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Jetting Toward a Greener Future
Angelo's Ashes
(Portfolio.com: News and Markets)
(Portfolio.com: News and Markets)
Submitted at 6/25/2008 12:00:00 PM
One of the biggest names in aviation has developed a jet engine that is more efficient, less polluting and cheaper to use than almost everything else in the sky, and it could revolutionize an industry facing skyrocketing fuel prices and mounting pressure to clean up its act. Pratt & Whitney has spent the better part of two decades developing the geared turbofan engine that burns 12 to 15 percent less fuel than other jet engines and cuts carbon dioxide emissions by 1,500 tons per plane per year. It's being called one of the most exciting developments commercial aviation has seen in years, and it was a hot topic at the Eco-Aviation Conference, where the aviation industry spent two days charting the course to a greener future. "It's technology like that geared turbofan that's going to drive fuel efficiency forward for this industry in the short and medium term," says Earnest Arvi of the Arvi Group. "Alternative fuels show great potential, but they're decades away." Pratt & Whitney was just one of the heavy hitters at the conference, an unprecedented gathering that underscored the severity of the issues the industry faces. With airline passenger growth rates and aircraft emissions expected to double by 2020 and 2030, respectively, the pressure is on to address those problems quickly. The conference saw a lot of talk -- and a little green-washing -- about developing alternative fuels to replace jet fuel, easing airport pollution, and building greener aircraft to replace the industry's aging fleet. Nearly 1,000 planes flown by domestic carriers will be more than a quarter of a century old by 2015, and Boeing officials have said that more than 10,400 new planes will be needed in the coming decades and making them as green as possible will go a long way toward reducing commercial aviation's carbon footprint. That's why Pratt & Whitney has so much to brag about with its geared turbofan,
which significantly advances jet-engine technology. Current jet engines have fans that suck air into the combustion chamber, where it is compressed, mixed with fuel, and ignited. Then it's blown through a turbine, generating thrust. It works, but it's inefficient because the fan is connected to the engine and turns at the same speed as the turbine. Fans work best at low speed, while turbines work best at high speed. Pratt & Whitney solved that problem with a gearbox that lets the fan and turbine spin independently. The fan is larger and it spins at one-third the speed of the turbine, creating a quieter, more powerful engine the company says requires less fuel, emits less C02 and costs 30 percent less to maintain. Pratt & Whitney has been torture -testing the engines, and its engineers have simulated more than 40,000 takeoffs and landings. The company's VP of Technology and Environment, Alan Epstein, says the engine will not only cut CO2 emissions, but will also reduce nitrogen-oxide emissions, noise and -- ultimately -ownership costs. "For the next generation of single-aisle aircraft, there's no question that engine performance will be key," he says. "Both economically and environmentally, this engine will deliver significant benefits." The industry seems to agree and is lining up behind the engine, which Pratt & Whitney expects to have in regular service by 2013. It's already slated for jets currently being developed by Mitsubishi and Bombardier. Pratt & Whitney isn't the only firm developing greener aircraft. Airbus is dabbling in alternative fuels and researching ways of recycling more than 6,000 planes slated for retirement during the next 20 years. Boeing is dabbling with hydrogen fuel cells and investing in algal fuels while pushing lighter planes like its 787 Dreamliner. Boeing says composite materials make up nearly 50 percent of the plane, which can carry as many as 330 people, making it far lighter than other planes its size. It is 20 percent more fuel-
