CFM International is a 50:50 joint venture between French engine maker, Snecma (part of the SAFRAN Group) and US aerospace giant, General Electric. The company was established in 1974, under an agreement between Snecma and GE to jointly develop and support the CFM56 engine, the sole product of the company. Snecma had previously entered a production agreement with GE for its CF6 engine, linking the two companies in financial and manufacturing areas in the late 1960s. Snecma produces the low-pressure turbine and fan for the engine, while GE Aviation produces the engine core. After political and economic difficulties surrounding the programme, it was saved from cancellation by orders from Delta Air Lines and Flying Tiger Airlines and then the US Air Force.
The CFM56 has since gone on to become one of most successful commercial aircraft engines of all time, with the 20,000th engine delivered in Feb-2010. 520 customers have purchased the engine so far, with CFM56 engines powering more than 8,000 commercial aircraft. The engine has been developed into six models, with a new generation engine, the LEAP-X, currently under development. The LEAP-X has been selected to power the new COMAC C919 150-passenger aircraft scheduled to enter commercial service in 2016.
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Following an 18 month appraisal process, easyJet announced on 18-Jun-2013 the order of a further 35 current generation A320 aircraft under its existing Airbus deal and a new order for 100 A320neo aircraft, plus a further 100 A320neo purchase rights. CEO Carolyn McCall argued that the deal will enable continued capacity growth of 3%-5% per annum, with costs per seat 11%-12% below its current A319 operations, and support easyJet’s return on capital targets: “Both from a growth perspective, modest cautious growth, but also from a cost perspective, this deal is absolutely critical for the long-term success of easyJet.”
The agreement with Airbus must be approved by shareholders at an EGM on 11-Jul-2013, setting up another potential battle with founder and largest shareholder Sir Stelios Haji-Ioannou, who labelled it: “Yet another huge capital expenditure deal with the same supplier at 'secret' prices... Naturally it raises more questions than answers.”
easyJet's strong share price performance – it has trebled over the past 18 months while the aircraft order was being considered – suggests that the other shareholders agree with Ms McCall.
Tibet Airlines, Tibet’s first airline, on 20-Jun-2011 received its public air carrier's licence from CAAC, after receiving approval from the aviation authority in Mar-2010. Tibet Airlines will be the first and only airline based in Lhasa when it launches operations next month and will benefit from the booming Tibet market.
Hyderabad Rajiv Gandhi International Airport, which celebrated its third anniversary of operations on 23-Mar-2011, stated it has developed a three-pronged strategy to improve its revenues in the wake of a decline in the real estate market.
Southwest Airlines on 15-Dec-2010 stated it would substitute 20 of its B737-700 orders for the larger B737-800 equipment with the first delivery scheduled for Mar-2012. The acquisition of the new aircraft could pave the way for the domestic carrier to expand into the international market with its own aircraft.
China Air Show: China welcomes C919 to the world; manufacturers reaffirm committment to China market
China International Aviation & Aerospace Exhibition (Airshow China) was held on 16/21-Nov-2010 in Zhuhai and showcased the rise of China’s civil aircraft manufacturer and also the growing importance of the Chinese civil aviation industry to international manufacturers and suppliers. A breakthrough for the event was rising domestic participation with Commercial Aircraft Corporation of China (COMAC) having a stand at Airshow for the first time. COMAC's C919 was the big news of the Airshow, racking up orders for 100 aircraft.
China’s fragmented airline industry is undergoing a shakeup. Merger and acquisition activity is intense – probably more so than any other aviation market in the world. In the space of a few short years, the majority of China’s second tier airlines have, at least partially, become owned or controlled by one of the "Big Three" carriers and/or HNA Group, as consolidation accelerates in China. In this report, CAPA reviews what’s fuelling the feeding frenzy and who the targets are.
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