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05 December 2014

Reengining Works Great. What About Retrofits?

Richard L. Aboulafia, Vice President, Analysis

Reengining Works Great. What About Retrofits?

With the remarkable commercial success of Airbus's A320neo family, Boeing's 737 MAX series and Embraer's E2 70/110-seat jets, it's clear the market is very happy with reengined jetliners. These new products, and other reengined aircraft, have already racked up more than 6,000 new orders over the past three years.

Customers are obviously focused on new engines, rather than any new airframe technologies. The industry is braced for a permanent environment of relatively high fuel costs, and fuel burn is largely determined by engine efficiency. This raises the question of engine retrofits for existing platforms.

It has been decades since anyone reengined an in-service jetliner. While the industry saw some minor retrofits in the 1970s and 1980s, the one true success was the DC-8 Super 70 program. This saw the replacement of Pratt & Whitney JT3Ds with new CFM56s on 110 Douglas DC-8-61/62/63s, creating the DC-8-71/72/73 Super 70 series. But this program ended almost 30 years ago.

Can jetliner engine retrofits make a comeback? Since the Super 70, most other segments of the aviation market have eagerly embraced putting new engines on existing aircraft. General aviation planes are retrofitted as are business jets. Most recently, both Nextant Aerospace and Beechcraft have offered Williams International FJ44 engine retrofits on existing Beechjet/Hawker 400s.

Retrofits are increasingly common in the military side of the industry, too. The U.S. Air Force reengined more than 400 KC-135 tankers with CFM56s. This month, Lockheed Martin delivered the 20th C-5M, with new General Electric CF6-80C2s. Some 52 C-5s will receive the new turbofans. The service is also looking again at a B-52 bomber reengining. Sweden's SK60 trainers are powered by new FJ44s.

Even fighter aircraft are retrofitted. The Royal Saudi Air Force is putting new GE F110-129s on its 70 F-15Ss. India also has launched a new engine program for its 125 Sepecat Jaguars, using Honeywell's F125.

High-bypass turbofans are the main reason that jetliners have not been reengined. Consider the extensive wing, landing gear and other airframe changes needed to accommodate successive generations of new CFM56s on the Boeing's 737 Classic, NG and MAX, along with numerous other systems changes. Clearly, a 737 retrofit has never been practical.

Reengining older A320s also would be difficult. When an aircraft is worth $10-20 million, investing millions of dollars in airframe work (plus another $10 million or so for the new engines) makes no sense when you can get a brand-new airliner for just $40 million or so.

Airbus's current-production A320s, and perhaps A330s, may present different stories. In the case of the A320, the NEO version is intended to involve minimal changes from today's A320. The NEO series leverages major wing-strengthening modifications that were implemented on later production models of the CEO (current engine option) family.

The bulk of these modifications came on-line in early 2013. Given today's record high production levels, this means that by the time CEO production ends, at least 2,000, and maybe many more, A320ceo series jets should have the necessary wing strength to accommodate the new engines: Pratt & Whitney's PurePower geared turbofan or CFM's Leap-1A (see photo). There may be other batches of pre-2013 A320s that have sufficient wing modifications to accommodate the new engines, or that can be converted at a relatively low cost.

The same possibility may emerge with the A330, since its NEO is designed as another "minimum change" reengining. In fact, it's possible that much of the A330 production run is eligible, and there, too, the market has seen record high production rates over the past few years.

Customers could almost certainly be found for these reengined jets. Delta's ongoing interest in used aircraft shows that even first-tier airlines are looking for value assets. The bigger challenge might be in finding lessors or other financiers to handle deals involving reengined jets, particularly since residual values will be highly uncertain. And much will depend on the market environment. Today's combination of low interest rates and expensive fuel would be most conducive for reengining.

In the event an A320ceo and/or an A330ceo retrofit reengining becomes reality, it would probably enter service after the turn of the decade. At that point, many of these airliners' engines will have served truncated yet respectable lives (perhaps 10-12 years). They may find secondary lives as spares, or they may be parted out.

Also at that time, the initial NEO orders will have been filled. Thus the engine primes would welcome the opportunity to keep production numbers up. And Airbus might find its production rates under pressure. If, that is, Airbus cannot prevent the retrofit concept from going ahead.

About the Author

Richard L. Aboulafia

Richard L. Aboulafia

Richard is Vice President of Analysis at Teal Group. He manages consulting projects in the commercial and military aircraft field and analyzes broader defense and aerospace trends. He has advised numerous aerospace companies, including most prime and many second- and third-tier contractors in the US, Europe and Asia. He also advises numerous financial institutions on aerospace market conditions.

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