Airbus on orders this year: You ain’t seen nothing yet

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.

Kiran Rao, EVP-Market and Strategy for Airbus

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.

24 Comments on “Airbus on orders this year: You ain’t seen nothing yet

  1. Kiran Rao, really? I guess that why you guys got VLA market so right with the A380. How did you guys come up with that forecast, a dartboard?

    • Aye, the dartboard in Mulligans on Rue St. Michel. [On a Saturday night at 4am]

      They’ve been rumbled now!!!

      • Ah! Now you’re making me nostalgic… used to live just round the corner.

        Signed, Somone(WhoUsedToBe)InToulouse. 😉

  2. So according to Wikipedia, American has 85 757-200s, United has 71 757-200s and ae apparently the largest operator of the 757-300 with a grand totl of 21.

    If these are the biggest two complaining about the transatlantic range of the A321 NEO, I can understand why some people don’t see the market potential for a new 757 replacement.

  3. Personally, I feel that Airbus needs to address the range of the A350. I don’t think its about matching capacity of the 9-X anymore.

    Compared the 777-X and the 787-9 the A350 came short in range and that’s not cool for a family of long-haul planes. These planes should have range of 8300. An ultra long-range A359 should be an easy build.

    • You should avoid comparing ‘book’ ranges between manufacturers, since they measure them differently. Airbus has long said that if they used Boeing metrics for range, all the A350s would have well over 8,000nm range.

    • Boeing and Airbus have quite different ways to calculate range. Airbus being much more conservative. If anything real-live range of the A350-900 is at least the same of the 787-9.

  4. That’s good to know then. I thought I read somewhere that the A350 is incapable of flying from the Middle East/India to the west coast USA.

    • That’s true but that’s the case for nearly all planes except 77L or A380.

      The 787-9 even has problems from ME to Chicago on hot days.

  5. I say: don’t enter that market. Leave it for Bombardier when they get bigger, for their next step/evolution after the CSeries. Yes, 1000-1200 planes, that’s too small for Boeing/Airbus but perfect size to move up for Bombardier.

    So, wrong if you do, wrong if you don’t. Like all the money spend trying to squash the CSeries will now be spent to stop them from going up the ladder. In the end, if all countries just decided to move away from subsidies, we’d all be in a better world with true competition.

    Now Bombardier might be forced into the CS500 because of these freakonomics. Instead of leaving them with the 100-150 seat market for the next 20 years (I was guessing same timespan as the CRJ), Boeing and Airbus might actually force even more public money to go into this stupid tax war. And the CS500 will come sooner rather than much much later because Bombardier will have been forced into doing it TO SURVIVE. All this tax money only creates antibiotic resistance and more wasted money…

    The world economic forum needs to get this to stop. Tax money should go to education, health and things every tax payer benefits from. It should not be spent trying to finance airplane deals into some spiral down to country bankruptcies and having to cut in social programs. This is not what a government is for.

    Boeing, Airbus, Bombardier, Embraer: all guilty. All should take a step back and fix this.

  6. “have said the A321LR is too small”

    The A321 and the 757-200 is almost identical in size.

    757:
    Cabin width 3.54 meters x
    Cabin length 36.09 meters
    = 127.7 m2 revenue cabin space
    Boeing catalog range: 3900nm
    United has only 169 seats in the configuration used to cross the Atlantic.

    A321:
    Cabin width 3.70 meters x
    Cabin length 34.44 meters
    = 127.4 m2 revenue cabin space
    Airbus catalog range: 4000nm (LR-version)
    Airbus has said that the A321LR will be perfect for crossing the Atlantic with 206 seats.

    The real and important difference will be in fuel consumption. If the airliners need more seats, use a widebody or increase frequency.

    • seats are not everything when it comes to “too small”

      to get the book range you need 3 aux tanks full to the brim leaving insufficient cargo hold space and payload to carry the full pax load, their luggage and the cargo they currently can haul in a 757.

      • Too small for what? Philadelphia-Shannon, Boston-Manchester, Phoenix-Kona, Miami-Manaus,…. I will bank on it that 1 or at least 2 U.S. Majors will order the 321LR.

        • Too small to warrant the expense of writing a check for them …. UA carries 169 pax in their Trans Atlantic 757’s. AA carries 179. They’re not going to play shell games with fuel tanks to leave revenue paying pax at the gate. Furthermore DL has 140 737-900’s on order/being delivered, coincidentally it’s the same number of 757’s they have, minus the 5 that they’re going to introduce to their fleet, in addition to the 45 A321 CEO’s on order as well.

          Before you go banking on anything, make sure that your bank is FDIC insured. That’d be embarrassing if you weren’t =)

          PS there’s Sun Country and Allegiant and Spirit. I’m sure they’d like to hear more about the LR.

    • Interesting when one considers that the A321LR will start to be delivered in 2019. Maybe American is keeping their options open and if Boeing doesn’t start anything, maybe they will go with the A321LR after all.

  7. Soon about half A320 deliveries will be A321s. Airlines have to choose between the NEO and LR.

    The LR allows the aux fuel tanks easily to be removed to create extra cargo space.

    The LR can lift siginificantly more cargo on e.g intra asia or transcon flights. Specially if the tanks are not installed.

    UA not ordering 321s puts them at a disadvantage against DL, AA, Jetblue, HA and Spirit. I think they will order soon.

    Airbus sold 2000+ A321s without a single one being on the Atlantic. The transatlantic discussion is a background discussion.

  8. United Airlines will do anything to stick with Boeing. That’s their Continental Airlines DNA. They can resist all they want but the A321LR is an excellent choice.

    • “United Airlines will do anything to stick with Boeing. That’s their Continental Airlines DNA. They can resist all they want but the A321LR is an excellent choice.”

      So when they ordered the A35J it was a mistake??

      Based on the facts presented, if you were the head of fleet planning would still order the LR for UA on the merit of “it’s a excellent choice”?? Airlines make sound decisions to stay in business and to stay competitive, not because it looks like a winner or whatever reason sounds plausible.

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