Nov. 2, 2015, © Leeham Co. Boeing gets an order for up to 26 787-10s.
Airbus firms up options to an order for 30 A330s, added to 45 previously announced by the same customer.
Boeing announces an order for nine 787-9s.
For all the talk of a wide-body surplus, this is shaping up to be a good year for wide-body orders.
Through September, Airbus recorded 90 firm wide-body orders, all but three for the A330 family. Boeing recorded 152 during the same period (these are net figures). Not included are any of the orders listed above, which have yet to be recorded as firm contracts.
Based on the YTD-September figures and those above, Airbus has a 42% share of orders this year; Boeing has 58%.
Any other announced orders that haven’t yet been firmed aren’t included in this data.
A widely expected decision by Emirates Airlines for wide-bodies at the Dubai Air Show this month has been put on hold. No decision on the Airbus A380neo. No decision on the competition between the Airbus A350 and the 787-10, the latter for perhaps 70 aircraft.
The concern about a surplus is less about new airplanes (though some analysts believe this sector is over-ordered) than it is about old airplanes. While there is debate over the residual values of used aircraft, spurred by remarks from Delta Air Lines during its earnings call, from the perspective of book-to-bill, cash flow and production gaps at Airbus and Boeing, the dearth of orders has been of equal concern of aerospace analysts.
Orders for the 787-10 largely stalled after the launch of the program in 2013. There have been few orders for the A350 and the A330neo. Boeing and Airbus both point to the lack of delivery slots for the 787 and A350 until after 2020. Now that Airbus won more than 80 orders for the A330ceo, which it says fills the production gap, attention is turned to selling the A330neo.
There has also been a dearth of orders for the Boeing 777X. The aircraft doesn’t enter service until 2020, and there has been little pressure for airlines and lessors to make decisions now.
There is a belief in some quarters that orders for A350s and 777Xs will pick up next year. This remains to be seen.
Bombardier’s US$1bn infusion
The news last week that the province of Quebec is investing US$1bn into the Bombardier CSeries program
wasn’t the reassuring news the company hoped for. Stock went down as much as 17%. Aerospace analyst notes were muted. News media reports didn’t have upbeat headlines, instead calling the investment corporate welfare and questioning the wisdom of spending taxpayers’ money on the program.
Many observers note that BBD will need another $2bn to see the program through to 2020, when cash flow is forecast to turn positive. BBD, not Quebec, has to come up with this money. About $1bn is hoped for from the sale of a minority stake in its Transportation (train) unit. If successful, this means BBD still has to self-fund the other $1bn. How this will be accomplished given the other cash challenges BBD has remains to be seen.
One thing that is a positive from BBD’s announcements last week is the $3.2bn write off against the CSeries program. This will enable more pricing flexibility in the market, something BBD to which was limited financially as well as philosophically. The latter changed when new management came in. Now the former is relaxed. We estimate this gives BBD $5m in new pricing flexibility.
BBD is hardly out of the woods yet. The next weeks and months will be critical to the future of the program and the company.