Category: Maintenance Repair Overhaul

More And Smarter Sensors Are Coming

MR-SENSOR_ATR
Could the aviation industry be getting close to finding the holy grail of sensors, monitoring aircraft structures?

The age of predictive maintenance and big data is just beginning, and the future will see aircraft generating ever more data, with more plentiful and smarter sensors and monitoring systems. This will be true for engines— where data collection began—and across a wide variety of aircraft components and possibly airframe structures that so far have been the most difficult components to monitor. New sensor connections, wireless or transmissible directly to communication buses, are also possible.

Esterline makes sensors for several aircraft components including engines, which are the most hostile sensing environment, according to James Ewing, vice president of engineering for advanced sensors. One major goal is to handle the increasing temperatures and pressures to which engine sensors are subject.

Engine OEMs are increasing pressures and temperatures to boost fuel efficiency, and Esterline must make sure its sensors can take the added punishment in engine hot sections, often by using exotic new materials and expensive alloys.

Engines on new-model aircraft will require sensors that support efficiency, safety and possibly new architectures for Full Authority Digital Engine Control, or FADEC systems. New engine sensors will have “less drift, longer life and better accuracy,” Ewing predicts. Engine-makers will want and even require sensors that are “fit and forget.”

MR-SENSORS_Meggitt

Sensors can monitor a range of engine parameters, as shown

Reducing drift means reducing some sensors’ tendency for performance degradation over time; for example, expressing an increased metric even when true engine performance is unchanged. Reliable accuracy from sensors will allow engines to be operated under the most efficient conditions, without fear that deterioration goes undetected.

Some sensors in hot sections are now replaced every five or six years. Airlines would like to lengthen or eliminate these replacement cycles entirely.

Future Sensors

Wireless sensors are used chiefly for testing engines under development, when a lot of data points are needed. In the future, to reduce weight and space used for wiring, sensors may transmit data wirelessly on operating engines. Wireless sensors need to harvest energy or tap local power sources. Engines generate powerful vibrations, but the challenge is to convert vibrations into usable power for sensors.

Another change might be distributing FADEC so sensors will need shorter connections. Rolls-Royce is considering dividing up FADEC into separate parts, which would reduce the amount of wiring needed to connect sensors.

Ewing expects sensors also will serve new uses. For example, for engine efficiency, sensors could measure turbine-blade clearances. The gap between tip and case determines air leakage and thus engine efficiency.

For safety purposes, sensors might measure the timing of turbine-blade tips. Changes in spinning speed or vibration could flag a bird strike or other foreign object damage that creates a risk to aircraft safety.

Ewing believes increased aircraft reliance on electric power will require sensors for battery health monitoring.

In the future, both more and different types of aircraft sensors likely will be required, says Lucas Sendra, Meggitt business development manager. Meggitt products include brakes, fire controls, bleed air valves, heat exchangers, fuel systems, engine components and sensing systems.

New technologies like optical and surface acoustic-wave sensing will enable new parameters to be monitored, he predicts. And more-electric aircraft will require new sensors to monitor electric motor performance. “Future monitoring systems will combine legacy sensors, smart and wireless sensors and new sensing technologies,” he says.

For example, Meggitt is working with Airbus and Textron on wireless tire-pressure monitoring systems that can transmit data up to 50 m (164 ft.), so mechanics won’t have to crawl around landing gear checking tire pressure.

Curtiss-Wright makes sensors for engine-fuel control, flight controls and critical-condition monitoring. The company is seeing more sensors being deployed for safety, efficiency, situational and health monitoring. “One of the strongest drivers . . . including retrofits, is . . . safety monitoring such as slat-skew, stall, engine-cowling position or thrust-reverser deployment,” says Graham Macdonald, senior vice president of sensors and controls. Curtiss-Wright recently delivered a suite of slat-skew detection sensors, placed on individual slats to increase accuracy.

Sensors typically interface with local control systems or data concentrators, which then interface with the communications bus. In many cases, sensors could eventually interface directly with the bus. Macdonald expects wireless sensors to become more attractive, especially in flight-test instruments and noncritical applications.

Airframe Sensors

The holy grail of health monitoring has been monitoring aircraft structures. This goal may be getting a little closer with Structural Monitoring Systems’ Comparative Vacuum Monitoring (CVM). CVM can test structural health on the ground, replacing time-consuming visual inspections.

CVM uses Teflon tape that has elastomeric sensors with fine channels etched in the adhesive face. The tape is applied to an aircraft, explains Richard Poutier, vice president for business development at Structural Monitoring Systems.

