Over the weekend Boeing ended its merger agreement with Embraer, leading to the Brazilian airframe manufacturer vociferously denying Boeing’s claims that it failed to meet its obligations. Litigation is expected. Boeing must have anticipated ending the agreement would result in a lengthy court battle but faced with paying $4.2bn in the midst of a worldwide crisis, the risk must have been acceptable for the company.
Boeing is reporting its first quarter results later today at its annual general meeting. The manufacturer will be applying for government support, however various sources suggest that if any support package involves relinquishing equity it will not be accepted. The reality is that Boeing may not have a choice if it wants to survive the pandemic crisis as well as continue to deal with the grounding of the 737MAX. Production levels have already been cut and job losses may come – Boeing has already requested voluntary redundancies to help reduce the need for cuts to the payroll.
Meanwhile, its European rival, Airbus, too is struggling to deal with the pandemic crisis. A letter to employees from CEO Guillaume Faury, as reported by The Financial Times, indicated that the company was rapidly losing money.
Although Airbus has cut production by a third – it is now producing 40 A320neos a month, down from 60 a month – the manufacturer expects customers to defer and even cancel deliveries as their fleets remain grounded. Airbus has not commented publicly on the internal letter but it will issue its first quarter results this week, which should show the depth of the losses sustained by the manufacturer.
Airbus has also announced the end of its tie-up with Rolls-Royce to develop the E-Fan X hybrid engine. Rolls-Royce created a hybrid-electric power generation system, comprised of an embedded AE2100 gas turbine driving a 2.5MW generator and 3000V power electronics and an electric propulsion unit. However, despite the fact that the E-Fan X was only intended to be a demonstrator aircraft, the test flight programme with all the elements integrated has now been abandoned as being “non critical at this time”, says Paul Stein, Rolls-Royce Chief Technology Officer.
AirbusChief Technology Officer, Grazia Vittadini, said that as the industry begins to “navigate the realities of a post-COVID-19 world” Airbus is certain of the need to “continue full-speed ahead with our sustainability ambitions” but that this will not involve the E-Fan X project, which is now at an end.
She said: “…decarbonising the aviation industry is no small feat. To achieve this, we need to re-focus all of our efforts on technology bricks that will take us there. It’s for this reason that Airbus and Rolls Royce have jointly decided to bring the E-Fan X demonstrator to an end. As with all ground-breaking R&T projects, it’s our duty to constantly evaluate and reprioritise them to ensure alignment with our ambitions. These decisions are not always easy. But they’re undoubtedly necessary to stay the course.”
Stein believes that in a post-COVID 19 world that “interest in sustainability will be stronger than ever” and that Rolls-Royce’s new power generation system “can and will be integrated into any future aircraft that is developed requiring a hybrid-electric propulsion system, including a comprehensive flight-test programme to ensure that all industry safety requirements are met”.