科技的未来：下一代发动机……开式转子发动机能否胜出？

Future of Tech: Next Generation Engine… Can the Open-RotorWin? Bernstein will host its Future of Technology conference in London & Paris on April 21 & 22.We’ll host an expert panel dedicated to the future generation of narrowbody engines, with afocus on GE and Safran’s new technology: the RISE. Adrien Rabier+44 20 7676 6820adrien.rabier@bernsteinsg.com 25,000 narrowbody aircraft, doubling by 2050. The narrowbody segment accounts for76% of the total of the aircraft fleet, globally. It is dominated by two programs: Airbus’ A320(48% market share), and Boeing’s B737 (42%). The narrowbody fleet is growing, driven bythe increased affordability of air travel in emerging markets, and the penetration of low-costcarriers, which only use narrowbody jets. We expect the fleet to double by 2050. Douglas S. Harned, Ph.D.+1 917 344 8430douglas.harned@bernsteinsg.com Cyriaque Blanchet+44 20 7676 7342cyriaque.blanchet@bernsteinsg.com A profitable duopoly, in a ~$50bn market.Engine manufacturers have positionedthemselves as the largest beneficiaries of the current Aerospace cycle, driven by theshortage of new aircraft. The profitability of the business, especially the aftermarketbusiness, made engine manufacturers some of the best Industrials companies. GE topsthe list, with a market cap larger than Airbus and Boeing combined. The narrowbodyengine market is effectively a duopoly between CFM (GE & Safran) and Pratt & Whitney andpartners (MTU, JAEC). CFM controls ~75% of the market, as it is the sole-source on theB737, and controls a ~60% market share on the A320. Jennifer Ma+1 917 344 8408jennifer.ma@bernsteinsg.com Specialist Sales James Brady+44 20 7762 5272james.brady@bernsteinsg.com Next generation is tomorrow’s technology, but today’s debate.The next generationnarrowbody programs from Airbus & Boeing should not be flying before 2038, at theearliest. But, the engine selection could happen in the coming years and is one of themost important debates for the stocks, because of the many options on the table and theimportance of being selected for the next generation. Steve Song+1 917 344 8401steve.song@bernsteinsg.com Safran & GE’s RISE.Announced in 2021, RISE is CFM’s next generation project. RISEstands for Revolutionary Innovation for Sustainable Engines. The project is built around anopen rotor technology (see Exhibit 1). CFM believes the open rotor architecture, combinedwith new materials and more hybridization, is the only path toward the required 20% fuelsaving. That is the threshold for airlines to justify purchasing new aircraft. The RISE couldalso be compatible with100% unblended sustainable aviation fuels (SAF), or hydrogen. Theopen-rotor architecture has existed for decades but never made it to a large commercialprogram. We see several challenges for the adoption of the RISE. Most importantly, theneed to adapt the plane around the new architecture implies that the RISE could be thesole-source option on both Airbus and Boeing’s platforms. We see reasons for Airbus &Boeing to favor dual-sourcing for the next generation. Especially given their difficulty tocapture value vs. the engine manufacturers. If the RISE were selected, this would reinforceour bullishness on GE and Safran. But, other options are possible. Many alternatives.CFM acknowledged they could work on a “LEAP v2”, a new generationtraditional engine, without the open-rotor. Pratt & Whitney have the ambition to deliver anew version of their geared technology (GTF v2). An important debate for Rolls-Royce isa potential return in the narrowbody business, following its exit in 2012. Rolls-Royce isfavoring a partnership, but has a technology it could leverage on its own. INVESTMENT IMPLICATIONS We rate Safran, GE, Airbus, Boeing and MTU Outperform. We rate Rolls-Royce and RTX Market-Perform. DETAILS EXHIBIT 1:Here’s how your plane’s engine could look like in 2038... PORTFOLIO MANAGER SUMMARY •25,000 narrowbody aircraft, doubling by 2050.The narrowbody segment accounts for 76% of the total of the aircraftfleet, globally. It is dominated by two programs, Airbus’ A320 (48% of total NB fleet), and Boeing’s B737 (42%). Annualvolume growth of +3% in the fleet has been driven by the fast-rising Asian market, and by the penetration of low-cost-carriers, which only use narrowbody aircraft. We expect the size of the fleet to double to ~50,000 planes by 2050. •Engines are the key component.Engine manufacturers have positioned themselves as the largest beneficiaries of thecurrent Aerospace cycle, driven by the shortage of new aircraft. Engines usually account for ~25% of the value of a plane, buthave seen their value increase significantly in recent years. The key attractive factor of profitability of the engine business isthe aftermarket business it generates as the engines are used and need spare parts and maintenance. •The engine market is an oligopoly.Effectively, there are only two or three players in each subsegment of the market. Innarrowbody, CFM