Leeham News and Analysis
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Leeham News and Analysis
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Airbus annual press conference 2016
By Bjorn Fehrm
Introduction
12 January 2016, ©. Leeham Co: Airbus held its annual press conference in Paris today against a backdrop of record 2015 deliveries. The year that went past was consequently a good one for Airbus. Orders were at a record high for the third year in succession and deliveries exceeded previous years for the 13th year in succession.
But the Airbus sky wasn’t totally cloud free; the large A380 only got sales by having ANA mop up the mess after Japan’s Skymark bankruptcy and production of the new A350 was hindered by a sole source lavatory supplier.
The result was that Airbus missed two 2015 delivery targets, the 15 per year for A350 (delivered 14) and the 2016 delivery of the first A320neo. The latter was because of “paperwork issues” related to certain things being “late to finish” ahead of certification.
Discussion
Deliveries and sales
Airbus broke its 2014 delivery record by six aircraft to record 635 delivered aircraft for 2015. Of these, 491 were A320s, 103 A330s, 27 A380s and 14 A350s. The company expects to break this record again this year with a minimum of 650 aircraft delivered during 2016.
Sales were above 1.5 times times deliveries for the third year in a row at 1,036 net orders. 879 of these were for A320, over 100 were for A330ceo, 50 for A330neo, 16 for A350 and three for A380. The A380 order was for an “undisclosed major airline” but it is an official secret that this was ANA taking over the 3 A380 produced for Japan’s bankrupt Skymark.
Aircraft programs
A320
The A320 program is noteworthy for continued strong orders, both ceo and neo. Production will not increase during 2016 as this is a year of production transition from ceo to neo. Airbus expect deliveries to accelerate during 2017/2018 and to reach 60 (or even 63 according to Airbus COO customers John Leahy) in 2019 when the production should have switched to 100% neo units.
The delay of the first A320neo delivery to January this year was due “things being late for certification,” according to Airbus CEO Fabrice Bregier, making the necessary “in service fault-finding documentation not being ready in time.” Delivery to Lufthansa is now expected “in the next two weeks.”
A330
The second sales results, which pleased Airbus, was for the A330. The production rate was previously reduced to six a month from 10, to avoid producing white tails during the ceo to neo transition. Rate 6 six is now secured by A330ceo orders from China and Saudi Arabia. Leahy joked he is now trying to get production people to increase the level to seven or eight per month again. With 140 new A330neo orders, the confidence in the variant is increasing. A330neo detail design is finished and parts production has started for FAL entry in Q4. Certification and first delivery is on track for Q42017.
Leahy mentioned that the A330ceo is still much in demand thanks to a rise in capabilities by the increase of take-off weight to 242t. He is now lobbying engineering to take that up to 245t.
A350
Airbus has had issues with its supply chain and could therefore not fulfill a target production rate of 15 aircraft for 2015. A major problem was with a single supplier, Zodiac. It is the sole supplier of A350 lavatories and an important supplier of seats.
Despite significant efforts from Airbus, Zodiac had not be able to correct issues in their supply of sole source items in the A350’s interior catalog. This has brought things to a level where Bregier singled out Zodiac as the sole supplier that had not been able to live up to their commitments during 2015 despite significant efforts from Airbus and repeated escalations. As a consequence Airbus has deselected Zodiac from the A330neo’s interior catalog.
The in-service experience of the 15 A350, which was delivered in late 2014, “has been according to expectation,” said Bregier. Airbus believes it will reach an A350 in service reliability of better than 98.5% for 2016. Deliveries for the year is expected to surpass 50 units with a ramp to over 100 units for 2018.
Development of the A350-1000 variant is on track for a Q42016 first flight with mid-2017 delivery. Bregier said things are going to plan and he could already confirm the performance of the aircraft as meeting specifications.
A380
Airbus delivered 27 A380s during 2015. That level of production was sufficient for Airbus to stop losing money on delivered aircraft. Airbus also booked three new orders from a “new major airline customer” during 2015 as described before.
Airbus is still pursuing larger orders for the A380 but “these take time to mature,” according to Leahy. In the meantime, efforts are underway to lower the production costs so that “cost break even will be just above 20 units per year,” according to Bregier.
Zodiac:
Is this (still) due to the explosion on their manufacturing site in Newport (~mid July of 2015) ?
Zodiac has there general shareholder meeting in 2 days time. That is going to be a fun session: being completely shut out of the A330 for “being in denial” on the A350. I think more work will be lost over time and am pretty sure Airbus is working on a second source for the A350. I assume shareholders will not be pleased…
No. All I will say is both major OEMs have been working very hard to get Zodiac back on track for supporting their more aggressive production targets. Too many acquisitions over the last 5 years and poor management of their own supply chains compounded their issues.
