Europe needs its « new space »

We have been hearing a lot recently about Space X, Blue Origin, XCOR companies. These names are at the forefront of this « new space » pole that has been created in California and is revolutionizing the space sector in the US. In stark contrast with the past, these new space champions are developing rockets and associated technologies with a mix of public and private money coming from dotcom billionaires (like Elon Musk for Space X or Jeff Bezos for Blue Origin) and venture capitalists more and more prone to invest in space (Draper Fisher Jurvetson, Founders Fund). In addition, these companies are highly innovative:

  • Space X is investigating and testing full first stage reusability for its Falcon 9 rocket (see infographic)

SpaceX first reusable

Space X first reusable stage

  • Blue Origin is developing a Lox/CH4 engine to replace RD-180 in Atlas V (240T thrust).

BE4

BE-4 model

  • XCOR is working in suborbital reusable spacecraft.

XCOR Lynx

Suborbital reusable spacecraft

Finally, they are bringing a start-up dynamic and « can do » attitude in a sector governed by blue chip companies with significantly more inertia. Overall, these companies are at the origin of the space push in the US and a factor explaining the widening gap between US and Europe. In order for this gap to be reabsorbed, ESA and most important European agencies (CNES, DLR) to invest in and develop a « new space » equivalent in Europe via

  • Seed funding in start-ups focusing on technology bricks (privatge venture capital sector in Europe is not mature at present)
  • Development of  demonstrator logic as CNES has been doing in the past via its « Programme d’Investissements d’Avenir » program.

Now, how to do this? Here some ideas

  • Allocate xxM€ (25 for (~10-20?) to create a specific space frontier fund to support space technology company creation
  • Allocate 50-100M€/year in demonstrators focusing in flight validation of key technology bricks (e.g. first stage reusability, innovative materials, new avionics suite)

 

A380 vs B747

Following Airbus decision on A330neo, speculation is now on next steps for A380 with A380neo (see post on May 21st and recent J. Leahy quotes).

To understand A380 situation and potential, we have decided to go back to B747 days and compare both programs.

Hereunder a cumulative sales comparison of A380 and B747 (including all its major versions).

A380vsB747 v3

First of all, A380 sales profile is similar to B747 sales profile in its first years (delta of between 50 to 100 aircraft in favor of B747, around 20%).

Secondly, after period of stagnation, B747 sales increased significantly (« second breath ») with launch of B747-400.

Thirdly, B777 launch affected and canibalized some B747-400 sales: B747-400 sales did not reach 10 units in one year after B777 launch.

In summary, if we base our analysis on B747 experience, A380neo development is an imperative to get a new « sales impulse » for the program. However, depending on B777X success, this upgrade could very well not be enough to significantly increase sales…

Airbus and Safran Launcher JV : a revolution?

On June 16, Airbus and SAFRAN announced the creation of JV to produce new family of launchers (see wide array of articles in the net, for example this one from Aviation Week).

Overall, the  effects of the Airbus and SAFRAN JV  could be dramatic for European space sector

-Arianespace integration in JV structure

-Consolidation of launcher design teams in ESA, CNES and the JV

-Consolidation of production facilities around « JV site »

So what next? First, Airbus and SAFRAN need to integrate their launcher activities. Secondly, Arianespace future needs to be decided. In the same timeframe, there needs to be  a discussion on CNES/ESA and Industry launcher design teams roles and responsibilities. Finally,  wider asset consolidation (production facilities) should not start after ESA European Council decisions in December, i.e in 2015.

Airbus and Safran Ariane 6 configuration

In addition, to June 16th Launcher JV announcement, Airbus and SAFRAN are proposing  an alternative design to current A6 baseline (see  post on May 5th). This new design introduces 2 Ariane 6 versions

Ariane 6.1 with a performance of ~4.5T in GTO and a projected cost of ~70 M€

-First stage : Cryogenic propulsion

-Boosters : 2 composite solid propulsion strap-ons (P145)

-Upper stage : « Aestus » type stage (storable propellant stage propulsion like Ariane 5 first versions)

Ariane 6.2 with a performance of ~8.5 T in GTO and a projected cost of ~85 M€

-First stage and boosters : same as Ariane 6.1

-Upper stage : Cryogenic upper stage based on « Vinci » engine

Hereunder a rendering of these 2 configurations

Ariane 6 Airbus_Safran

This configuration is very different from CNES / ESA agreed Ariane 6 baseline (again, see post of May 5th ). In a nutshell, it is more flexible and maintains large cryogenic propulsion industry but it is around 20% more expensive.

So what next? Well, the defining moment for Ariane 6 configuration choice (and planning by the way) will be next ESA Council Meeting in December. Till then,  lots of discussions between CNES, ESA and Industry…

 

A330neo Launch : Airbus press release

So, it did happen : Airbus launched the A330neo as wildely expected : see Airbus press release

Characteristics are similar to what was discussed in this blog on June 1st.

In summary :

– A330-200neo renamed A330-800 and A330-300neo renamed A330-900 have both been launched

-A330neo has 14% fuel consumption advantage vs CEO

-A330neo has 5% airframe maintenance advantage vs CEO (updated maintenance program and new Bleed System).

-A330neo will feature winglets and larger wingspan (around 3m)

-First delivery is expected in Q4 2017

-Farnborough commitments amount to 121 aircraft (interestingly mainly lessors)

To close, a little rendering…

A330neo picture

A330neo: guessing some features

This article will try to shed some light on specific characteristics of A330neo as development schedule and cost, technical features and economics versus A330ceo.

