Penetration of carbon fibre into

narrow body aircraft – A

potential game changer
Carbon Fibre 2016
Adrian Williams
About Us

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2
Impact of carbon fibre composite penetration in narrow
body aircraft

MUSD Planned production rate for B787, B777X, A350 & A380
2500 Scenarios for penetration in new narrow body platforms

2030
2000 Introduction of
new narrow
body platforms
1477
1500

739
2020
1000 Start of new 295
narrow body
platform design
500
850 850 850 850
400
0
2014 2034 2034 2034 2034
Scenario 1 Scenario 2 Scenario 3 Scenario 4
0% CF 10% CF 25% CF 50% CF
• Assumptions

– Boeing and Airbus build rate only

– Primary structures only High penetration of carbon
– Intermediate modulus CF at $70/kg fibre composites on narrow
– Currently no primary structure CF on narrow bodies bodies could dwarf current
– CF cost of ~$2 M on B787 demand
– At equal CF penetration, CF value/seat is constant

4
Penetration has been increasing

60 Older platforms Newer platforms

Composite materials in structure (%)

50 A350
B787 CSeries

40

30
?
B777X
ATR72

A380
20 E2 jets
ATR42 MRJ A330neo
A330 A320neo
A320 A340
Sukhoi 100 B737 max
10 B777
A310
CRJ1000
757 MD-11
B737
0 B707 DC-9 DC-10 L1011 767 747

1940 1960 1980 2000 2020

Will the gap in composite content between traditional aircrafts and new wide body
platforms such as the B787 and A350 platforms be bridged?

Source: Hexcel, FMG analysis 5

Maturing technology and market needs have been
driving penetration

Drivers for CF adoption Barriers for CF adoption in narrow bodies

Lightweighting due to increasing operating cost pressure:

Complex organizational and industry transformation
greater competition between airlines and rising fuel price

Lightweighting due to emissions legislation Meeting narrow body production rates

Reduced life cycle costs – maintenance and design life Poor/little recyclability of material

Part consolidation and reduced tooling costs Lack of confidence about material knowledge

Enhanced passenger experience Impact damage/repair-ability

Dominant material on current narrow body aircraft is

“The 777 has been flying for more than
10 years with more than 565 airplanes
in the fleet and to date has not replaced
a single composite floor beam”
Aluminium
Metal producers haven’t yet given up on aerospace and
are planning their come back on the next platforms with
new alloys and new technologies.

“The 777 composite tail is 25% larger

than the 767’s aluminum tail, yet
requires 35% fewer scheduled
maintenance labor hours”

Source: Boeing 6
Global air travel demand and passenger expectations
continue to grow

Revenue passenger-kilometer (trillion)

Long term growth

still expected
4.6%
Global air
travel demand
is still healthy 6.1%
13.0

6.6
4.9

2010 2015 2030

Reduced flight cost

Choice of flight routes and times
Passengers Longer distance flights
demands are
Point to point travel due to extended range capability
evolving
Improved comfort and travel experience
RPK growth driven by emerging/developing markets

Source: ICAO 7
Over the past 5 years, low cost of capital have sustained the ability of
airlines to acquire new aircraft despite unpredictable oil prices

110 10 10 10%
Oil price is volatile, 9 9
100 expectations are for 9 9 9%
some increase from 8
90 8 8%
recent lows
7 7
80
6 7%
6
Oil barrel price ($)

Interest rates (%)

70
6%
60
5 5 5%
50 4 4 4
4 4 4%
40
Cost of capital is 3%
30 expected to remain
20 low 2%

10 1%

0 0%
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

Oil Price ($/barrel)

Interest rates (%) LIBOR 12M Backlog in years

8
The aviation supply chain is evolving under
increasing customer pressure
Airports
Regulations

Aviation supply
chain OEMs Airlines Passengers

Improved market share by

answering passengers’ demands
regarding
Differentiation – Low cost
– Aircraft models – Choice of routes and times
– Technology – Improved flight experience
Improved profitability Improved profitability
– Improved capital employed
– Reduce operating costs
– Innovative business models

Increased
pressure

9
Have airlines found the secret to financial
sustainability?

Over 5,000 airlines operate worldwide

Between 2001 and 2010, at least 94
airlines went bankrupt in Europe
Most airlines are private companies