During an inspection, equipment draws a vacuum over several channels of the tape. If there are any surface cracks, channels will leak air, and the equipment will detect the leak and pinpoint the crack location.

CVM has been proven to work on aluminum structures and is being tested on composites. It can be retrofitted on any structure on which mechanics can lay the tape and has been approved to check the health of wingboxes on the Boeing 737. One U.S. airline has installed the tape on seven 737s and used it for 120 inspections. Several others are evaluating it.

“CVM has been accepted by Boeing and included as an alternative method of compliance,” Poutier explains. “It avoids ripping up floorboards and taking out seats to inspect the wingbox.” He estimates CVM has saved $150,000 in lost revenue per aircraft during a heavy check by speeding up inspections.

Structural now offers CVM for inspections required by airworthiness directives and service bulletins. Longer term, it wants to deploy the technology for routine inspections. Eventually, it might be used to monitor inflight structural health.

CVM can detect surface cracks and measure their length. Only eddy current inspections can at present detect subsurface cracks. Poutier says OEMs may learn to judge structural integrity by surface cracks and run a CVM test every 500 cycles to remain confident about the safety of components.

The natural next step is to install CVM as a line fit in new aircraft. According to Poutier, several OEMs are now considering this.

Aviation Technician Shortage is a Gathering Storm, Although There are Solutions on the Horizon

A new report finds that while 30 percent of the aviation mechanics workforce is at or near retirement age, new entrants into the field only make up 2 percent of the workforce population each year.

The report from the Aviation Technician Education Council (ATEC) found that while there are more than 286,000 Federal Aviation Administration (FAA) certified Airframe and Powerplant (A&P) mechanics, 27 percent of the workforce is aged 64 and above.

The large gap between the demand for trained workers and the number of new employees entering the aviation mechanics industry is problematic.

Boeing projects in its 2016 Pilot and Technician Outlook that 679,000 new maintenance technicians will be needed to maintain the world’s airlines over the next 20 years. Airlines in North America specifically will require 127,000 maintenance personnel, the report said.

According to the ATEC report, enrollment in all Aviation Maintenance Technician (AMT) schools totals nearly 17,800, but the program’s capacity is more than 34,000. And while A&P program capacity has increased by 2 percent in the last 18 months, enrollment has decreased by 2 percent.

Steve Sabold, director of admissions at the Pittsburgh Institute of Aeronautics (PIA), said certified mechanics are an industry necessity.

“Every aircraft that goes up in the air needs to be signed off on by an A&P certified mechanic,” Sabold said in an interview with Transportation Today. “That alone makes them, once they get their certification, a very hot commodity.”

But getting young people into the program may be difficult because of a larger issue that affects all skilled trade positions.

“There’s not a lot of people going into skilled trades period,” Sabold said. “When you have less people going into skilled trades across the board, it certainly doesn’t help us fill up our pipeline any quicker.”

Meeting that demand, Boeing said, will require educational outreach, career pipeline programs, and other innovative solutions. ATEC suggests a focus on strategies to increase the number of female candidates, where currently they make up just 2.3 percent of the certified mechanic workforce.

Improving the retention of graduates of AMT schools is another critical factor. AMT school respondents who were surveyed by ATEC estimate that 20 percent of graduates pursue careers outside of aviation, and just 60 percent take the FAA test for mechanic certification.

Dan Cooper, vice president of economic development and governmental affairs with Tri County Technical College in South Carolina, said the attitudes of parents can also add to the problem of engaging students in the skilled trades.

“A lot of the parents want their kids to be more successful than they were,” Cooper said. “They have no idea that these jobs have the potential to make six-figure salaries. People consider skilled trades jobs to be dirty or only for those who aren’t as smart. But that’s just not the case.”

The decreased enrollment in aviation mechanics may also be due to the experience of the students themselves.

“I think there is less exposure for young adults in utilizing skilled trades today,” Sabold said. “As technology has advanced, I don’t think young adults see the people doing the hands-on work that is necessary, and because of that may not think of aviation mechanics as a career option.”

According to the U.S. Bureau of Labor Statistics, aviation mechanics make a median salary of $60,270 per year, as of 2016.

Aviation companies, Sabold said, are working to get more young adults into AMT programs.

“Aviation companies are being proactive about getting into the schools, even as early as middle school and changing the mentality of students,” he said. “They are starting to step up and help others see the benefit of a certified aviation mechanic career.”

For example, this month both Piedmont Airlines and Constant Aviation will participate in open house events at PIA to reach out to potential students about careers in aviation mechanics. Piedmont Airlines is owned by American Airlines and operates hubs in Philadelphia and Charlotte Douglas International Airports. Constant Aviation, with locations at airports in Cleveland, Orlando, Phoenix and Las Vegas, specializes in airframe and engine maintenance, major repairs and avionics.

