On the Record with
Lloyd Thompson, President, The Engine Alliance -- GE Aircraft Engines/Pratt & Whitney

"This is a niche market for a high profile product," said Lloyd Thompson, president, The Engine Alliance, of the GP7200 power plant the GE-Pratt partnership is developing for the Airbus A380.

"The competition is intense. In fact, I wish it wasn't so competitive, as the commercial part of it is not very pretty. That's one reason we have a GE-Pratt partnership-the market is relatively small and the risk of three players clearly would not portend good returns for anybody.

"Discounts? I have never seen realistic pricing. The reality is that all these customers are big customers and no matter when they come to the table they are going to extract equal commercial deals, so it's not a pretty picture. The discounts are on everything, from price to life cycle cost guarantees. These are first class flag carriers, they carry a lot of weight because of their other transactions (with the engine manufacturers) and with Boeing or Airbus. So they're going to get their pound of flesh.

"The industry is in a spiral. The airlines are constantly complaining of declining yields, therefore they're driving for increased productivity day in, day out. Part of that is brought by new equipment, which means new investment. And investment means we have got to recover our investment. There's a pricing equation in that there's an aftermarket and a service stream involved, but it's a vicious loop that's driven by the situation most of our customers are facing right now, and the continuing declining yields.

"Were in the middle of it -- we're part of the answer, especially with a product offering 15% lower DOC on a seat-mile basis, which if you can fill the airplane is a big advantage.

"It's a challenge for us to achieve the value," he continued. "We have to strike a balance where the customer recognizes the value we bring. Clearly they want all that value, clearly we need some of it to recover our investment. But customers also recognize it's in their interest to have suppliers who are relatively healthy. We're committing to aggressive guarantees, were doing commercial deals. But were not doing anything stupid."

"All this for a limited market of 900-1,000 very, very large aircraft over 20 years-that's 4,000 engines. We can probably make a case for a 50% share of the market. Clearly the more successful programs you see are on multiple platforms, but we're limited to large four engine aircraft. If it's reliable and meets customer satisfaction criteria, then it will be lucrative."

Technical development of the GP7200 has been bounding along in leaps and strides.

"We completed second round of tests of the compressor, culminating with the core of the engine running in the GE90-115B (it is in fact a scaled version of the GE90 development)," Thompson told Show News. "This makes us extremely comfortable with the guarantees we gave to Airbus and potential customers.

"We've gone to a hollow titanium swept fan for better noise and efficiency. Earlier we ran a 42% scale fan on a P&WC demo engine and validated all the 3-D aero tools. We're really comfortable with the tools were using to predict performance. This year we will continue rig tests and risk abatement activities.

There will be another compressor test later in year. "We're looking for a little more efficiency in the compressor, trying to put some distance between ourselves and competition in efficiency," said Thompson. "We already have an advantage, and we intend to increase it. A turbine technology rig will be used later this year to validate some second-generation 3-D aero tools.

"We plan to run a larger scale fan late this year or early next year. More importantly, in the fourth quarter, we will complete the preliminary design phase of the engine and begin detailed design. That will lead to first engine on test 16 months later, in April 2004.

"Airbus is on schedule on the A380, and our schedule is locked in step with it. We'll have to start ramping up from our current engineering team to a full complement at the end of the year to support initiation of detailed design.

"(Past GE Aircraft Engines chief) Brian Rowe always said, 'If you don't have a compressor you don't have an engine,' so as far as I'm concerned I have an engine and a half!

"Singapore brings in all the major players/customers from the region. Clearly we want to let them know we are here, and that we have a better engine than a year ago -- and that's validated by Airbus data. There will be a second wave of customers, and we want to start planting the seeds now."

First flight of the GP7200-powered A380 is scheduled for early 2006, with aircraft certification and entry into service planned for the end of that year. MTU and Snecma are also revenue-sharing participants in the GP7200 engine program.

By John Morris