The financial crisis

was a watershed in
airline profitability

Industry characterized by
Cyclicality
Thin margins
High capital intensity

Source: IATA, wikipedia common 10

Airlines operate a complex mix of business models

Low cost carriers Network carriers

United
Southwest
– Cost cutting – Hub operations Air France – KLM
Ryanair
– Maximize non flight revenue – Large fleets Emirates
– Array of services
Southeast Asia 53%
Europe 35%
North America 27%
World 26%
Middle East 12%
Africa 9% LCC’s market share in 2013 Emirates

Cargo transporters Partnerships Star Alliance

FedEx Express
– Combination of models – Expended network SkyTeam
UPS Airlines
– Different network strategies – Code sharing oneworld
– Fidelity programs

38% Cargo only

Members Countries Passengers
Passengers
oneworld 14 161 557.4 M/year
36% 11% Express carrier
Skyteam 20 177 665.4 M/year
15%
Comnbination carrier Star Alliance 27 192 641.1 M/year

Source: Boeing, Diio/Innovata, ICAO, CAPA 11

Business models dictate the choice of aircraft

Business model

Aircraft types

Optimization of flying cycles
Network strategy
Non flight revenue
Fidelity programs
Load factor
Aircraft utilization
Travel route offer
Carrier capacity
Customer experience
Maintenance costs
Operating costs
Cargo revenue

The choice and mix between wide

and narrow body is critical to
business model and operational
efficiency

12
Aircraft model selection is a complex mix of
operational and business needs

To improve their flight route

and time offer, many airlines
Travel route offer
are relying on smaller aircraft
for mid to long distance routes

Airbus A321 neo

Efficiency (example, Airlines are aiming for a 80% load factor on their flights to achieve a balance
load factor) between low risk advance tickets and high return last minute fairs

Prime selection criteria for long haul trips or

Passenger premium segment passengers
experience Airlines have invested in newer aircrafts as well
as wide bodies to deliver improved comfort

Award wining interior on

Qatar Airways’ A380

Source: Airbus 13
 Narrow body operating model is less sensitive to
improved fuel burn
Operating costs per block hour per seat

N/B more sensitive

maintenance -13%
$37.4 -16%
0.7 $34.7
6.4 $32.4 0.4
0.7 5.0 $29.3
4.5 6.4 0.4
3.1
5.0
-5.0 4.5 -5.4
N/B more sensitive 3.1
to aircraft cost
20.0 21.6
15.0 16.2

5.8 5.8 4.6 4.6

Narrow body Narrow body Wide body Wide body

25% fuel economy 25% fuel economy

Crew Fuel Aircraft cost Maintenance Other

Source: Oliver Wyman_planet stats, FAA 14

OEMs are using their wide and narrow body platforms
to balance differentiation and profitability

New aircraft Innovative

models
Differentiation technology Wide bodied
aircrafts are the
prime platforms to
demonstrate
Narrow bodied differentiated
aircrafts are the technology
main drivers of Increased market
Limited new
OEMs profitability share in profitable
development
segment

Aftermarket Part
Profitability redesign

Reduced
Controlled supply
manufacturing
chain
costs

15
 Competitive intensity around narrow bodies is increasing

Boeing New Entrants

3,500 Airbus NB share of market (%) 80%
3,306

78%
3,000

5%
2,500 2,436 What will the
74%
2,273 place of new
2,113 17% entrants be?
Aircraft build rate

16%
2,000 1,844 15%
1,701 70%
1,588 13%
12% 39%
1,500 12% 42%
44%
43%
41%
40%
1,000 Airbus A321 neo is
outselling 737 Max
with 70% market
500 42% 44% share of “Large”
48% 47% 45% 42% narrow bodies

0 60%
2015 2016 2017 2018 2019 2020 2030

Source: FMG analysis 16

Competition from new entrants threatens
dominance of Boeing and Airbus in Narrow Bodies

Boeing and Airbus will need to deliver greater differentiation at lower cost to
protect their market share in narrow bodies

Bombardier C100/300 COMAC C919

First commercial flight with in July 2016.
300 Confirmed orders including $5.6Bn
from Delta
20% Less fuel burn, 25% less direct
maintenance costs
Expected to enter service some time after
2020
Over 500 orders mostly Chinese operators
Competes directly with A320neo and 737
MAX

Embraer E-Jet E2 Irkut MC-21

Expected to enter service in 2018
Order book of 270 A/C
Competes against A319 and 737 Max 7
175 orders
On paper competes strongly with A320neo
and 737 MAX but limited production
planned and unlikely to be popular outside
Russia and close allies

