I am amazed how many airlines made commitments far above their current fleet size. For me, many of these orders are actually bets, and comparison is difficult. The 30 aircraft ordered by Lufthansa are rock solid (they need seem simply to replace aging A320). But a 100-aircraft order by Norwegian or 200 by AirAsia or 150 by IndiGo are less solid. And I think manufacturers oversell to some extent, but probably more than they ever did before. Just why? Reply
I am amazed how many airlines made commitments far above their current fleet size. For me, many of these orders are actually bets, and comparison is difficult. The 30 aircraft ordered by Lufthansa are rock solid (they need seem simply to replace aging A320). But a 100-aircraft order by Norwegian or 200 by AirAsia or 150 by IndiGo are less solid. And I think manufacturers oversell to some extent, but probably more than they ever did before. Just why?
@Schorsch, I agree there is a chance that some of the orders are “over-ordered” and the entire order not filled. Don’t forget however, when Indigo a few years ago ordered its 100+ A32X, no one thought they would be able to take them. Yet here they are, still taking their planes and they are one, if not the only profitable Indian air carrier. The same can be said about Lion Air and their B739ER order. While they haven’t taken all of them yet, very few thought they would have taken the current amount so far.
It will be interesting to see if any “only Airbus” customer orders the Max or if the trend continues with “only Boeing” customers ordering Airbus.
I think there is a good chance many of these orders which seem too large for the airline which bought them, include some “speculative buy” frames in the number. That is to say airlines with cash or financing available are buying up positions on the speculation the aircraft will be in considerable more demand in the future – enough so that the price differential will cover the cost of money spent on PDPs in advance of the delivery. They are buying them to sell or lease them in the future, not to operate them. Norwegian is a good example. I can’t remember Bjorn Kjos’ exact words, but it was something along the lines of “We bought the A320neo for other business opportunities.” I’m sure Airbus made a terrific offer to Bjorn for the A320neo, and I suspect he bought them anticipating he could get a price premium for his slots once all Airbus can offer is delivery positions several years later. We saw a lot of speculative buying in the early 787 ordering too, and there are a few newly minted millionaires out there among those who rolled the dice and bought in when the prices were very low.
CM, Norwegian didn’t buy the A320 for “other” business opportunities. However much that belief is based on wishful thinking, I don’t know. Nevertheless, it does not square with the fact that Norwegian is expanding rapidly and wants to operate new fuel efficient NBs from OSL to places as far away as DXB (as they do now), or even longer.
Norwegian is planning to operate all of their new aircraft for not much more than 7-8 years. So, the first A320s arriving in 2016 will likely start to be replaced in 2024.
Also, I’ve seen no evidence that Norwegian supposedly was offered a more “terrific offer” from Airbus than what they were offered from Boeing, and the neo slots Norwegian was offered are not fictitious as you seem to believe; and as you should know, Norwegian is not taking delivery of all of their new aircraft at once; in fact, they are spread out over a number of years. With all due respect; that you seem to suspect that Norwegian is bying neo’s in anticipation that they can get a price premium for their slots, is IMO, nothing but pointless and somewhat biased speculation on your part.
That is a good business plan. So the B-737MAX and A-320NEOs are not being bought for their efficencies (which both will be very efficent), but more for an investment asset. Selling new airplanes before they reach 10 years old is a smart stratigy, and now by ordering the MAX and NEO, he expands the potential market he can resell them in.
Yeah, I agree Jacobin777, this story only shows one side of the picture. The story did not say that DY also ordered 100 B-737-8MAX at the same time as the A-320ESs. Is the AA order for 130 A-321NEOs firmed up? Will the order survive the BK?
All of the AA order has been removed from Airbus’ backlog. Classics and NEOs. American is no longer listed in Airbus’ backlog as of January’s release.
Now that’s interesting. Thanks.
The bankruptcy court has to reaffirm everything. Simply has not been done yet.
With so many budget carriers placing orders on what outwardly appears to be wing a prayer business plans, both manufacturers are at risk from this swill of aeronautical gluttony.
The pendulum of orders continues it’s swing in EADS favour, with critical loyal Boeing operators continuing to abandon the brand, quite why Boeing haven’t been capable of addressing this exodus must be more product based than sales & marketing.
It’s patently clear that if EADS the capability of pushing more airframes through the door, we would see even more yellow highlighting.
Phil, I like your phrase “both manufacturers are at risk from this swill of aeronautical gluttony”. It seems to be one of the most accurate statements made in the discussions between the MAX and the NEO.
That said, we have no idea what Airbus offered in the way of discounts and other incentives to buy, or lease, the NEO. We also have no idea if Boeing tried to match the Airbus pricing and incentives, or not. The fact that at listed prices, all the NEO models are significantly higher than the coorsponding MAX model seems to have made no difference to these customers. Leasing customers will buy the aircraft their customers are interested in leasing.
The AA and DY orders seem to be the most interesting orders, as the NEOs were ordered along side of the MAX. How does that make any business sense? Not only will these airlines have two completely different airplanes flying the exact same missions, but now you have to stock two completely different set of spares. You also have to fund two different training programs for crews and maintenance. Different test equipment? Most likely.
