Talk of further consolidation within Europe’s dynamic aerospace sector has been on the lips of industry watchers for several years, but although the major European-based global players have not progressed toward further mergers, the continent’s biggest aerospace company, the former EADS, has achieved a very significant business restructuring, sweeping all its diverse companies into one giant, three-division entity, and adopting the new corporate identity of the Airbus Group.
At one stage it looked as if a proposed merger between EADS and BAE Systems might create the world’s largest combined aerospace and defense company, but a German political veto put an end to this plan, largely because of sensitivity over the defense aspects of such a deal.
BAE Systems has a key role in the U.K.’s nuclear weapons program, and while Germans are enthusiastic on commercial aviation, the subject of nuclear defense is one that its politicians and public are happy to leave to the British, French, and U.S. The general reluctance of many NATO nations to maintain their defense budgets has caused a serious knock-on effect rippling through much of the European defense sector.
Legacy air defense programs, such as the Dassault Rafale, SAAB Gripen, and Eurofighter Typhoon, are today still providing plenty of production work, and upgraded versions are on the way, but beyond 2020 these programs are dependent on winning more export orders to avoid serious implications for existing assembly plants.
There are today relatively few new European military air programs, but one of the largest, the Airbus A400M transport, should generate new export sales and will extend production out well into the next decade, but other market sectors, such as jet trainers and surveillance aircraft, are proving very slow to mature into large-scale production.
The need to take a long-term strategic view on aerospace is recognized at the political and technical European Union level. Investment in highly innovative technologies and manufacturing methods is underway in an effort to retain a broad-based leadership role and to stay competitive with upcoming developments and production capacity in the BRIC countries (Brazil, Russia, India, and China). Heavy investment by European companies in overseas assembly plants has seen Airbus setting up factories in the U.S. (civil aircraft and helicopters) and Brazil (helicopters); Rolls-Royce expanding R&D facilities as well as production in the U.S. and Singapore; BAE Systems becoming well established in the U.S. and Australia; and Italy’s Finmeccanica Group expanding in the U.S.
A New Airbus Is Born
The restructuring of EADS into the new Airbus Group is far more than just a commercial re-branding operation. After decades of transatlantic criticism that Airbus is too political, and regarded by European leaders as a high-profile status symbol that must be subsidized—a claim always denied in Europe—the changes within the new Airbus finally create the accountable and transparent company structure that brings it into line with other global corporations.
Of course, financial assistance will still be willingly given by European governments to help invest in new programs and longer-term research and development, as is the case in the U.S. and elsewhere, but in business terms Airbus is now seen as a highly profitable independent enterprise that has broken free of its state controls.
In re-paying government loans through the generation of profits from its civil airliners, it has produced an extremely good deal for European taxpayers. For example, the best-selling A320 family was originally forecast to break even if 200 were sold. Today, the sales total for these single-aisle jetliners is a staggering 10,200, with a backlog of 4200 aircraft yet to be delivered. European governments that have supported Airbus financially collect a royalty on every one sold, so while it will be some time before they see a return from sales of the giant but slow-selling A380, the A320 has become a commercial success on a grand scale.
Because the delivery timescales have now become so extended, Airbus has recently announced that it is raising the A320 production rate to 46 a month in 2016. Final assembly plants in Germany, France, and China will be joined by a new Airbus factory in Mobile, AL, next year. Just six years ago production was cut because of the financial crisis and falling demand, but since 2010 the demand has returned and monthly flow has gradually increased from 36 to the current rate of 42. By 2018 it could reach a monthly total output of 50 aircraft.
Since the decision to go ahead with the A320neo, with a potential 15% reduction in operating costs, sales have surged, and this has created a real challenge, as well as welcome news, for everyone across the global supply chain. Airbus Group CEO Tom Enders has played a key role in steering the new Airbus through a complex, multinational transition, and he has insisted on developing a close partnership with his supply chain in what he describes as an “extended enterprise.” He firmly believes that taking the suppliers into a closer, rather than confrontational, relationship is an important strategy if production costs are to be kept down.
The latest civil Airbus, the A350 family, is making rapid progress toward certification and first deliveries by the end of this year. Four aircraft are now in the test flight phase, with over 1100 hours achieved by the first two. One of the development aircraft is being fully fitted out with passenger seats and cabin systems and will soon embark on long endurance test and evaluation flying.
The A350 is being developed into a family of wide-body transports, seating from 276 in the A350-800 to 369 in the A350-1000, and with a non-stop range of up to 8250 mi. Nearly all A350 customers have selected the -900 and -1000 versions, and the -800 may be dropped. All variants are powered by two Rolls-Royce Trent XWB engines. The combination of advanced aerodynamics, a wide cross-section fuselage with over 50% made from composite materials, and lean burn engines will offer a 25% reduction in seat mile costs compared to equivalent size current jets.