“Open Houses give PIA the opportunity to deliver critical information about career demand,” said Suzanne Markle, president and CEO of the Pittsburgh Institute of Aeronautics, in a written statement. “That we are hosting events with such a large number of companies in comparison to the number of upcoming graduates attending is a strong indicator of career demand.”

PIA offers programs in aviation maintenance and aviation electronics. PIA’s campuses in Pittsburgh, Youngstown, Hagerstown and Myrtle Beach have been selected as four of approximately 40 aircraft maintenance schools to partner with Delta Air Lines.

“We look forward to the opportunity to serve new students and prepare them with the entry-level mechanic skills we know our employers are looking for,” Markle added.

Airbus Sees Strong Market for HEMS Twins

The stampede to single-engine helicopter air ambulances is likely coming to an end in the U.S., according to Chris Emerson, president of Airbus Helicopters Inc., Airbus Helicopters’ North American arm. “I think you are going to see a pickup on the twins,” Emerson said, citing his company’s own recent sales experience into the air medical market. “Over the last four years in air medical we have sold more twins than singles,” including several large twin orders in the last few years as more operators transition to IFR programs. “They’re all buying twins,” he said.

Emerson said changes in the air medical industry and the growing physical size of patients was leading to a pickup in demand for larger, twin-engine ships. “The needs of the population are changing. The demographics are such that helicopters need to do more. The famous air medical golden hour has given way with the need to get the emergent care on board immediately. It’s getting the equipment and the medical know-how on the helicopter to provide the service immediately, not in the golden hour. An H145 is now a flying hospital.”

Emerson also noted the change in basing models. “There’s a lot more interest in hospital-based models. When you are linked up with a hospital-based system that air transportation cost is a fraction of the entire health care bill that patient is getting. It’s not separated. You’re seeing that where it makes sense in urban environments. Four years ago I had a HEMS customer tell me that the twin-engine market was dead. Today that same customer is buying twins. Why? Because with a twin you can fly neo-natal isolettes and supplement on-scene rescues with more comprehensive service in the helicopter.”

He also said that patients are physically simply getting larger and “we need to adapt to that.”

That is not to say that single-engine helicopter air ambulances are going away, Emerson said, but you will be more likely to find them in rural settings. “You will always have on-scene, rural, community-based programs that service populations that are not near trauma centers. Otherwise, you’re in an ambulance forever or at a basic hospital that can’t deal with you.”

But a key reason for selecting a twin to service an urban program, aside from cabin size, is the one engine inoperative (OEI) capability, Emerson said. “If you are in an urban environment, what does your one engine inoperative environment look like? When you get into an urban environment you want OEI performance so that the pilot doesn’t feel it.”

The need for speed and OEI margins is driving interest in the new Airbus H160 medium twin from select air ambulance operators, Emerson said. He thinks the H160 will do well in the high-end air medical market, particularly hospital-based programs with strong transplant programs where the 155-knot speed and range of the H160 will make it an effective hospital-to-hospital solution compared to employing fixed-wing assets. “We’re in talks with several leading programs on the H160,” he said.

Emerson thinks the air medical market is on the upswing. “Today there is a general optimism around growth again,” he said, noting that Airbus has “enjoyed the most multi-ship sales over the last four years into air medical.” But the growth is likely to be measured, characterized more by incremental fleet replacement and strategic base growth as opposed to the large net fleet growth of decades past.

However, Emerson thinks the overall U.S. helicopter market is poised for healthy growth thanks to thinning used inventories and more generous bonus depreciation under the new tax law. “This is the strongest we’ve entered a fourth quarter since I’ve been here—four years. We’re going to hit our annual targets this year before the end of October, which is unreal. It’s a good sign. We’ll continue to see a strong push to the end of the year.

“The impact of the accelerated depreciation and expansion to used aircraft has benefited the market to the extent that you cannot find a good quality used H125 or H145 with less than 8,000 or 9,000 hours because they have all been bought up this year because of that accelerated depreciation being applicable to used aircraft. That’s great for our new business. I think we’ll see a big push at the end of this year and we need to be ready for it. Last year we had 72 percent of the new order market share. Today we are sitting at 70 percent and we should be 70 or plus this year.”

 

Take a look inside the MH-139, the helicopter chosen by the US Air Force to replace the UH-1N Huey

MH-139

In what many have defined an upset victory, the United States Air Force announced the selection of the MH-139, to replace its fleet of UH-1N “Huey” helicopters. A 375M USD firm-fixed-price contract for the non-developmental item integration of four aircraft was awarded on Sept. 14.

