 h
3610 h1
3480 h2
4340 h3
3970 h4
4730 h5
9850 h
9320 h
Time sincelast shop visit
19170h
SVRemoval
X
X
2
RSVR = 2x1000 / 19170 = 0.104
• SHOP MAINTENANCE COST DEPENDS ON TWO FACTORS :
• SHOP VISIT COST SVC in K$
• SHOP VISIT RATE SVR nb SV / 1000
Engine DMC Breakdown ( cont’d )
SHOP DMC IS A FUNCTION OF SV RATE AND SV COST
SHOP DMC = SVC x SVR measured in $ / EFH
Shop Visit Rate: Shop Visits cause breakdown Example of a High Thrust Rating engine
SV MAINLY CAUSED BY EGT AND OTHER CAUSES
CFM56-5B3/PA321
LLP14%
Hot Parts12%
Performances42%
Other32%
Shop Visit Rate: Shop Visits cause breakdown Example of a Low Thrust Rating engine
SV MAINLY CAUSED BY LLP AND OTHER CAUSES
LLP47%
Hot Parts10%
Performances1%
Other42%
CFM56-5B6/PA319
Expected time to next shop visit
• Determined by:• Shop visit cause• Time since last shop visit • Condition of different modules• On-wing life policy• Status of Life Limited Parts• Expected time to the next shop visit• Business consideration
• Goal is to rebuild an engine with acceptable time to the next shop visit
Performance Performance
Life Limited PartsLife Limited Parts
Other PartsOther Parts
Shop Visit Cost - Shop Visit Workscope
Shop Visit
Shop Visit Cost - Shop Visit Cost estimates
• SV Cost : the SV Cost depends on the workscope performed during the SV– Minimum W/S level : Low SV Cost– Performance W/S level : average SV Cost– Full W/S : High SV Cost– W/S level depends on the age of the engine, the time on wing since last SV, the age
of Life Limited Parts….
• Shop visit cost breakdown estimation:⇒ 55 - 60% Material cost ⇒ 10 -15 % Labour⇒ 25 - 35 % Repair
• SV Cost evolves with the maturity of the engine program– development of new repairs– used spare parts availability
LLP management
Depending on the shop visit time occurrence, LLP management must be adapted to the situation (example of an operator requiring a minimum build of 6,000 cycles)
20,000 cycles
28,000 cycles
SV SV
Remove 20,000 and 25,000 cycle
parts
Remove 30,000 cycle partsShop visit occurs
close to 20,000 cycles
23,500 cycles
29,500 cycles
SV SV
17,000 cycles
SV
Remove 25,000 cycle parts
Remove 30,000 cycle parts
Remove 20,000 cycle
partsShop visit occurs close to 17,000 cycles
EISTime scale
1st SV
1
2nd SV
0.7
3rd SV
0.6
4th SV
0.6
Engine Aging
Relative times to Shop Visit Mature Engine
Thrust Ratings Options on A320 Family
CFM56 (Max T/O thrust)*
A318 -5B8 (21,600 lbf)
-5B9 (23,300 lbf)
A319 (613)
-5B5 (22,000 lbf)
-5B6 (23,500 lbf)
-5B7 (27,000 lbf)
A320 (733)
-5B5 (22,000 lbf)
-5B6 (23,500 lbf)
-5B4 (27,000 lbf) **
A321 (228)
-5B4 (27,000 lbf)
-5B1 (30,000 lbf)
-5B2 (31,000 lbf)
-5B3 (32,000 lbf) **
* Max T/O thrust, Min Sea Level per engine type certificate
** Thrust Bumps available for Hot/High Airports T/O
*** A/C Configuration at delivery
Thrust Ratings Options on B737NG Family
CFM56 (Max T/O thrust)*
- 600 (69 A/C delivered)
-7B20 (20,600 lbf)
-7B22 (22,700 lbf)
- 700 (1077)
-7B20 (20,600 lbf)
-7B22 (22,700 lbf)
-7B24 (24,200 lbf)
-7B26 (26,300 lbf)
-7B27 (27,300 lbf)
- 800 (1518)
-7B24 (24,200 lbf)
-7B26 (26,300 lbf)
-7B27 (27,300 lbf)
- 900 (92)
-7B24 (24,200 lbf)
-7B26 (26,300 lbf)
-7B27 (27,300 lbf)
* Max T/O thrust, Min Sea Level per engine type certificate
Source : ACAS, Feb 09** A/C Configuration at delivery
Maximum temperature EGTMaximum temperature EGT
By-pass Ratio LimitationsEngine Rating and On-Wing Life
Engine Rating and On-Wing Life
LARGE EGT MARGIN & LOW DETERIORATION RATETRANSLATE INTO LONGER ON-WING LIFE
0 10,000 20,000Time on wing
EGT
dete
riora
tion
EGT Limit
0 10,000 20,000
Time on wing
EGT Limit
Low RatingHigh Rating
Same Engine
Engine goes to shop
10% Takeoff derate
