A320 NEO ENGINE SELECTION AN INDEPENDENT ANALYSIS ENGINE LEASING TRADING AND FINANCE 2018 LONDON, UK WWW.WILLISASSET.COM
A320 NEO ENGINE SELECTION
AN INDEPENDENT ANALYSIS
ENGINE LEASING TRADING AND FINANCE 2018LONDON, UK
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ABOUT WAML
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SOME QUESTIONS?
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• 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?
SOURCE: FLEET ANALYZER AS OF 19/04/2018
*INSTALLED ENGINES ONLY – NOT INCLUDING DELIVERED SPARES.
POPULATION COUNT OF Neo AIRCAFT – NOT ENGINES
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• 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
SOURCE: FLEET ANALYZER – 19/04/2018
• 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
0
500
1000
1500
2000
2500
3000
3500
Africa Asia Pacific Europe Latin America Middle East North America Unassigned
PW1000G DELIVERED/ORDER BOOK BY REGION
LEAP PW1000G Unannounced
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• CURRENT MARKET SHARE?
• OEM LOYALTY?
• INDIVIDUAL ORDER STATUS?
• MARKET UPTAKE OF NEO TECHNOLOGYCURRENT ?
• IMPACT ON CEO AIRCRAFT?
• RESIDUAL VALUES?
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• 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?
PW1100G
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• AN EVOLUTION OF THE CFM56-5B?
• ADVANCED FEATURES?
• LEAP FAN PERFOMANCE?
• PERFORMANCE IMPROVEMENTS?
• LLP COUNT?
• ESV COSTS?
LEAP-1A
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CFM56-5B LEAP 1A
Fan Dia 68.3" Fan Dia 78"
Bypass ratio
5.7 : 1 Bypass ratio 11.0 : 1
Width 1.908 M Width 2.543 M (maximum envelope)
Length 2.599 M (flange to flange) Length 3.328 M (flange to flange)
Weight 2.501 Tonnes (dry) Weight 2.99 / 3.008 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 1.682 M Width 2.224M (Fan case)
Length 3.201 M Length 3.284M (flange to flange)
Weight 2.404 Tonnes (dry) Weight 2.858 Tonnes (dry)
Fan / 4 Stage LPC / 10 Stage HPC / 2 Stage HPT / 5 Stage LPT
LayoutFan / reduction gearbox / 3-Stage LPC / 8-stage HPC / 2-stage HPT / 3 Stage LPT
Published fuel savings ~15%
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PW1100G
CARBON SEAL - #1 REMOVAL DRIVER TO DATE
COMBUSTOR LINER – 2ND LARGEST REMOVAL DRIVER
HPC REAR HUB KNIFE EDGE SEAL – BATCH PROBLEM
FAN BLADE DISBONDING
SLOW STARTS
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LEAP-1A
HPT SHROUD COATING - #1 REMOVAL DRIVER TO DATE
HPT STG 2 DISK – BATCH ISSUE
BOOSTER – PERFORMANCE ISSUE – REDUCED TOW
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• 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
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• THRUST CAPABILITY / RANGE
• FUEL BURN
• TECHNICAL EVOLUTION / COMPLEXITY
• UNIT COSTS / VALUES / LEASE RATES
• OEM FINANCIAL SUPPORT
• MAINTENANCE COSTS / MRO NETWORK / MR RATES
• OEM AFTERMARKET CONTROL / SUPPORT
• EIS SUPPORT (TRAINING / MANUALS / PROVISIONING)
• LLP STACK COSTS / VALUES
• SPARE ENGINE COSTS / CONFIG (THRUST / QEC)
DECISION
FINANCIAL
TECHNICAL
COMMERCIAL
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BRENT CRUDE
• WARRANTIES
• ENGINE DEFECTS OR FAILURES• PART DEFECTS (INCLUDING LLPS)
• GUARANTEES
• IFSD• ATB• SV RATE• FUEL BURN / RETENTION• EGT DETERIORATION• AOG SUPPORT (SPARE ENGINES)• DELAYS & CANCELLATIONS• LLP ULTIMATE LIFE
• MAINTENANCE
• TERM BASED• PAY AT SHOP VISIT• LLP SUPPORT • AOG SUPPORT (SPARE ENGINES)• ETOPS GUARANTEE
• SPARES
• 3RD PARTY LEASE• POOLING ARRANGEMENT• OWNED SPARES
• IAFTERMARKET
• A HEALTHY INDEPENDENT SECTOR TO SUPPORT RESIDUAL VALUES
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• 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
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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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