Airbus investors day Dec. 10-11: here’s our preview

The annual Airbus investors days are tomorrow and Thursday in London. Airbus will webcast the event; go here to link up.

The presentations will include a mix of commercial and military, with John Leahy, chief operating officer of customers, presumably presenting on the commercial. Group CEO Tom Enders, along with the chief financial officer, are likely also to present; the agenda won’t be posted until tomorrow.

On the commercial side, we expect discussion of the pending delivery Saturday of the A350-900 to launch customer Qatar Airways. Entry into service won’t happen until next month.

We expect the analysts to drill down on the A330ceo production gap; Airbus has had little success selling this airplane, and the hoped-for large order from China for the A330R has once again failed to materialize. The gap falls off the cliff in 2016. Airbus previously announced a production rate cut from 10 to nine in 4Q2015 but we think this will have to drop even more, and dramatically.

We also expect questions, which almost certainly will be answered ambiguously, about the pricing of the A330neo and A350-900 order from Delta Air Lines. Delta’s CEO publicly said he’d be happy to order the neo if the price was between $70m-$80. Now that the order happened, the question is obvious: was the price in that range? We don’t expect Airbus to reveal pricing for the obvious commercially sensitive reasons between Airbus and DL, and at the same time, Airbus doesn’t want other airlines to be using this range as a benchmark.

Questions might also arise about where Airbus got the delivery slots to accommodate Delta’s early schedule requirement. These customers were scheduled to take delivery in 2017: China Aviation Supplies, Air Lease Corp and AerCap, each with unplaced airplanes as of July when we last pulled information, Asiana, Avianca, AWAS, also with unplaced airplanes, Azul (via AerCap), Cathay Pacific Airways, China Airlines, Ethiopian Airlines, Finnair, Lufthansa, Qatar, Singapore, Sri Lankan, TAM, TAP, Thai, US Airways and Vietnam. Many of the same companies have deliveries scheduled in 2018. Hawaiian Airlines was set to receive A350-800s, but this order was ditched in favor of the A330-800. Unknown is if these slots had already been reallocated.

Airbus and Boeing had scoured the market to find slots for Delta; Airbus succeeded and Boeing didn’t. Not only does the question arise, who did Airbus get the slots from but also what incentives were required for the customer(s) to give up the slots?

Leahy told The Wall Street Journal he expects an A321neoLR order by year end—the obvious question: from whom? CIT Aerospace yesterday publicly expressed interest. American Airlines has acknowledged interest but says it’s not yet ready. United Airlines, Delta and jetBlue have also seen some details but we don’t think they’re quite ready. Air Lease Corp has been a strong, public advocate for a Boeing 757 replacement. We expect questions on this topic.

The prospect of an A380neo is likely to arise again. We expect the answer to be, “we’re studying it.” A decision is believed coming next year (we think it will be a “go.”)

The military A400M will likely come up and perhaps the KC-330 MRTT. We don’t follow other military programs.

Guidance for 2015 orders and deliveries will likely be provided.

32 Comments on “Airbus investors day Dec. 10-11: here’s our preview

  1. “We expect the analysts to drill down on the A330ceo production gap”

    Airbus plans to deliver the first A330neo in the fourth quarter of 2017. That leaves 3 full years of A330 CEO production, 2015,2016 and 2017. The backlog is 255 A330s, or 85 per year. A few top-up A330-200, A330-300, A330F or MRTT orders & Airbus is fine. Am I missing something?

    This isn’t a 2020 EIS like the 777X, it ain’t all the same.

    “Airbus and Boeing had scoured the market to find slots for Delta; Airbus succeeded and Boeing didn’t. ”

    That’s unconfirmed. Maybe Boeing found / offered slots but Delta didn’t take them for other reasons. Delta made clear delivery requirements beforehand & Boeing proposed 787s.

    What is IMO an important reason Delta choose the A350-900 is that it has a larger sister for Pacific flights, if future market development require it. The 787-9 doesn’t. It’s an issue that played a role at LH too.

    • “Airbus and Boeing had scoured the market to find slots for Delta; Airbus succeeded and Boeing didn’t. ”

      “That’s unconfirmed. Maybe Boeing found / offered slots but Delta didn’t take them for other reasons. Delta made clear delivery requirements beforehand & Boeing proposed 787s.”

      Oh, come now, Keesje, are you really suggesting we don’t know what was going on there?

      • In the end wouldn’t you say that it all came down to the economics of the entire package, since Boeing was willing to throw in the 77L as temporary lift until they get free 787 slots?

      • Ok Delta is prestigious,but would it really be worth losing the money Airbus could of made by selling to another airline?As Airbus and Boeing can’t build latest generation planes fast enough, it seems childish to lose profit just to win the annual order race and hurt the opposition.Whilst it’s nice to see the free market working,they both need lots of money to invest in new products for the battle to come.

