There is a shift underway in the the commercial aircraft market, however, it is one that has been trending for some time. Over the past 40 years, narrowbody aircraft deliveries have grown 2.6X versus widebody unit delivery growth of 2.0X. The compounded result is that while between 30 and 40 years ago NB deliveries were twice that of WB aircraft, NB aircraft are now delivered at triple the number of widebody aircraft.
Figure 1 below illustrates this shift:
Reasons for this include changes in the gage, or seat capacity of each model, the improved range plus the narrowbodies relative ease of integration and maintenance within an airline’s network. From 1985 to present, the average narrowbody has gained 0.85 more seats per year, resulting in an increase of plus ~26 seats today. The mix of widebody aircraft also became smaller aircraft as four-engine aircraft (A340, A380 & 747) were phased out in favor of smaller, more efficient and lower cost twins (A330, A350, 777 & 787), driven by customer preference to fly point-to-point, rather than connecting through hubs.
Reviewing current orderbooks from a more shorter-term, forward-looking perspective, we see the continued strong growth in narrowbody aircraft. We also see an additional shift taking place in the make-up of engine orders for aircraft where an engine option is available. There are a few reasons for this including reliability and durability issues that have impacted some programs.
We can peel-back the onion one additional layer and focus on the two aircraft where there is an engine choice during the airline’s selection process. It is typically assumed that market forces within a dual competitor oligopoly will result in a close to even distribution of share over time. While market share will fluctuate as large orders are made for one or the other engine by large operators, we may be seeing some fundamental shifts taking place on two major programs.
A320neo
While the 737Max is a sole-source aircraft for the CFM LEAP engine, airlines have the option of either the P&W PW1100G or the CFM LEAP-1A for the A320neo. However, the share of the PW1100G on the A320neo has continued to fall over the last eight years as P&W’s share fell from 45% to 40% in 2016. A review of the backlog as of September 30, 2023, shows that the share of the engine sales unit backlog for the PW1100G has now fallen to 34%, with a 2023 only (through October) drop of 86 aircraft in the backlog for the PW1100G versus an increase of 1,444 for the LEAP-1A.
For reference, at the end of the delivery of the A320ceo family, the market share of the V2500 was ~45%, as compared to 55% for the CFM56, and until the final few years of the program it was 48%/52%, very close to 50/50.
It is particularly important to note that this shift is not reflective of the recent GTF powdered-metal issues which became public in mid-2023 timeframe and which are resulting in unscheduled inspections and grounded aircraft. However, there have been a spate of technical challenges since its entry into service, such as knife-edge seal durability, combustor durability, and durability in environments with high airborne particulates. The question is, will the market share return closer to historic levels on the A320ceo, and at what cost?
A320neo 12,500 aircraft backlog … = 4,278/ (4,278 + 8,150) = 34%*
*As of September 30, 2023
787
Even more significant than the previous example is the shift we are seeing on the 787. The 787 may be powered by either the Rolls-Royce Trent-1000 or the GE Aerospace GEnx. In the case of the 787, early in the aircraft program, Rolls-Royce was first to market and led in market share. As we look at the current aircraft unit sales backlog, the GEnx has achieved a significant advantage in the orderbook with the GEnx share at 83% share versus 17% for the Trent 1000. Much of this is likely due to the durability and technical challenges the Trent-1000 faced and resulting configuration instability.
RR market share in the current ~700 aircraft backlog … = 238/ (238 + 1,134) = 17%*
The impact for RR financially is compounded by the fact that the widebody market saw a significantly reduced utilization during the pandemic and then slowly recovered to pre-COVID levels… as of September 2023, the widebody market had recovered to 93% of 2019 levels. With RR’s dependence on the widebody market the impact on the company has been significant and has certainly played a large part in decisions to divest businesses (electric power) and a focus on the Ultrafan engine to regain a foothold in the narrowbody market.
