A330 programme. The long range programme presents no new challenges. However, managing the order book beyond 2016 becomes more challenging due to competition from A350 XWB and Boeing 787.
—From the Airbus Group 2013 Annual Report
We have written previously that Airbus faced a production gap, a major drop in backlog orders from 2016, with no orders at all from 2020 (excluding the 27 orders placed in March by China, for which we don’t currently have delivery data yet). Back on December 29, we noted that the prospect of the A330neo was gaining traction–and it’s even more so today.
Market Intelligence from multiple sources indicate that Airbus will announce at the Farnborough Air Show that it will proceed with re-engining the A330 into a new engine option configuration, including sharklets similar to that on the A320 family.
This will give a needed boost to the A330 line. There have been a dearth of orders, in part, no doubt, to the industry waiting to see whether Airbus will proceed with the A330neo. Recall that there had been a drop in A320 family orders in the run-up to the launch of the A320neo.
We have now completed a comprehensive study about the business case for the A330neo and how competitive it would be vs. the Boeing 787-8 and -9, and what price Airbus has to offer to help make the airplane competitive. This proprietary study is based on our proprietary economic modeling which, along with our own Market analysis, concludes that there is a business case to proceed with the A330neo. We concurrently believe Airbus will discontinue offering the A350-800, although this announcement may not come for some time. Among the reasons: Hawaiian Airlines wants the A350-800 as offering the passenger capacity and the range it desires. The A350-900 is too big, officials currently believe. But an A330-300neo won’t offer the range Hawaiian wants (it will fall about 1,500nm short, according to our estimates). If Airbus discontinues the A350-800, Hawaiian may well re-issue its Request for Proposals that will give Boeing a shot at getting the 787-9 into Hawaiian. Given the planned production boost to the 787 line (12/mo in 2016, 14/m0 in 2018 or 2019), Boeing now has delivery slots to offer to match that of the A350-800 schedule.
But we don’t think Airbus is done once it launches the A330neo. We believe Airbus continues to look at the prospect of re-engining the A380, c.2020, given additional impetus from the large customer for the A380, Tim Clark of Emirates Airlines. This article in The Wall Street Journal is the latest on this topic.
We expressed our view February 3 in Updating the A380: the prospect of a neo version and what’s involved.
Emirates’ Clark indicated that the last 25 of his new A380s could be powered by new, efficient Rolls-Royce engines fits with the February 26 RR announcement for the 2020 availability of its Advance engine. Our February analysis showed that the A380 is competitive with just seating changes until the 777-9X enters the market. After the 777-9X EIS, bigger changes are needed to defend the A380’s position as the most efficient of air transport. How the Advance closes this gap will be the subject of an upcoming analysis.
We also believe Airbus continues to evaluate the prospect for an A350-1100. As precise as the Advance announcement was from Rolls Royce as future oriented was the follow on, the Ultrafan. This has clear grounds; the Advance business case is firmly footed. It will be the engine for the A380neo as described but the real opportunity will be the A350-1100. The surprisingly good start of the 777-9X has made an Airbus counter in the 400 seat segment more urgent than expected. The A350-1000 needs a 400 seat sister, yet stretching the existing Trent XWB engine on the -1000 would be complicated. With no improvement in engine fuel consumption, it forces a higher maximum weight to keep the range, which forces a larger wing, which forces stronger engines, which…. Or, alternatively, keeping the current Trent XWB and wing means reduced range, similar to the Boeing 787-10 approach.
The Advance works like a magic wand on this viscous circle. More efficient and lighter then the Trent XWB, it enables a 2020 EIS of a 400 seat A350 which weighs fractionally more than today’s A350-1000. It means no new wing, no new landing gear, etc, just a fuselage stretch married to Advanced engines and you have your 400 passengers flown the distance asked for.