If all options are exercised the programme is valued at $2.4 billion for up to 84 helicopters, training devices and associated support equipment until 2031.

The new choppers, based on the Leonardo AW139 and offered by Boeing as prime contractor, are expected to reach the IOC (initial operational capability) in 2021 (this is what Leonardo claims in its press release even though it appears a bit optimistic considered that the Lockheed Martin and Sierra Nevada, both offering UH-60 Black Hawk variants, may contest the award)when they will replace the old Huey taking over the role of protecting the America’s ICBM missile silos as well as VIP transportation and utility tasks.

The MH-139 leverages the market-leading Leonardo AW139 baseline, a modern, non-developmental, multi-mission helicopter that is in service with 270 governments, militaries and companies across the world. According to Leonardo, over 900 AW139s are already in service with 260 assembled and delivered from Philadelphia, where the U.S. Air Force’s MH-139 will be assembled. ​Check it out below.

The U.S. Air Force MH-139 will be equipped with sensor turret under the nose with electro-optical and infrared cameras, provisions for machine gun mounts and possibly hoists.

The U.S. Air Force MH-139 will be equipped with sensor turret under the nose with electro-optical and infrared cameras, provisions for machine gun mounts and possibly hoists.
MH-139 demonstrator.
 Boeing/Leonardo

The helicopter features provisions two wing-mounted pods for 70 mm unguided rockets as those presented by AgustaWestland at Farnborough International Airshow in 2012.

The Italian Air Force helicopter can do also something else. Since they can carry a bambi bucket they can perform aerial firefighting activity. Beginning in 2018, the Italian HH-139A belonging to the 82° Centro CSAR (Combat SAR Center) from Trapani have carried out firefighting tasks in Sicily.

The Italian Air Force helicopter can do also something else. Since they can carry a bambi bucket they can perform aerial firefighting activity. Beginning in 2018, the Italian HH-139A belonging to the 82° Centro CSAR (Combat SAR Center) from Trapani have carried out firefighting tasks in Sicily.
The HH-139A during the firefighting training activity carried out at Decimomannu airbase in 2015.
 Alessandro Caglieri

NASA’S SUPERSONIC TECHNOLOGY WILL CUT TRANSCONTINENTAL FLIGHTS IN HALF

Resultado de imagen para nasa supersonic jet

The air corridor from the East to West coasts is one of the busiest in the United States. On a typical day, more than 100 flights make the six-hour journey between the Big Apple and Tinseltown. That’s thousands of hours per day that passengers are stuck in airless, soulless tubes with lousy Wi-Fi. And the experience is much worse when you realize that the technology exists to cut that time in half—but airlines are forbidden to use it.

The main reason is noise. As soon a plane exceeds the speed of sound—about 767 miles per hour, depending on temperature and other conditions—it creates a thunderclap heard in all directions. In 1973, the Federal Aviation Administration (FAA) banned supersonic planes operating over the continental U.S. But NASA thinks it can finally solve the problem that’s dogged aerospace engineers for decades: lowering the sonic boom.

In April, NASA signed a $247.5 million contract with Lockheed Martin to help develop a quiet supersonic plane, the X-59 QueSST. A “low-boom flight demonstrator,” the X-59 won’t carry passengers across the U.S.; it’s designed to prove to federal and international regulators that supersonic jets can create a sound no more disruptive than conventional passenger planes. If the project is successful, it could lead to a change in regulations and a new class of speedier jets.

NASA already has a basic design for the plane, a slender shape that reduces its “acoustic signature.” In early November, it will test the concept over the skies of Galveston, Texas, sending a modified combat jet, the F/A-18 Hornet, into a series of dives that produce sonic booms similar to the X-59’s. NASA has recruited 500 people on the ground to answer surveys about the noise.

“We’re solely focused on addressing the challenges of quiet supersonic flights over land, reducing that sonic boom to a sonic thump,” said Sasha Ellis, a NASA spokesperson for the X-59 mission.

After gathering the data, NASA will share the information with Lockheed Martin, which is scheduled to start building the X-59 in January 2019. The goal is to have an X-59 ready for trials in 2021. Only after NASA shares sound data with the FAA can manufacturers begin crafting their own supersonic planes. Peter Coen, NASA’s project manager for commercial supersonic technology, said sonic boom lessons from the X-59 can be scaled up to plane capacity as large as 100 passengers.

NASA has taken some criticism for developing a technology that would likely add to carbon emissions, a contributor to global warming. Once NASA and Lockheed prove to regulators that supersonic jets can produce publicly tolerable noise levels, they plan to focus on environmental issues. Emissions and fuel efficiency are beyond the scope of the X-59 mission, said Peter Iosifidis, Lockheed Martin’s X-59 program manager.