efficient and produces 20 percent fewer emissions than similarly sized aircraft, company officials say. Boeing is betting composite construction will bring huge improvements in fuel economy and emissions to commercial aviation. Further gains could come from improving the nation's outdated air traffic control system, something nearly everyone at the conference said must happen. The current system is based on radar technology that dates to World War II, and plans to replace it with a satellite system known as NextGen are at a standstill while FAA reauthorization is stalled in Congress. But the industry has several other ideas, from allowing flights through military airspace to widespread adoption of a quieter, more efficient landing technique called continuous descent approach. Industry experts say adopting such steps could significantly reduce fuel consumptions and delays. The International Air Traffic Association says cutting just one minute from every commercial flight would save more than 1.9 million tons of fuel and 6.3 million tons of CO2 annually. The air travel industry has taken a lot of heat for being slow to address its environmental impact, and some say parts of the eco-conference were just slick PR. But even some critics say the fact the industry is discussing environmental stewardship shows it's finally getting serious about the issue -- if only because doing so is in its best interest. "Climate change could mean fewer coastal vacation destinations, inaccessible airports and a general economic malaise that cuts travel spending," says Liz Barratt-Brown of the Natural Resources Defense Council. "Looked at in that context, you could argue that the aviation sector has the most to lose from global warming." Related Links Boeing and Airbus Go Head to Head Airbus Gets a Lift Reverse Course
Submitted at 6/25/2008 5:00:00 AM
Countrywide Financial is becoming more of an embarrassment for Bank of America just days before it completes a takeover of the mortgage lender. At the same time, the Senate is pushing ahead with sweeping legislation on housing while facing questions about why some of its members received belowmarket-rate mortgages from Countrywide. As first reported by Daniel Golden on Portfolio.com, the primary author of the Senate bill, Christopher Dodd, Democrat of Connecticut, as well as Senator Kent Conrad, Democrat of North Dakota, refinanced properties through Countrywide's V.I.P. program in 2003 and 2004. Also on Portfolio The VIP Club Portfolio.com's guide to the loan scandal. With Friends Like These Who's who in the scandal. The Senate vote on the bill may come as soon as today. Also today, Countrywide shareholders will vote on the all-stock acquisition, initially valued at $4 billion, but now significantly less than $3 billion, thanks to a decline in shares of Bank of America. The deal could close as soon as July 1. Hanging over both events is the growing questions and investigations into how Countrywide does business. Today, the attorney general of Illinois plans to sue Countrywide and its chief executive, Angelo Mozilo, contending that the company engaged in deceptive trade practices in lending. The complaint, reports Gretchen Morgenson of the New York Times, accuses Countrywide of "relaxing underwriting standards, structuring loans with risky features, and misleading consumers with hidden fees and fake marketing claims, like its heavily advertised 'no closing costs loan.'" "People were put into loans they did not understand, could not afford, and could not get out of," the Illinois attorney general, Lisa Madigan, told the Times, "This mounting disaster has had an impact on
individual homeowners statewide and is having an impact on the global economy. It is all from the greed of people like Angelo Mozilo." The attorney general is seeking that any mortgages that used deceptive practices be rescinded or modified in some way. Tanta on the Calculated Risk blog is very skeptical of the attorney general's claims, noting that Countrywide's allegedly deceitful practices were common in the business. Tanta says: "Nobody has to like any of these business practices. But they have been hiding in plain sight for a long, long time. This ginned-up outraged innocence—all directed at Countrywide, as if everyone else in the industry had never heard of any of this—is truly getting on my nerves." Still, the Illinois investigation is just one of a number into the company's practices and into stock sales by Mozilo. The potential liability for Bank of America—in terms of both public image and legal costs—appears to be huge. Congress is also grappling with the fallout over Countrywide as it tries to push through an overhaul to ease the nation's worst housing slump since the Depression. The core of the Senate bill is a plan that would allow thousands of troubled borrowers to refinance to more affordable fixed-rate loans through the Federal Housing Administration. Seeking to address the questions being raised by the disclosure of the Countrywide V.I.P. loans, an amendment to that bill would require lawmakers to disclose the lender and terms of the mortgages on their residences in an annual financial statement, reports Lori Montgomery of the Washington Post. Politico.com, which has asked all 100 senators to disclose where they got their mortgages and whether there were any special terms, says that only 15 members have failed to respond. Related Links Credit C.E.O. Comp Under Fire, IV Was B of A Blindsided by Countrywide Lawsuits? Countrywide Gets a New Home