June 15, 2015, Paris Air Show, c. Leeham Co. Boeing predicts 1:1 book:bill (orders to deliveries) this year.
For Airbus, you ain’t seen nothing yet. And it’s not even super-salesman, super-optimist John Leahy doing the talking.
Kiran Rao, EVP Marketing and Strategy, said that after a slow first half of the year, Airbus will come on strong in the second half with a book:bill much greater than 1:1.
Rao wouldn’t be drawn into a more definitive guidance, however.
Although sales by Airbus and Boeing have been modest this year, Rao scoffed at the suggestion the industry is entering an order trough.
“I’d start by saying you’re not seeing a decline yet. What you see is we have a nice, gentle start to the year and then we usually have a little bit of an uptick toward the end of the year. The year is not over yet, so don’t write anything off yet,” he said. “We’ve got some surprises in store before the end of the year. Not for the [Paris Air] show.”
Rao doesn’t think the industry is going into a valley after years of record orders. “Maybe we had some very exciting years in the past. I don’t want to predict how many airplanes we’ll sell this year yet, but it’s not going to be a disappoint year,” he said.
In advance of the Air Show, Boeing claimed interest is building for the so-called Middle of the Market airplane (MOM), an aircraft sized between the 737-900ER/9, the A321 and the 787-8 and A330-200. MOM is conceptualized as a twin-aisle, 250-passenger aircraft with a range of 4,500nm-5,000nm.
As we reported last week, Airbus Commercial CEO Fabrice Bregier isn’t worried and believes the A321neo and A321LR covers the MOM sector.
The A321LR was launched last January with an order from Air Lease Corp. for 30. As of today, no other orders have been announced, though a few are expected at the Air Show.
“There’s an awful lot of interest in the A321LR,” Rao said. “We’re talking to several airlines. Looking at the way Boeing is reacting [with the MOM discussion] to our aircraft, I would say that they know how serious the airlines are taking it and they know they’ve got something to worry about.”
Rao, like Bregier, is dismissive. He says Airbus and Boeing basically agree the market is only about 1,000 airplanes, not enough to spend billions of dollars for a new airplane.
Further, John Wojick, Boeing’s head of sales, told The Seattle Times the MOM program could be launched in 2019 with an entry-into-service of 2025, just six years, compared with the lengthy gestation of the 787, A350, 777X and Bombardier CSeries of seven years or more. Even the derivative 737 MAX has a birthing period of six years and the A320neo five years.
“Based on the previous experience of Boeing, I think they’ve got an awful lot of lessons to learn before they can make statements like that,” Rao said.
Two US airlines, American and United, have said the A321LR is too small, carrying fewer passengers than their Boeing 757s in international configuration.
“One of the things about the 321LR is, yes, there is the US-to-Europe market to consider,” Rao said. “The potential the 321LR can bring is not just limited to the North Atlantic. If we look at some of the European carriers, the A321LR is not too big or not too small. It’s the right size. What you have to look at is the new market’s we’ll create in the Middle East and inter-Asia.”
Observers, Rao said, are looking at the A321LR as a one-to-one replacement of the 757. This market is only about 100 aircraft across the Atlantic, Rao admits. “When we look at it the way we do, we look at all the opportunities that the aircraft can create and operate in various parts of the world. This is why it’s taking a bit of time, because it’s not just we’ll take a 757 and replace a 757. It’s ‘look at the value it brings you in your network. Then you can see there’s a lot more routes in the world than just crossing the Atlantic and not just worrying about North American carriers. There are plenty of other carriers in the world.”
So what is the size of the market for the A321LR? Before it was launched, potential customer Steven Udvar-Hazy, CEO of Air Lease Corp (which became the launch customer) said the market was 1,200 aircraft. Airbus’ Leahy cited 1,000, a figure Boeing’s VP-Marketing called “laughable.”
Rao noted that Tinseth now says there is a market for 1,000 MOM aircraft.
“There are two kinds of forecasters in the world. Those who don’t know how to forecast and those who don’t know they don’t know how to forecast,” Rao said.