The likely beneficiaries of supersonic travel over land, at least at first, will be high-end corporate customers. “Such flights won’t be available for vacations to Disney World. It’s designed for road warriors who need to get to and return from places quickly,” said Vik Kachoria, president and CEO of Spike Aerospace, which is building a supersonic corporate jet for ocean routes.

“As with most new products, the affluent are more likely to be the first adopters,” said Iosifidis. But once technology is taken up, prices often fall.

Boeing opens first factory in Europe, chooses UK

Boeing opens first factory in Europe, chooses UK

Boeing inaugurated its first production plant in Europe on October 25, 2018. And to take its first footstep, the U.S. manufacturer chose Sheffield in the United Kingdom.

The plane maker invested £40 million ($51.24 million) into the factory of 6,200 square meters that produces aluminum and steel parts for the 737 and the 767. Raw materials should come from thirteen suppliers, mainly from the United Kingdom. The parts are currently being produced using ten completely automated machines, that are capable of performing all processes required for each part.

Once manufactured, the components should then be transported to be assembled in Portland, Oregon, before reaching the final assembly line in Seattle, Washington. The final output of the factory should be of 7,000 to 8,000 parts per month, with 25 automated machines.

It is not the first installation of Boeing in Sheffield, however. In 2001, the manufacturer already co-founded the Advanced Manufacturing Research Center (AMRC) with Sheffield University, Rotherham. The manufacturer solutions of the AMRC should be applied at the Boeing Sheffield plant.

The creation of this new plant follows Boeing’s recent years strategy to diversify parts production and gain in independence. In October 2018, Boeing acquired aviation parts provider KLX Aerospace Solutions which supplies chemicals and composites for the sector. The same month, the European Commission has approved, under the EU Merger Regulation, the creation of a joint venture between Boeing and French aerospace manufacturer Safran to manufacture auxiliary power units (APUs).

The Ideal Pilot Candidate: What Regional Airline Recruiters Want Most

Even though regional air carriers are on a hiring binge, they still remain selective.

Envoy Air

Regional air carriers are on a well-documented pilot hiring binge, creating “one of the most exciting times ever” for aspiring airline pilots, says Captain LaMar Haugaard, director of pilot development, and chief pilot at Horizon Air. But recruiters remain selective, weighing candidates’ training backgrounds, flight experience, and even non-pilot qualifications, Haugaard says. Trainees should keep these hiring preferences in mind as they build hours toward the qualifications they need to fly for the airlines.

Flight Experience: Regional airlines typically require pilot applicants to have their commercial, instrument and multi-engine ratings, and be at least within striking distance of obtaining their airline transport pilot certificate from a flight training program. The ATP certificate, mandated by the FAA in 2013 to fly for Part 121 air carriers, represents the biggest change in what regionals want most — or require — in candidates for pilot positions, says Haugaard. An ATP certificate requires 1,500 hours of flight time (or somewhat less for a restricted ATP license). Holders must also be at least 23 years of age. Regionals often hire high-quality, young applicants, and pay for the type rating training, which counts toward their 1,500 needed hours.

Regional airlines also prefer applicants who’ve worked as certified flight instructors (CFIs), especially in instrument (CFII) and multi-engine instrument (MEI) training roles.

“CFIs working in structured programs outperform peers significantly” once hired by regionals, Haugaard says. “Instrument procedures are the foundation of how we operate. We don’t have time to train pilots in these skills — we’re assuming you bring that with you,” he explains. “If you’re teaching instrument procedures on a daily basis, you’re very familiar with these skills and techniques.”

Haugaard notes the Journal of Aviation Technology of Engineering’s Pilot Source Study 2015 found CFIs had fewer non-completions of training at regional airlines than expected, while pilots without CFIs had more non-completions and required more extra training than expected.

Part 135 cargo operations are also a plus, Haugaard says. “If you’re flying in the Rocky Mountains or North Carolina, and the weather’s at 200 and a half [200-foot ceilings and half-mile visibility], I’ll leave my Cessna in the hangar,” Haugaard continued. “But if you’re flying cargo in a Navajo Chieftain, you’re going to go, and learn a lot in the heavy instrument conditions.” In contrast, “banner towing and sky dive operations are almost worthless,” Haugaard says. “You’re not necessarily gaining experience, you’re just repeating more of what you know.”

Training Protocol: Recruiters view programs that train pilots in a standardized crew environment, as superior to ad hoc accumulation of required ratings. Crew-style training is a critical element of these programs, as they familiarize students with the standardized procedures commercial carriers rely on.