Hello Bjorn
If i hear well, Leahy specially said that he was holding back a330neo sales campaign in 2015… and that 2016 will be a nice year for widebodies (response to Trevidic question)
Bonne journée
The A350 (particularly the troubled 1000 model) really seems to have hit a stone wall in sales, alongside the 380. It’s amazing to see a new larger derivative such as this fail to catch on after having it’s smaller/launch sibling achieve such penetration, and with a slow ramp up/development phase. The EK order almost has to happen for this to be successful it seems.
In what way, exactly, is the -1000 “troubled”?
It is that it will be flying too fast and high … and then will be fuzzy for most of the mortals…
😀
Was wondering how this is different to the 787-10. They both have similar backlogs, similar production, and EIS within one year of each other, have had to wait for upgraded engines… and, the 787-10 could really use that EK order too, isn’t that so?
If The A350 hit 14 instead of 15 that’s pretty darned good
With additional conversions from -900 this year and now the news that VS is just about to acquire a dozen (three leased, nine direct purchased), it seems to me the -1000 is in a pretty reasonable place given we’re still about 18-20 months from EIS.
For the purpose of comparing the A350-1000 with its main competitor post EIS, it’s interesting to note that the 777X currently has 6 customers ( + one unidentified order/customer for 10 777-9). The A350-1000 currently has 10 customer – or 11 if Virgin Atlantic goes ahead with their rumoured order for 9 (+3).
In contrast, the highly successful 777-300ER had “only” secured 83 orders through April 2004 – or just before the EIS of the first 777-300ER (Air France) in May, 2004.
The 777X is an ok aircraft, but it isn’t going to really be a big seller outside the Mideast. I expect sales for the 777x are going to be pretty limited as compared to eventual sales for the a350-100: which has an appeal for airlines with routes other than those passing through the Persian Gulf terminals. Consequently, I believe the 777x has a very limited future.
The rumours about the A350-1000 are getting louder:
http://www.aero.de/news-23248/Virgin-will-sich-zwoelf-Airbus-A350-1000-zulegen.html
Virgin will buy 9 and lease 3 more -1000 to be delivered from late 2018 or early 2019 on.
It is also mentioned that Virgin may cancel the 6 A380s to be delivered from 2018 on.
The 777-300ER and the 777-9X were also considered by Virgin.
Am very impressed by the target ramp of the A350. I thought that the original target was in the 30-40 range for 2016. Presumably they will be looking to produce at least 53 given that the 3 test 1000 frames will be rolling off the line during the year. I suppose they won’t need toilets!!
It sounds like Airbus is confident in its own ability to achieve the numbers and has done some serious knocking of heads together with regard to its supply chain. The proof will be apparent on December 31st I suppose……..
Is the assumption that the A330NEO will ramp to 10 a month or to run at a lower volume? The thought of 20+ A350/A330s/month as well as A380s at 3/month suggest that TLS will be a rather busy place by 2018.
Are they going to build the A338? Only 10 orders vs the A339’s 160. My thought right now is it’ll go the way of the A358.
It is not a separate/extended design effort, is it?
( compare to the A319 that lacks real interest too.)
The A338 will probably be needed for future Airbus freighters and MRTTs.
No !
They need the A338 (Ex A332) for a lot of others developments sooner or later !
– Freighters
– MRTT
– Awacs
And eventually to contain B788 pricing !
“And eventually to contain B788 pricing !”
I believe that the A380-800 pretty much assures that the 787-8 will never be successful. As soon as Boeing figures out how to eek even the smallest profits from the 787-8, all Airbus has to do is lower the price again on the a330-800 – and they can lower the price on the a330 by a lot!
On an interesting note, Air Asia X has officially kicked the can down the line and cancelled all current A330s (to including Leahys IGW version and or versions)
I have not see delivery targets, something like over 60 0n order now. I guess he doesn’t really need them.
I guess the next step is to cancel those and pick up A350-900s, cancel those for -1000s then cancel those in favor or A380s at which point they fall off the edge, but shoot that take them to 2030 or better.
Was the A380 transfer to ANA officially in 2015?
The usual slight of hand with Airbus taking next years orders into the current finished year.
Talk about silly, they don’t have to do that other than Leahys ego.
Airbus booked an order for 3 A380s to an undisclosed customer on 16th December.
You do know that Airbus doesn’t operate in a regulatory vacuum, don’t you? Please feel free to offer any shred of evidence you have to support this very tired myth.
Please list any regularity evidence that Airbus has to abide by anything other than what they want to in regards to items such as listing A380s to “undisclosed customer”
My take is they can just cancel it the next year if it does not come through. i.e. there are no regulations on that aspect of the business.
And an ORER is a slight of hand when we all know its 3 already built aircraft. Now they can say they had 3 A380 orders in 2015 and did not go the whole year without one? right
While you are busy analyzing supposedly fishy orders could you continue into Boeing’s domain of unidentified soap bubbles?
We are all so keen on gaining some understanding there.
I do not disagree on Boeing, I am discussion Airbus in this post as that is what the title of the thing is.
Please see the next Blog entry on assessment of Boeing orders for Boeing comments.
