Qatar swaps A319neo to A320neo; just 29-39 orders remain

Qatar Airways has swapped its order for the A319neo in favor of the A320neo, leaving just 29-39 orders remaining for the smallest version of the neo family.

Qatar became the first customer for the A319neo when it placed a surprise order at the 2009 Paris Air Show. Bombardier had negotiated a contract for 20 CSeries to be signed at the show, and with market expectations high, was embarrassed when Qatar’s CEO, Akbar Al-Baker, did one of his famous U-Turns and didn’t proceed. (Al-Baker would embarrass Boeing and Airbus at later air shows by withdrawing an announced deal for the 777-300ER and no-showing at an Airbus press conference.) We were reliably told that the French government intervened with the Qatari government to block the important CSeries order at the Paris Air Show in favor of an order for the A319neo and A320neo.

Avianca Colombia retains an order for nine and Frontier Airlines has 20, according to the Ascend data base. Flight Global reports Avianca has 19 on order, however, and this is the figure shown in an Avianca presentation, probably reflecting options yet to be exercised. Avianca is scheduled to get three in 2017, two in 2018 and the rest in 2019, according to Ascend. Frontier is scheduled to begin taking delivery in December 2018 through 2020.

This means the A319neo, which was supposed to enter service in 2016, six months after the October 2015 EIS for the A320neo, now slips behind the A321neo EIS.

The new EIS schedule means the A319neo still is planned to enter service two years before Boeing’s 737-7 MAX but two years after Bombardier’s CS300. Embraer’s E-195 E2, which seats 133 in single class to the A319neo’s 156 in single class, is scheduled to enter service in 2019.

The Frontier order is iffy, we believe. The CEO, David Siegel, told us a couple of years ago economics of the A319 aren’t very good in today’s fuel environment and favored the larger A320. Frontier was then owned by Republic Airways Holdings and was sold this year to Indigo, an investment group (not related to India’s Indigo Airlines). Indigo was principal owner of Spirit Airlines, an ultra-low cost carrier in the US. Siegel has been transforming Frontier from a low cost carrier to a ULCC. The new ownership is certain to accelerate this transition.

We expect the new ownership will also favor the A320neo and A321neo, and that eventually the order for the A319neo will be up-sized. We believe Avianca will inevitably follow.

This means Airbus will probably drop the A319neo eventually. The A319ceo may be retained through 2019 at steeply discounted prices, but more likely the A320ceo with deep discounts will be Airbus’ continuing competitive response to Bombardier’s CS300 and, to a lesser extent, Embraer’s E-195 E2.

Boeing has sold the 737-7 only to Southwest Airlines and WestJet. Southwest is said to need the 737-7 for its Midway Airport operations. Air Canada has the option to convert some of its 737 MAX orders to the -7.

Odds and Ends: E-190 v Superjet v BBD in Russia; China’s aviation; WestJet’s speed dating; Crandall speaks

E-190 v Superjet v Bombardier: With the finding that the pilot of the demo flight of the Sukhoi SSJ 100 Superjet simply flew into a mountain in Indonesia, rather than there being a problem with the airplane, the cloud has been lifted from the aircraft. So the direct match-up of the SSJ vs the Embraer E-190 can now be compared and this article does so. Bombardier’s CRJ-900 and CRJ-1000 also compete.

China’s Aviation: Airbus and Boeing think China pose the greatest threat in the future, but this analyst is less enthusiastic.

WestJet of Canada: The low cost carrier took a bold step to order up to 45 Bombardier Q400s to feed itself. Now it’s using speed dating to decide where to fly the airplanes.

Crandall speaks on AA-US merger: Former American Airlines CEO Robert Crandall weighs in on the merger between American Airlines and US Airways.

Odds and Ends: CSeries picks up; Air Canada’s Rouge; A380 v 747-8; Allegiant Air

CSeries picks up: Bombardier is ending the year with some upbeat news for the CSeries. First was an LOI for up to 30 CS100s from an unidentified customer. Next the wings arrived to be assembled onto FTV1 (Flight Test Vehicle 1). Then today it converted the MOU for 10+10 CSeries from AirBaltic to a firm order. BBD now has more than 350 orders and commitments for the aircraft. Update: Aviation Week has this item comparing early CSeries orders and E-Jet orders. CSeries stacks up pretty well.

Air Canada’s Rouge: Aspire Aviation has this column on the future of Rouge and the creation of WestJet’s Encore airline, and the impact on Canada’s aviation.

A380 v 747-8: AirInsight has this analysis comparing the Airbus A380 and Boeing 747-8. We discussed portions of this earlier, when the ad wars broke out between Airbus and Boeing, but this is more expansive.

Allegiant Air Acquires A320s: Allegiant Air is on a shopping spree again, this time acquiring nine Airbus A320s from Iberia Airlines.

LCC airline news: AirAsia bid draws scrutiny; WestJet goes upscale; M&A potential

There are two items of note for low-cost carriers that we find interesting:

  • AirAsia’s bid to buy Batavia Air looks like it is to become a political football, according to this article in the Wall Street Journal.
  • Canada’s WestJet is adding premium coach class to its long-standing single-class service. We find this one particularly interesting.

Then there is this analytical piece from Seeking Alpha about a variety of potential mergers.

Odds and Ends: More on the Ex-Im funding renewal; Boeing studies 757 replacement

Ex-Im: Republicans continue efforts to shut down the Export-Import Bank, a move that would hurt Boeing Commercial Airplanes sales most but which also would hurt other industries as well. Delta Air Lines is the driving force behind the effort to cut off Ex-Im funding. As we’ve previously indicated, rules agreed to last year by Europe and the US changed the pricing model of the Ex-Im guaranteed loans to be market rates, solving a major objection of Delta.

Ending Ex-Im Bank funding would be a dumb idea. It would hurt American business and furthermore, fees generated a net $2bn for the US Treasury in the last five years.

757 Replacement: Boeing is already studying a replacement for the 757 with a loosely targeted EIS date of 2025-2026. This is called the New Airplane Study.

Qatar Airways: U-Turn Al-Baker has U-Turned his way out of the Bombardier CSeries. Although he continues to profess to be interested in the airplane, the first 2 1/2 years of production has now been sold out. Bombardier has moved on to customers it can rely on.

BCI Leasing: Principals of an obscure lessor were found guilty of fraud. This story explains. Here is the press release from the US Attorney’s Office.

WestJet: ATR and Bombardier are waiting for WestJet to make its decision between the ATR-72 and Q400 for the airline’s entry into turbo-prop markets. The Q400 is thought to have the advantage for the longer-range operational requirements. The order could be for up to 40 aircraft. If Bombardier wins, this would follow a recent order for up to 20 Q400s from Eurolot. After a dismal year last year in which BBD sold only seven Q400s (against a net of 119 ATR turbo-props), BBD appears headed for a very good year.