Airbus is considering developing a new engine, or perhaps a plane, with General Electric, according to a court document cited by Bloomberg News.
Raytheon Technologies (ticker: RTX), GE (GE), Safran (SAF, France), and
(RR.London) make jet engines, while Airbus (AIR.France) and Boeing assemble the planes. A new plane or engine would be a big deal for those companies, but the details are so scant that the news isn’t moving stocks all that much, especially given that it is Christmas Eve.
The Bloomberg article cited a Wednesday appeals-court decision, which it said has since been sealed, dealing with an intellectual-property dispute between Boeing and a unit of Raytheon Technologies (RTX).
stock was down about 1% in early afternoon, while
(RTX) and GE (GE) shares were off 0.7% and 1.5%, respectively. Airbus and Rolls-Royce shares closed close to flat, while
stock dropped about 0.4%
Dow Jones Industrial Average
were both little changed.
An all-new plane would, frankly, be a bit of a surprise coming out of the pandemic. Boeing has talked about plans for what it has called a new medium-size aircraft, or NMA, since 2017, but no decision about development has been announced. Even the size of that plane isn’t set in stone. Originally, industry executives expected it to be a twin-aisle jet, but others have said more recently that it might be a single-aisle plane.
Boeing, Airbus, and GE didn’t immediately respond to requests for comment.
The industry might not need a new plane, from Boeing or Airbus. Travel is down and planes, with modern engine technology are more capable than in the recent past.
“There are six planes that matter,” Credit Suisse analyst Robert Spingarn tells Barron’s. Those are the Airbus A220, A320 and A350 as well as the Boeing 737 MAX, 787 and 777X. “Those are the planes that matter that will last into the future,” he said.
Even if a new plane isn’t on the drawing board, new engines could be.
“Airbus has already publicly said that it is developing low/no carbon aircraft for the next decade,” wrote Vertical Research Partners analyst Rob Stallard in a Thursday research note. “What is more intriguing is that GE is reported to have offered a geared turbofan engine.”
A geared turbo fan is a jet engine with, well, gears—like a car or bicycle. Gears add complexity, which can increase maintenance costs, but they can make an engine more efficient than the traditional turbofan engines in widespread use today.
A Raytheon geared turbofan engine, made by subsidiary Pratt & Whitney, powers the Airbus A220 and A320 NEO jets. The A320 NEO can also be bought with a LEAP-1A engine from CFM, the engine joint venture between GE and
A new geared turbofan is potentially more competition for Raytheon, but investors don’t need to fret. Market shares in aerospace change very slowly. Planes take years to design and fly for decades.
Rolls-Royce, for its part, is a large maker of jet engines, but its equipment typically powers larger planes. Some of its products power 777, 787 and A350 jets.
Engines are fascinating, but the biggest issue for the commercial aerospace industry isn’t about the next hot jet or futuristic engine technology. The issue is when will commercial air travel look like it did in a pre-pandemic world. U.S. air traffic is still down roughly 60% compared with pre-Covid levels. The air travel recovery is, and will remain, the biggest issue for the industry and aerospace investors in 2021 and beyond.
Write to Al Root at [email protected]