Performance analysis programs of a propulsion system are established and recommended as tools for estimating installation penalties. The performance parameters such as inlet capture area, inlet pressure recovery, inlet drag, nozzle gross thrust coefficient, nozzle/afterbody drag, installed thrust and specific fuel consumption can be obtained on condition that the uninstalled engine performance is matched with the inlet/nozzle internal and external performances. The influences of design parameters and operation conditions on the propulsion performance are also discussed. Finally, an aircraft/propulsion system integrated program has been worked out which can optimize the engine cycle parameters. The numerical results obtained show that the installation penalties are 20% to 30% at the identical flight conditions and throttling settings. Therefore it is very important to reduce the installation penal-tiesand to reach the optimal integrated propulsion performance.