“In the airlines, we live and breath standardization,” Haugaard says. “You get in an airplane with a First Officer you’ve never met, and you know what they’re going to say, and they know what you’re going to say,” as crews work through the checklist and other operational procedures. “It’s very structured.”

Moreover, these immersive programs make students comfortable with the fast-paced learning and execution airlines expect of their pilots during training and beyond. Among the problems regionals face in meeting their hiring needs are the washout rates, or “non completions” of training by pilots they evaluate, and the extra training some candidates are found to need. Pilots trained under crew-style protocols are less likely to washout or need additional training. This helps explain an interesting finding of the Pilot Source Study: Regional airline applicants with 1,500 hours or fewer, like recent grads of such programs, had fewer non-completions and extra training events, and required less recurrent training than expected, while pilots with more than 4,500 hours had more non-completions than expected.

Education Requirements: College degrees are “preferred but not required” at regionals, Haugaard says. Major airlines all formerly mandated a bachelor’s degree for their pilots, but have begun to relax the rule “because of supply issues.” However, “it does not matter what the degree is in,” says Natalie Nielsen, a pilot and director of pilot recruitment at Envoy Air, simply that the candidate completed a four-year college program.

Extracurricular activities: Expect recruiters to look over social media profiles and postings. Trainees and applicants should also be aware of airlines’ grooming policies. “We do not allow visible tattoos, and hair should be off the ears and collar,” Haugaard says. “You cannot have full facial hair, unlike our European friends — we want a tight seal on the quick-donning oxygen mask.”

Regionals also expect candidates to have the right attitude and work ethic, which is becoming an issue as the current generation enters the workforce. “Millennials have some great things to offer,” says Haugaard. “They also bring an expectation of almost instant success, and we’re all dealing with that to a certain extent.” As a result, airlines are “adapting” polices, for example creating more flexible benefits packages, he says, but applicants themselves need to demonstrate “some level of adaptation and acceptance” of workplace realities.

Finally, recruiters and airlines are interested in more than a pilot’s flying capabilities. “We’re looking for that individual that is part of the community, a holistic individual who has technical skills,” Haugaard says. “Volunteerism, being a good citizen, giving back – those things are important to our corporation.”

Prospects are bright for pilots with these qualifications at the regionals, and for later advancement to a major airline. “The supply issue is very real,” says Haugaard, “and the pool of qualified applicants is indeed getting smaller.”

Airbus believes its AI can eliminate flight delays

Airbus BelugaXL

 

Airbus is a veritable titan of industry. In 2016, it generated more than $76 billion in revenue and employed a workforce of around 134,000. It’s the world’s largest space business. And it offers a range of passenger airliners from 100 to more than 600 seats and supplies tanks, combat, transport, and mission aircraft.

But at its heart, it’s AI- and cloud-forward

“In Airbus’ case, AI has been a journey for decades,” Adam Bonnifield, VP of artificial intelligence at Airbus, said onstage at VB Summit 2018 on Monday. “The price of using these technologies has plummeted, because of the explosion of computing power availability.”

Airbus takes a data lake approach to management and analysis. It builds a reservoir of data for in-service aircraft, which it subsequently makes available to companies and individual users.

JetBlue was a launch customer of the first module of Airbus’ Scheduled Maintenance Optimizer platform, which taps algorithms to determine the optimal maintenance schedule for fleets of more than 200 aircraft. It’s part of Airbus’ eponymous Services by Airbus offering, which includes training, flight operations, air traffic management, and other products.

“We can take some of the biggest problems in our industry — grounded aircraft, quality nonconformity problems, and operational delays — and use AI to solve them, period,” Bonnifield said. “About $40 billion is spent on delays in the United States, […] and about 80 percent of airlines are chronically late. It’s because they don’t have access to certain data that would help them manage when their plane lands and before it takes off.”

More than 200 airlines are using Airbus’ Smarter Fleet technology. And others are tapping the firm’s partnership with IBM, announced in 2013, which provides operators with IT services for maintenance, engineering, and flight operations.

Last year, Airbus partnered with Palantir Technologies to launch Skywise, a big-data integration and advanced analytics platform. The company claims it not only improves industrial operations performance across Airbus’ industrial divisions, it enables enhanced aircraft and equipment designs, improved operational efficiency for legacy fleets, and one-click workflows for reporting to regulatory bodies.

Bonnifield said arming employees with data allows them to spend more of their day doing “expert tasks.”

