By Bjorn Fehrm
Toulouse 13 Jan 2015: Airbus today held their annual press conference where they among other things revealed their final numbers for orders and deliveries. The press conference was hosted by Airbus CEO Fabrice Bregier accompanied by COO Customers John Leahy, new COO Tom Williams and new Head of Programs Didier Evrard.
Airbus in 2014
Bregier started with pointing out that 2014 was a very eventful year for Airbus. Airbus did their customary end of year sprint and passed Boeing for net orders with 24 aircraft netting 1456 commands, Figure 1.
On the delivery side Boeing is ahead with 723 deliveries versus Airbus 629, Figure 2.
Further Airbus certified the A350 and delivered the first aircraft to its launch customer, Qatar Airways. It also launched the A330neo and got 120 orders during the year. Finally they flew the A320neo first prototype.
Airbus in 2015
Bregier then said 2015 will be more about execution; getting the production ramp up of A350 running smoothly, producing 15 aircraft and leaving the year with rate 5 at the Final Assembly Line (FAL) level.
2015 is also the year of certification for the A320neo and then first delivery, expecting to happen in Q3 and Q4 2015 respectively. Finally it is the year of break even on production cost versus net price for the A380, where “we are on track to achieve that” according to Bregier.
John Leahy continued with presenting slides around the sales race over the years with Boeing. Overall he said they are dividing the market pretty evenly between them. Airbus has slight lead in narrowbodys (5-10% depending on year and time of year) even when you even out the 6 months head start according to Leahy. In Widebody Boeing has a lead in the last years but if one compares the average from all years from the launch of the A350 widebody sales are just about even, Figure 3.
Choosing the 350 launch as a comparison time period cuts off 180 Boeing 787 orders, so the comparison has its weaknesses but overall the Narrowbody and Widebody aircraft markets are pretty evenly divided between the two with fluctuations between years.
Leahy then formally launched the A320neoLR with the official name “A321LR” announcing Steven Udvar-Házys ALC as the launch customer. We will take a closer look at the final figures for A321LR in a follow up article.
Leahy then spend the majority of time on the A380 arguing why the market will come to this aircraft. The reason is that air traffic grows with Gross Domestic Product, GDP, but airports and airport slots do not. Over the next 15 years the number of airports which will be slot constrained will more than double and these airports that are already have substantial A380 traffic, Figure 4.
The future of the A380 is therefore secured, Leahy said. He was supported by Bregier in the QA session where a strong support for future developments of A380 was given, though without specifics. “After some difficult years A380 is now on track product wise and economically, it then becomes an aircraft program like any other and the point in time for any incremental improvements will be decided on a running basis”.
There Leahy also got the question how fuel costs, which are almost 100% lower than a year ago, will affect sales. He said “if it has any effect it is that airlines have more cash on hand to place the initial deposits”; arguing that aircraft orders are made with a planning horizon of 10-15 years and therefore would not be materially affected but a short term fluctuation of fuel prices.
Overall the mood of Airbus management was one of quiet confidence. The only area not 100% in order or under control was the effects the failed Global Investor forum has had of the image of the A380. Our deep analysis has shown this to be more general sentiment and hesitation of the market to fill such a large aircraft rather than any deficiencies in the aircraft’s underlying economics. We believe therefore one should add changing the markets perception around the A380 to the task at hand for Airbus 2015.
“Overall the mood of Airbus management was one of quiet confidence”
Not Leahy, he made it a show, making jokes on his collegeas & competitors. Thanking his Seattle collegues for staying up late, (with their glasses of red wine), telling them there was something to learn here. Trying to defuse the common feeling Boeing is in the lead on big twins. Or anywhere in general 😉
Yeah lol this guy is a comic. Who here remembers when EK cancelled those A350’s he told the press that they weren’t worried about it and those slots would be filled very soon? Still nothing. Minutes 35:50-36:10 btw.
The 330 is the most successful wide body program? In what universe? Minute 43:33
I don’t have an issue with him, just the presentation.
How can fuel costs be down 100%?
It is a viewpoint thing. glass half full / half empty 😉
Based on fuel cost today “100%” it used to be 200%/twice as much. so fuel has come down 100%.
Obviously different from a predrop position. Then it is only 50% drop in price.
A321LR is launched. Untapped middle of market right above it.
What is the list price value of all net orders 2014 for Boeing?
There is a rush going on in A321 deliveries, there will be a rush for A321NEO’s from 2017. Many conversions in the pipeline.
When the A321LR comes online, it will most likely replace the A321NEO on the FAL. The payload, configuration options increase the rest value, longer term flexibility of the airframe (e.g. for cargo conversion), compensating it’s slightly higher empty weight.
Potentially some airlines will initially opt for the A321LR without the (retrofitable) auxilliary fuel tanks. Giving it lower OEW, better cargo capacity and hot/high capability.
The 450 A321LR target is far too low & Leahy knows it. Intra Asia, N-S America and EMEA leisure operators will realize that in no time.
In the US, operated by AA, DL and Jetblue it scheduled to take over transcon and Caribean flights. UA can no longer stay out.
In the meantime, Boeing is making 10 787s a month and ramping up.
Almost as many 777s a month as A330.
767s still being produced. It looks to me like Boeing is taking market share year by year until A350 is established at full rate (A330 continuing down but not as low as 767)
My take is Boeing winds up with 60% or so of the wide body market and then maintains that by matching.
But then I think its aircraft produced not orders in off and out years that is really market share.
Better is a year by year comparison of aircraft produced, that’s a number that has no argument, nothing to dispute, solid.
“In the meantime, Boeing is making 10 787s a month and ramping up.”
Any projections around how much potential for cost reductions there still are in the production process and at what rate those can be achieved?
Excellent point. While Airbus had the edge this year in terms of net orders, their cancellation total was horrendous. To me, as well as your self, aircraft produced is the main variable since it cant be modified or diluted by terms like undisclosed, unannounced, MOU and LOI. I think Boeing will be able to regain lost market share by getting those airplanes in the hands of its customers sooner than later. Backlogs are great to investors butworrisome to carriers who need immediate lift.
1/3 of cancellations appear to be linked to CEO for NEO swaps. Kind of a “bored rich” problem, isn’t it ?
Then if your net orders are still higher than what the “belts and suspenders” guy across the road managed you have taken the right kind of risk imho.
Problematic are those late customer defections/founderings like the Skymark deal
where dedicated frames have already been built.
Correct, that is why I’m so surprised by the 625 aircraft of “Unidentified Customer(s)” the manufacturer has in its order book for 2014. That sure can’t relate to what they see as quality of orders.
Quod licet Iovi, non licet bovi 😉
Even some of those “bovi” are more equal than others.
“In the meantime, Boeing is making 10 787s a month and ramping up.”
That’s the real good news for 2014 IMO! 787’s are introduced everywhere and the -9 seems to have matured a good chunck beyond the -8. Securing good cash flow for the year to come.
The production deferred cost at some point have to be repaid but thats’ for later.