Further cost reductions are expected from reduced training requirements due to a common flight deck design and flying qualities shared with all the other Airbus designs, the A320, A330, and A380. The latter remains the largest commercial airliner in production, with a passenger capacity from around 450 up to 700 in a high-density configuration. The A330 is still in great demand and is being offered with improved payload, and a version is optimized for high-density regional routes, aimed at China and the Asian market.
A military tanker/transport version of the A330 is proving to be a popular choice for many air forces seeking to update their air refueling and military transport fleets. This aircraft is large enough to be able to carry up to 265 troops and their equipment in the cabin, while at the same time it carries enough fuel to replenish receiver aircraft from two underwing refueling pods. A USAF-style refueling boom can also be carried on the rear fuselage centerline, or a third hose and drogue unit.
This sector has been well served by European designs over the years but is now one of the most hotly contested sectors in the whole commercial aerospace market, with major competitors including Gulfstream and Cessna in the U.S., Bombardier in Canada, and Embraer in Brazil.
Europe’s leading supplier in this market is Dassault Aviation, with its family of twin and tri-jet Falcon aircraft. All feature very high-end specifications, in terms of performance, advanced flight systems, and passenger appeal, and this reflects the company’s commitment to heavy investment in R&D and a strong technological heritage inherited from advanced combat jets.
The latest Falcon jet, the 5X, is all new, and will emerge to join the Dassault bizjet family in 2015. It will feature a similar fly-by-wire flight control system to the tri-jet Falcon 7X but will have a larger cabin and “the most advanced flight deck in civil aviation,” with numerous head-up and head-down displays, additional integrated enhanced vision sensors, and features to permit safe operation at night and in poor visibility when using runways in restricted locations, such as in mountain valleys.
Dassault has continued to upgrade all its family of jets to keep them highly competitive and has worked closely with other aerospace companies in the past on designs for a supersonic business jet, but the lack of a fuel-efficient and quiet engine that can cruise at a supersonic speed over extended ranges has so far defeated all attempts at bringing a viable bizjet-size SST product to market.
The reorganization of EADS saw the strong Eurocopter brand morphed into Airbus Helicopters. Apart from the name change, this rotary wing business has continued as before, with a world-leading market share in military and civilian markets. It has not developed any heavy-lift military products to challenge the Boeing CH-47 Chinook, but in all other size categories of helicopter the company has models that offer the latest standards in avionics and flight safety.
The NH-90 is the latest military helicopter and is in large-scale production for European and export customers. It is the most important of the new programs. Slightly larger than the Sikorsky S-60/70 Blackhawk and Seahawk, it has a fuselage that can accommodate a sophisticated anti-submarine/anti-surface naval equipment fit, and there is also a utility army version with a large rear cabin ramp.
Other medium helicopters in the Super Puma family are popular worldwide for search and rescue, combat SAR, special missions, and oil and exploration support operations. Smaller helicopters in the family provide paramedic support and police support capabilities, as well as generalpurpose civil and military utility roles.
The main European rotary wing competitor to Airbus Helicopter is Agusta-Westland, which has a very wide ranging portfolio from the AW101 Merlin and Lynx Wildcat military helicopters to a whole family of new-generation small and medium helicopters, including the AW139, AW169, and AW189. This latest family has high levels of commonality between the different types and also uses common tools and ground support equipment. A reduction of up to 40% in training time results. This family is aimed initially at oil-rig support, light transport, SAR, and coastal surveillance, but more protected, armed, military transport variants are emerging, offering high speed as well as a low profile for added survivability over the battlefield.
Europe’s aero engine manufacturers include Snecma in France, MTU in Germany, and Rolls-Royce in the U.K. All are truly international with programs stretching to partners across the globe. MTU is closely involved in partnerships with both Pratt & Whitney and Rolls Royce on civil and military engines.
Rolls-Royce has around 50% share of the world’s big fan market with its Trent series, which covers thrust ranges from over 50,000 lb up to 110,000 lb. Trents power all the largest current widebody jets apart from the Boeing 777-300ER, and the latest Trent XWB is due to enter service later this year on the A350.
Development work is underway on enhanced Trent derivatives that might have application on a revised A330 and possibly the A380. Snecma, through its CFM partnership with GE, has well over half the engine market on the A320 family and is sole powerplant on the Boeing 737 classic. The CFM Leap engine is destined for the 737 MAX and A320neo.
Although it has lost out powering the latest 737s and A320s, Rolls-Royce is determined to re-join this market at some time in the future, possibly via a new Boeing airliner sized between the 737 MAX and the 787.
In the meantime, CFM is moving forward with development of a prototype new-generation open rotor engine. If successful, a suitable powerplant can be matured in advance of the follow-on 150 seat civil programs that will eventually replace the 737 MAX and A320neo in the late 2020s.