Skywise pulls in aviation data from sources across the industry — including work orders, spares consumption, components data, aircraft and fleet configuration, onboard sensor data, and flight schedules — and surfaces it for users in a unified dashboard. And that’s just the tip of the iceberg. Skywise also taps data sources that are traditionally hosted on isolated servers, such as operational interruption history, parts replacements, post-flight reports, pilot reports, and aircraft condition monitoring reports.

“We’ve taken sensor data from our aircraft […] and other operational data we use to service planes and maintain them into one […] environment,” Bonnifield explained.

The goal is to marry operational, maintenance, and aircraft data in a secure platform for storage, management, and analysis and to give users insights at the aircraft fleet and global levels. More than seven major airlines around the world use Skywise, which Airbus intends to make available for Airbus helicopters, military aircraft, and other products operators in the near future.

But Airbus admits it doesn’t have all the answers. That’s why it has recruited more than 100 companies to solve problems plaguing the industry — for example, how to extract data from flight manuals — as part of its AI Gym initiative.

“We need help understanding how to [parse] … technical diagrams that have a lot of captions and annotations,” Bonnifield. “A key lesson we learned was that bringing … data together is only solving the first part of the problem. The second part of the problem is understanding how that data interoperate[s].”

 

Is American Airlines Recession-Proof?

The world’s largest airline carries a massive debt load, and its profitability has been falling. Should investors worry about its ability to withstand a recession?

In recent years, American Airlines (NASDAQ:AAL) CEO Doug Parker has been one of the most vocal advocates of the idea that industry consolidation has permanently transformed the U.S. airline business. Whereas airlines have historically lost huge sums of money during periodic industry busts, Parker has boasted that American Airlines will never lose money again.
Yet on the surface, management’s optimistic outlook seems to clash with a trajectory of declining profits at American Airlines. If the company is struggling to maintain its profitability in a robust economy, one could reasonably wonder how it would do in an economic downturn. Indeed, American Airlines stock is down 38% year to date, so investors clearly are skeptical.

AAL Chart

AMERICAN AIRLINES YEAR-TO-DATE STOCK PERFORMANCE. DATA BY YCHARTS.

Let’s take a look at what might happen to American Airlines if there is a recession in the next few years.

Pretax margin has been sinking

Over the past two years or so, American Airlines has experienced sharp margin erosion. In 2016, the company achieved a 12.6% adjusted pretax margin, but that fell to 9.1% in 2017.

In the first half of 2018, American Airlines’ adjusted pretax margin fell by another 4 percentage points. It expects a similar margin decline in the third quarter, although the year-over-year profit pressure should hopefully start to ease in the fourth quarter.

American’s management blames the margin declines on a combination of rising labor costs — as it brought employees’ wages up to industry-standard levels — and the speedy run-up in fuel prices. However, in the medium term, American Airlines executives expect to recover fuel cost increases through higher fares. A variety of other revenue and cost initiatives should add to its prospects for a profit rebound.

How American Airlines plans to turn things around

Last September, American Airlines announced ambitious profit-improvement goals at its investor day conference. Management touted opportunities to improve annual profitability by $3.9 billion by 2021.

An American Airlines plane.

AMERICAN AIRLINES HAS AMBITIOUS PROFIT GROWTH GOALS. IMAGE SOURCE: AMERICAN AIRLINES.

This figure should be taken with a grain of salt. After all, American Airlines expected to capture about $1.5 billion of the total $3.9 billion opportunity in 2018, yet profit is on track to decline significantly year over year. Nevertheless, if fuel price headwinds moderate next year, these revenue and cost initiatives should help the carrier stabilize its profitability. American Airlines also increased its baggage fees recently, which should boost ancillary revenue in 2019.

Route optimization should also provide a sizable near-term profit boost. American is eliminating a number of underperforming routes (and cutting capacity on others), including several routes between Chicago and Asia. This capacity will be redeployed into more promising markets, particularly in Europe.

Last — and perhaps most significantly — American Airlines will receive extra gates in Dallas-Fort Worth and Charlotte and larger gates at Washington, DC’s Reagan National Airport over the next three years. This will allow the carrier to concentrate its growth in its three most profitable hubs, which will likely make them even more profitable. It will also make it easier for American Airlines to cut additional underperforming routes elsewhere in its network.

Economic disruption is still a risk

There’s a wide range in the profitability of different routes and hubs across American Airlines’ network, so the carrier has plenty of levers available to stabilize its profit margin if fuel prices continue to rise (i.e., it could make further cutbacks to lower-margin routes). This flexibility also offers some protection in the event of a recession that could cause unit revenue to fall.