Mitsubishi MRJ
Expected to enter service in 2018
Order book of 220 A/C
Regional jet does not compete directly with
larger narrow bodies but will offer
alternative for some operators

17
Boeing’s next aircraft –New Midsized Airplane

Key Features
200-270 seat aircraft with
5000nm range
Twin Aisle
Composite wings
Fuselage material choice still
open
Boeing studies assume
service entry of 2024-25

Aviation Week/BofA
Merrill Lynch survey

90% of respondents want it

before 2023
69% of respondents would
prefer a carbon fibre
composite fuselage
74% would prefer carbon
fibre composite wings and
empenage

18
The adoption of Composite materials on wide body platforms
has smoothed the way for narrow body aircraft

Material
Performance
certification
understanding
Increasing the
Understanding where the documentation and
use of composite materials performance testing trail for
has the greatest impact these new materials

Composite materials in
structural sections

From the A380 till

Supply chain today… Manufacturing
readiness processes

Setting up a completely new

Investigating new processes
supply chain based on small
adapted to larger scale
to medium players
Material production
availability
Confidence to invest in
upstream capacity

19
Metal producers have also been innovating to
satisfy the needs of the aviation industry

Aluminium-lithium
Development of new – Developed in the 80’s
alloys – Renewed interest as airframe material due to significant weight saving
compared to aluminium coupled with use of traditional metal processing

Fibre Metal Laminates

More efficient processing in production, lower costs of structural components and a
Hybrid materials high level of fire safety
– Use of Glare on the A380
– New generation to be developed by Airbus and Fokker

Metallic additive manufacturing has started to be adopted by the aerospace industry

Additive and a number of printed parts are already flying
manufacturing Early opportunities include brackets, hinges, engine components and interior
components

20
 Bombardier C Series Case study

46% composite content

Use of CFRP on the wings and despite use of Al/Li
rear fuselage
• Resin infusion process
fuselage
adapted to larger series
• Reduced corrosion
• Reduced drag
• Improved fatigue Key Features
Conceived in 2005 as a clean
High by-pass geared turbofan
sheet design targeting the 100-150
engines seat market
20% fuel burn advantage – claimed
lowest fuel burn per passenger at
2L/passenger/100km
50% les Nox
25% lower direct maintenance
2950 mile range
Use of aluminium lithium on
the fuselage
4 x noise reduction
Larger windows than any other A/C
• Superior impact resistance, other than 787
inspection and repair Largest overhead bins in its class
Carbon fibre reinforced composite compared with composite
Lower cabin altitude
solutions
Aluminium lithium • 1 tonne lighter compared to
conventional Al

Source: Canadian business, transportation

board safety of Canada
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Conclusions

Materials choice for the fuselage will be the key battleground for carbon
fiber composites
The challenge for the industry will be to deliver improved impact characteristics and
repair-ability on a timeline to meet the needs of the next generation narrow body aircraft

Competition will drive Boeing and Airbus to introduce new narrow body aircraft
earlier than they would economically desire
MRO benefits of composites are yet to impact and will improve as operator experience
increases and innovation delivers new solutions
The case for carbon fiber composite wings is now well established
Innovation in carbon fiber composites will continue to deliver improvements in cost for
2nd and 3rd generation solutions which metals will struggle to answer
Even without a full carbon fiber composite fuselage penetration can reach close to
50% as evidenced by the C Series

22
The introduction of carbon fibre technology on narrow
bodies will be a game changer

MUSD Planned production rate for B787, B777X, A350 & A380
50% penetration
2500
starts to look like
Scenarios for penetration in new narrow body platforms
most likely
scenario
2030
2000 Introduction of
new narrow
body platforms
1477
1500

739
2020
1000 Start of new 295
narrow body
platform design
500
850 850 850 850
400
0
2014 2034 2034 2034 2034
Scenario 1 Scenario 2 Scenario 3 Scenario 4
0% CF 10% CF 25% CF 50% CF
• Assumptions

– Boeing and Airbus build rate only Carbon fibre composites

– Primary structures only materials revenue could see a 6
– Intermediate modulus CF at $70/kg fold increase in commercial
– Currently no primary structure CF on narrow bodies aerospace in todays money
– CF cost of ~$2 M on B787
within 20 years
– At equal CF penetration, CF value/seat is constant

23
Questions

24
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