Why some mayor airlines ordered both the A and B offerings? maybe it has to do with A using 700?nm and B using 500?nm in their respective comparisons and both coming out better than the other.
the A320 and B737 families, despite being roughly similar in size cover different operational requirements.
Some dinosaurs will disappear.
[Comment deleted. We’re not going to allow this forum to become a personal axe to grind.]
Wow! I thought some of Uwe’s posts were challenging to make out.
One thing is certain; on this blog, we have never let the facts get in the way of a good comment. It would be quite a news story, if it were true!
FT, slideshare is about the most useless place to present information.
pdf or ppt downloads please.
Is Scott on vacation??
Must be i am waiting hear about the peeling on the 787 last i heard it it was going to take 14 days to shimmy each one.
Just seen a report on A.I to sell the 787 at a profit because of technical problems do they know a lot more then what is Boeing is putting out about the shimmy’s.
Do you have a link to the AI story? Are they selling all of them? They probably do know more than Boeing is saying publicly, but the timing of this does not indicate it is related to the tail shims. That has only been out for a short time and it usually takes months for airlines to make deals between themselves to sell/buy each other’s airplanes.
Who is buying these airplanes? It would only make sence at this point in time for another B-787-8 customer who also ordered them with the GEnx-1B engines and has programs already in place for the airplane.
the link on the air India story
That makes it clear as mud. But thanks for the link, Dutchman. They may sell the airplanes as they need the money. The airplanes are worth more than AI paid for them.
AI did try to shake down Boeing for $1B in claimed lost revenue due to the B-787 delivery delays.
Not long ago AI was looking around for financing their frames.
EX-IM-Bank got its limits extended.
Maybe AI found somebody for a lease back arraangement?
QF, LAN, AI, LOT, JAL are all pushing out / converting early 787-8s
next weeks “news” I guess..
Keesje, perhaps the most likely would be QR. Their B-787s are ordered with GE engines and LOT, LAN and QF all ordered RR engines,
QF announced last week they not take 787-8 this yr.
I would like to see the list of scheduled 787-8 deliveries in 2012as foreseen early January. It seems most airlines on that list have balked recently, citing various reasons, but the result is the same.
It now looks like the numbers of 787 being delivered in 2012 is no longer up to Boeing alone. Everybody seems to be staying quiet on it..
Yet Kingfisher IS still listed, and their situation is FAR more dire. Sorry, something just doesn’t pass the smell test.
Not the “direness” but the legal state is relevant.
You will have to “clear” your nose a bit to discern that smell correctly 😉
Kingfisher has many Airbuses still on order, including about 6 A-380s. There situation is dire enough to question if any of them will ever be delivered.
Then kindly explain why Airbus hadn’t removed US Air’s orders when they were in Ch 11?
Chapter 11 is VERY common in US business. It’s not Ch 7 liquidation.
Perhaps it’s your snoot that needs cleared?
Kingfisher is not in bankruptcy.
No, their situation is FAR worse than that AA, Kingfisher is on a path to CFIT. American WILL survive, Kingfisher will NOT.
Currently Kingfisher hasn’t paid their staff since DECEMBER, when was the last time AA missed pay role? Kingfisher is having planes REPOed, when was the last time AA had a plane REPOed? Half of Kingfisher’s fleet is grounded because they can’t or won’t pay the maintenance on the planes, when was the last time AA had half or ANY of it’s fleet grounded because they refused to do maintenance?
You’re little “technical” point is made, but the truth is the situation at AA is a tactical Bankruptcy, which the US airlines have gone through over and over. Yet this is the first time Airbus has removed a US carrier from their backlog over a “bankruptcy”… yea. Sure. If you wish to keep pushing the “I believe” button that is your choice. I just don’t see the rationale. US Air was in “bankruptcy” yet Airbus didn’t cancel a single one of their planes, in fact, they loaned them MORE money to finance further Airbus purchases? Do you expect the same for Kingfisher? I sure don’t.
Oh, and I forgot to add when was the last time AA had their accounts frozen by the IRS? Kingfisher’s currently are because they neglected to pay their taxes.
They are also on a cash only basis with their fuel suppliers. When was the last time AA was on a Cash only basis with their suppliers?
Kingfisher just last week canceled 80 flights, in violation of Indian law, because they couldn’t staff the planes or fuel them. Yea… but AA is in Ch 11, so let’s all worry about their status as a customer. Phuuuuleeez.
I seem to recall there was a story not long ago about Kingfisher has not paid their employees for months, either.
GECAS has threatened to repossess some of IT’s airplanes. It is not just the tax man they owe money to.
The difference between AA and IT is AA is doing it leagally, IT apparently is not.
World Trade Organization(WTO)and European Union(EU). Airbus Directors and WTO to keep on recognise the promise made for Doha Development Agenda(DDA). WTO now control our economy, fate and future. The fate of the so-called Doha.
Let’s blow your snoots and get back to professionalism.
Airbus is confident AA will affirm the A320 orders. We think y’all are reading too much into things here.