That said, American Airlines could still be vulnerable, especially if rising oil prices and tariffs cause inflation to rise just as real GDP growth starts to stagnate. (Some prominent economists see this as a major risk, but others think it’s unlikely to happen anytime soon.) A “stagflation” scenario would push costs even higher while making it hard to increase unit revenue.

American Airlines’ high debt load makes it particularly ill prepared for a near-term recession. As of midyear, the company had about $24 billion of debt and capital leases. Furthermore, it expects to spend $5.6 billion on capex and pension contributions in 2019, which could cause its net debt to move even higher.

But the good news is that capex and pension contributions combined should total just $3.3 billion in 2020 and $2.7 billion in 2021. This will allow American Airlines to start reducing its debt burden in a meaningful way.

American Airlines has more than $7 billion of liquidity and enough unencumbered assets to raise another $2 billion of capital if necessary. While that should ensure its survival in any likely economic scenario, a recession would still be extremely painful if it hits in 2019. However, by 2020 or 2021, American should be much better prepared for a downturn, thanks to lower capex and pension costs and the benefits from its network changes and other revenue and cost initiatives.

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Lufthansa Is Giving Boeing a Shot at New Wide-Body Deal

 

Deutsche Lufthansa AG is trying to decide whether to take its first Boeing Co. 787 Dreamliners, or to expand its fleet of Airbus SE’s marquee A350 wide-body jets as it updates its long-range aircraft, according to people familiar with the plans.

Lufthansa has requested proposals from both Airbus and Boeing, and is looking to order about 20 jets in a deal that may be finalized in the next few months, said the people, who asked not to be identified as the discussions are private.

The campaign to woo an influential blue-chip customer will probably hinge on more than the customary discounts for a deal valued at about $5 billion at list prices. The German airline is also asking the planemakers to help it get rid of its aging and fuel-hungry Airbus A340 models, the people said.

Representatives of Lufthansa, Airbus and Boeing declined to comment.

While Boeing and Airbus have on occasion taken back used jets to seal deals, they probably wouldn’t consider A340 trade-ins from just any potential buyer, said George Ferguson, an analyst with Bloomberg Intelligence. Demand and book values for the four-engine aircraft have dwindled as airlines shifted to flying more-efficient twin-engine models.

Complex Fleet

The purchase of wide-body aircraft can define a carrier’s strategy for decades, as the jets have a lifespan of 25 years or more and resale values vary widely. They are also a major investment for both airlines and manufacturers, with the latter depending on large orders to help the multibillion-dollar programs turn a profit.

Lufthansa has already ordered 25 A350s, 12 which will begin operating in Munich by year-end, and holds options for 30 more. While it has vowed to reduce fleet complexity, five years ago the carrier ordered 34 Boeing 777-9 jets, with the first one due to arrive in 2020. Those would be on top of any potential order for the smaller 787s.

Second Thoughts

The Boeing 777-9 deal has come under internal scrutiny, and Lufthansa has said it is considering stretching outdeliveries, concerned about the cost and size of what will be the industry’s largest-ever twin-engine jetliner. The accord includes 14 jets that Lufthansa can opt out of taking.

Lufthansa is paying the price for investing too little in its fleet for two decades. The carrier’s 728 aircraft were, on average, 11.4 years old last year, twice the age for Dubai-based Emirates, the world’s largest long-haul carrier.

Lufthansa’s fleet includes almost 100 four-engine aircraft, which produce the highest fuel bill of any airline in Europe. Its 50 A340s, almost a fifth of the models still in operation worldwide, are increasingly a liability with oil prices near the highest in about four years. The oldest -300s, delivered between 1996 and 2001, are considered likelier candidates for retirement over the stretched -600s, some of which are less than a decade old.

Both planemakers have acquired used A340s over the years. Airbus repurchased models as resale prices plunged below the amount it had guaranteed customers. Boeing accepted trade-ins from China Eastern in 2012 and Singapore Airlinesin 1999 — both as part of complicated transactions that helped land sales for its largest twin-engine jet, the 777.

A340 Dilemma

Airbus made only 375 of the A340, which were rendered obsolete as twin-engine aircraft like the 777 and Airbus A330 were certified for long-range flights. Since production ended seven years ago, secondary-market values have plunged.

The A340 did enjoy a brief resurgence this year, which peaked over the summer, as a short-term replacement for Dreamliners grounded while their Rolls-Royce Holdings Plc Trent 1000 engines were repaired, said George Dimitroff, head of valuations for Flight Ascend Consultancy.

“That’s literally the only limited demand we can see for that aircraft, and trading prices are all in the single-digits millions of dollars,” said Dimitroff. “If you tear it down, some parts have value. A lot of the airframe parts are common with the A330.”

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