First of all, concerning its development schedule it is natural to turn to previous and similar incremental developments as A320neo and B737MAX schedules. Development duration for these variants stands at ~5years. It is to be noted that brand new aircraft development duration is not so different being positioned between 5 years and 8 years depending on the type: B777 5.5 years, A330 8 years, A320 5 years, B787 8 years. In any case and taking into account these variability, A330neo development duration should not go below 4 years.

Secondly, concerning its development cost, again, it seems natural to turn to neo and MAX initiatives. For these, figures of 1 B€ -2 B€ seem to be the consensus without taking into account engine development costs bore by engine manufacturer ( B737 MAX development costs being higher as more mods required – see Flight Global article on the subject). Now, how to obtain A330neo development costs? These costs can be split in engineering ie mainly man.hours (incl. subcontracting) and testing hardware (one aircraft demo at max). Concerning Engineering costs, these will be driven by modifications to A330 baseline. It would seem that, as per Airliners.net post, some A350/ A380 cockpit features, additional composite materials in tail structure and sharklets could be  integrated in A330neo in addition to new engine. Overall, these changes are more important than A320neo and seem in line with B737MAX. On testing hardware cost, these will be higher as A330neo aircraft and most parts are bigger. In this context, we would imagine development costs for A330neo standing ~ 1.5 -2 B€ (from 1 B€ on the A320neo).

Finally, let’s get into the economics, latest articles  seem to point out that Rolls Royce should be powering A330neo variant with a variant of B787 engine Trent1000. These variant is expected to bring ~ 15-16% fuel burn advantage vs Trent700 in current A330 aircraft (conservative hypothesis: Trent700 and 800 have same performance – Trent 800 is higher bypass ratio engine and Trent 1000-TEN to be used for neo is 3% more efficient than Trent 1000). Taking the assumption that engine extra weight (~1t), drag and loss of efficiency due to bleed system will be roughly absorbed by sharklets and weight reduction initiatives, it means that A330neo fuel burn advantage vs A330 rests at ~15-16%. Translated in COC, it means ~7-8%

Overall, A330neo should be developed in 4/5 years with a cost of ~1.5/2 B€ and fuel burn advantage of 7-8 % translating in COC advantage

A380neo : game on!

Recently, Fabrice Bregier strongly hinted the need to upgrade the A380 to compete with B777X.

Overall, it would seem that neo philosophy is going to span full Airbus product line very soon with the A320neo set to fly in 2016, the A330neo that could be launched by 2017/8 and the A380neo.

Previously, we have been quite skeptical about the A380neo comparing it to the benefits of developing the A330neo.

However, in a context where wide-body capacity on Airbus side will be lagging with respect to Boeing, resources should be available from A350-1000 and A320neo (partially) and where in the end, A330neo development + A380neo development should amount to lower costs with respect to new development, A380 could be serious option to consider.

In any case, with B777X (and A350-1000 actually), A380 in its current version will be very difficult to sell…

BE Aerospace strategic options

On May 5th, BE Aerospace announced it was exploring strategic alternatives that could involve a sale of the company or one of its units.

Since then, there has been some discussion on who could be targeting BE Aerospace as described in Reuters article

Here, we would like to go over the different potential buyers, their financing capabilities and BE Aerospace strategic fit.

The potential buyers can be separated in 3 categories: ‘big’ Tier 1 suppliers ( United Technologies, Honeywell & SAFRAN), Aircraft OEMs (Airbus & Boeing) and direct BE Aerospace competitors (mainly Zodiac for cabin & WESCO Aircraft for distribution).

Please find at end of article some details of analysis results.

Overall, in case of global sale of BE Aerospace, main candidates are UTC & Honeywell with a preference for Honeywell as it is eyeing acquisitions in Aerospace and UTC made a huge acquisition already last year with Goodrich (~13 B$) -and also purchased RR share in IAE (1.5 B$). In case of separate sale of Cabin & Distribution business, it is difficult to see other candidates except Aircraft OEMs for distribution business. For competitors as Wesco & Zodiac, such an acquisition would completely transform its balance sheet dramatically increasing debt & leverage ratios which seems unlikely at this stage.

 

Financial   capability

Strategic   fit

Comments

Financing

M&A   strategy

Synergies

Market   (increased) access

Tier 1   suppliers

United   Technologies

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UTC has already cabin interior business   and oxygen systems as well.
UTC Aerospace has made huge acquisition last year (Goodrich) and seems   focused on execution and internal growth at present

Honeywell

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HON does not have cabin interior   business.
HON is eyeing >10B$ acquisitions till 2018 in mechanical components &   differentiated technos.

General   Electric

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-

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GE Aviation business focuses on engines,   systems & services which does not seem to fit with cabin interior   business but seems to fit with distribution. However, GE is focusing on   Alstom as mega-acquisition. It would seem difficult for GE to make another   bid for BE Aerospace at this stage. Should Alstom deal not happen, then this assessment   should be renewed.

Safran

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-

-

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SAFRAN acquisition policy is to   accelerate or establish positions in critical areas at justified price.
SAFRAN’s net debt today is at ~ 1 B€ and SAFRAN is focusing on propulsion and   aircraft systems around electrical aircraft: cabin interiors &   distribution do not seem core to their strategy.

Aircraft   producers

Airbus

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-

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Airbus or Boeing would not purchase   cabin interior business company serving equally both manufacturers.
As services are becoming the name of the game, distribution business could be   of interest.

Boeing

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-

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BE   Aerospace competitors

Zodiac  

-

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Zodiac financing capabilities do not   allow for BE Aerospace acquisition (total or cabin business)

Wesco

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WESCO could be interested in   distribution business but it completed HAAS acquisition in 2012. In addition,   BE distribution business is WESCO’s size& acquisition would completely   transform balance sheet

 

 

 

My aerospace news & analysis