20% Takeoff derate
Rating selection and operation
Effect of Engine derate-Average Savings per A/C per yearbased on 15 year study-A321/ CFM56-5B3/3-FL = 1,4-3000 EFH/ year
Assumptions:
Factors Affecting Severity
Environmental Conditions
Flight Leg and Thrust Derate
Exha
ust G
as T
empe
ratu
re
Engi
ne C
orne
r Po
int
Outside Air Temperature Influence
Outside Air Temperature at T/O
Seve
rity
Fact
or
0.78
1.35
1
2
1 2 3 4Flight Leg (Hours)
0%
10%15%
Decreasing Takeoff Derate
Source: EMCWG
5%
0%
1%
2%
3%
4%
5%
6%
7%
EIS Year 5 Year 10 Year 15
5 shop visits for Operator 1
Single Engine deterioration
Average fuel consumption increase
Operator 1 : 3.8% to 3.9%
Engine Operation – Fuel consumption vs. on-wing life
% F
uel B
urn
dete
riora
tion
0%
1%
2%
3%
4%
5%
6%
7%
EIS Year 5 Year 10 Year 15
3 shop visits for Operator 2
Average fuel consumption increase
Operator 2 : 4.5% to 4.6%
3D. Engine Operation – Fuel consumption vs. on-wing life
% F
uel B
urn
dete
riora
tion
0%
1%
2%
3%
4%
5%
6%
7%
EIS Year 5 Year 10 Year 15
0.7% Lower fuel consumption for Operator 1at the cost of 2 additional Shop Visits over 15 years
3D. Engine Operation – Fuel consumption vs. on-wing life
% F
uel B
urn
dete
riora
tion
0%
1%
2%
3%
4%
5%
6%
7%
EIS Year 5 Year 10 Year 15
300 000 $ saved in fuel2 400 000 $ higher shop cost
3D. Engine Operation – Fuel consumption vs. on-wing life
% F
uel B
urn
dete
riora
tion Assumptions:
-Savings per aircraft-15 year study period- FL = 1,4- A320/ CFM56-5B4/P-1,8 $/ USG fuel-3000 FH/ year
Engine Fleet Management - Tools
• Commonality
• Staggering– Spare engines used to reduce average usage of individual engines– Easier Shop Visit planning
• Engine Re-rating– Take advantage of the different ratings of a common engine model installed on different aircraft models – Permit to extend the average time between shop visits of the engine fleet
Engine Fleet Management - Commonality
• Commonality within a fleet of engines brings savings on:
– Spare engine inventory– Spare parts inventory– Engine fleet management– Mechanics training– Interface with Engine Manufacturer– Documentation– …
ENGINE COMMONALITYA KEY DRIVER TO REDUCE COSTS
Engine Fleet Management - Staggering
Installed engineSpare engineShop Visit
Without StaggeringSeveral Shop visits occur simultaneously 2 spares minimum required
With StaggeringNo overlap of Shop visits 1 spare sufficient
Using a spare engine to dilute utilization of installed engines permits to avoid that several shop visits occur simultaneously.
ENGINE STAGGERING: POSTPONE SHOP VISITS AND REDUCE SPARE REQUIREMENT
EMO• extends the on wing life of the engines that are EGT limited on A321• postpones shop visits which would have otherwise occurred on A321
Engine Removed from A321 and installed on A319
EGT Redline
A321-5B3/3 On Wing Life A319-5B6/3 Additional On Wing Life
EGT
EFH
6021H-04/99
Engine Fleet Management – Re-rating
Industry challenges … CFM Solutions
• Air transport challenges accelerating– Fuel pressure, environment … we have to be ready
• CFM’s response: the revolutionary LEAP-X engine
• But we have to keep our options open …– Parallel path with open rotor
Fan DiskBooster spoolShaft
High Pressure Compressor Front shaftStage 1-2 spoolStage 3 diskStage 4-9 spoolCDP seal
High Pressure TurbineFront shaftFront air sealDiskRear shaft
Low Pressure TurbineShaftConical supportStage 1 diskStage 2 diskStage 3 diskStage 4 disk
CFM56-7B Life Limited Parts Status
30,00030,00030,000
20,00020,00020,00020,00020,000
20,00020,00020,00020,000
25,00025,00025,000 25,00025,00025,000
Current Lives
* Low & Middle Ratings / High Ratings
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