        • It isn’t just prestige, is it?. Delta has a large widebody fleet that will need replacement in the future. This win gives Airbus a leg up on future orders that Boeing will have to compete more aggressively for – e.g. A350-1000 vs. 777X. And I do believe that Delta has, in the past, gone straight to the OEM without competition, if they think an aircraft has good economics and fits well in their existing fleet. The last A321 order comes to mind, and probably the 242T A330 order as well.

      • My take what was going on was Delta (for better or worse) used Boeing as a stalking horse to get the aircraft they had already decided on at bargain basement prices of the nature Ryanair got on 737s.

        Please note the false statements the A330NEO was not part of the final consideration then suddenly was. Bait and switch.

        While I don’t feel sorry for Boeing, you have to wonder with all that it cost Airbus to cut the cost to the bone (break even at best) to get this deal.

        • “Please note the false statements the A330NEO was not part of the final consideration then suddenly was. Bait and switch. ”

          – When did they say this?

  2. Drop in production, at least that means resources are available for the build of new Beluga planes..

    • Drop in production, at least that means resources are available for the build of new Beluga planes.
      Finding 5 slots across ~5 years wouldn’t even be that much of a problem if there wasn’t a production gap, though.

      • guess the manhours spend per frame is the same for a Beluga compared to a normal a330?

        • I don’t think the Beluga conversion team are the same people from the regular A330 production line.

  3. I guess this one answers to the question is how high will A350 production be by 2018 and what ramp up is Airbus (quietly) expecting now?

  4. For Airbus winning this Delta contract, I think available slots, low prices, incentives and OEM loyalty are acceptable factors for many. They stay away from technological differences.

    More acceptable then e.g. flawless development, ETOPS 370 maturity out of the blocks, superior Pacific payload-range, comfort and growth potential (vs 787), more advanced design, lower OEW, fuel consumption, EIS risks and operating costs (vs 777\X).

    It feels a bit like stating the 777 beat the A340, because Boeing typically gives discounts and Airbus needed all the slots for the A330. A feel good story.

  5. I expect China will make a number of big A330 orders when it suites them. Developing widebody capabilities are a high priority to China and Airbus wouldn’t be interested in a finishing centre in China without a big incentive. I remember that there was some inference that Airbus found China production to be no cheaper than European production, and dearer than USA. So I guess 150-200 A330s from China must be pretty safe. Announced orders can always get cancelled, but the Chinese government breaking trust with investors would do damage to China’s image as a place to do business which would be slow to fix. The big question would seem to be the CEO/NEO mix. I also wonder how much A330 production suppliers can handle, if A350 production is going over 10, and the A330 was supposed to be dead by now, Toulouse will need a lot more seats than anyone ever expected Airbus to need during the next few years.

    • I’m Beginning to wonder if the plan isn’t to shift the whole a330 ceo/neo line to China as soon as a350 is up and running

      • If that’s the plan they might as well just scrap the A330 and be done with it. The Chinese aerospace industry is nowhere near the level at which they would be able to support a program as complicated and advanced as the A330.

  6. “Guidance for 2015 orders and deliveries will likely be provided.”

    Delivery guidance is usually provided during the annual press conference in January.

  7. “The gap falls off the cliff in 2016. Airbus previously announced a production rate cut from 10 to nine in 4Q2015 but we think this will have to drop even more, and dramatically.”

    Scott, do you know what is going on with current rate? AB has delivered 93 A330’s through Nov 30, which is less then 8.5 per mouth now. How do you cut production to 9 when you’re already below that rate??

    • They are for the Chinese order of 70-200 A330Rs to come through. Good luck.

    • You need to observe Airbus production a little better:

      “How do you cut production to 9 when you’re already below that rate??”

      The production rate is 10 per month, you are confused with the delivery rate. Production and deliveries are not always in sync. Avianca has deferred 3 A330s, Libyan Airlines and Afriqiyah Airways also have 2 A330s each stored in Toulouse due to the war in Libya.

      “which is less then 8.5 per mouth now”

      Airbus produces A330s on an 11-month basis. So 93 deliveries plus 7 deferrals as mentioned above gives us 100 produced A330 in 2014. Add another 10 for December, that gives us 110 / 11 = 10 per month.

  8. If I were the Chinese I might wait a few years for the 330 NEO. And get 50 refurbished 767s dirt cheap from the US on a 6 yr lease to fill short term needs.

    • Yeah! Problems with the new generation of space-flex-lavatory that may hurt a certain set of your body parts!

    • From Qatar’s Facebook page:

      #QatarAirways announces that the Airbus #A350 aircraft ceremonial transfer of title has been postponed until further notice.

      With the imminent launch of the new Airbus A350 programme, both entities are committed to introducing the A350 very soon. #QatarA350

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