Always the same response when somebody dares have even a hint of criticism of Airbus…
It is the most obvious way to point out that a poster conjures up arguments in a strongly partisan way. The same indication emerges from the same old “arguments” repeated ad nauseam _and_ in the face of having gotten a sufficiently detailed explanation on the why and why nots to have it tabled.
Difference between debating for winning and debating for knowledge increase. Some only know about the winning and will loose that way.
John F. Kennedy, Commencement Address at Yale University, June 11 1962
Physician heal thyself.
Uwe says: “While you are busy analyzing supposedly fishy orders could you continue into Boeing’s domain of unidentified soap bubbles?
We are all so keen on gaining some understanding there.”
YES PLEASE !!!
Airbus is a publicly traded company, subject to the exact same rules as all such companies. They cannot simply ‘make up’ orders – they need a signed contract and paid deposits before the order can be listed. Each order is both an asset (a paid deposit and the promise of future revenue) and a liability (they have to produce it).
There’s no sleight of hand involved either. The Skymark order was removed from the order book, so this is a new sale.
I’ll consider any evidence you have to the contrary. But you really don’t have any, do you?
@ Stealth66
This will be a perfect reply to Uwe’s question just before your post
Indeed. I have no issue with the legality of Boeing’s order book.
The only issue I have with the huge number of ‘undisclosed customer’ orders is that it’s impossible to reasonably compare backlogs whenever the alleged “poor quality” of Airbus’s backlog is discussed.
I asked for chapter and verse as well and you cite generalities.
Yes money was involved, how much, how sweetheart a deal to keep this as a holding place? Neither you nor I know but we all know Airbus is desperate to log A380 sales.
As ANA owned part of Skymark, hmmmm.
It is not an order, its a sale of white tails. An order adds to the production books, a white tail does not
‘Order’ or ‘sale’ is semantics. ANA (the most likely customer) will take delivery of three A380s that they’ve paid for.
The rest is just deflection from the fact that you have nothing to support your original claim that Airbus “moves orders from one year to another”.
Semantics? Really?
Me, I eat, breath and live technical specs, words have specific meaning.
An order is for new production, a sale can actually be either but in this case its specifically white tails sold to very very nebulous customer. Shows you how desperate they are.
Reuter is quoted as saying they were desperate for sales of A380.
So wink, nod, grin and we have a sale. $1? Yes it makes a difference on how much they got for them and technically partly owned by ANA anyway.
John Leahy says if Boeing hadn’t made more 787s than they did they would have been ever. Really? If I was rich I would not have to struggle to pay my bills.
And yes you watch Airbus report their stuff latter and suddenly when they are far behind Boeing announced sales they jump ahead.
Call it what you want. I know what I call it.
Yes, it’s semantics. Your arbitrary definitions are just that, yours. Regardless of whether it’s an order or a sale, Airbus added three A380s this year that they had previously removed. Are you this bothered when Boeing does exactly the same thing?
So, I’m right. You have nothing but bluster about some perceived ‘cheating’ on the sales/orders front. It really is a tired old myth.
Going off topic, but if Boeing is a publicly traded company and has severely shaded (or lied) about its TransAero orders (which I agree they have) then where does that leave Airbus?
I guess you can try to have it both ways, I don’t believe there is any legal issues involved but I could be wrong, time to take it up with Security and exchange!
Seriously, the old long-dispelled myth that Airbus “makes up” orders (even though it would be illegal for them to do so) is brought back from the dead because of three (read: 3) A380s?
Three planes which we know were previously earmarked for Skymark, whose order was cancelled by Airbus themselves, leaving them with two white tails and a pre-FAL frame. Three planes which we’ve also known/supposed for two weeks will go to ANA.
Three (again: 3) frames whose order was previously cancelled got re-sold to somebody else.
And that’s what prompts a lengthy re-run of old myths?
Slow day, eh?
slow day?
No quite the contrary, IMHO.
Interests centered around Boeing seem to have been rather successful in leaning in various ways on airlines to not buy A380.
Selling even 3 A380 to a national airline from a strongly US aligned economy could be viewed as a landslide in magnitude comparable to selling A350s to JAL.
Airbus can’t make up orders, but they can leave Kingfisher orders on the books (not the A380 orders, but the 67 A320 and 15 A330 orders) well after Kingfisher stopped flying in 2012, lost its transport license over a year ago, and its assets are presently being auctioned.
We all will never know what is an “order” an “option” or a “cancellation” until we see a “delivery,” but we can see if an airline actually is an airline by whether or not it holds a license.
Sigh.
The Kingfisher order will be removed once the Indian courts decide who actually owns the contracts and they decide to try and get their deposits back. It’s quite simple.
The Skymark A380 order was cancelled because interim payments were not made when scheduled and Skymark had no way to pay for the planes that were already nearly completed. Skymark was in breach of contract and Airbus decided to cancel the order.
The two situations are completely different, but let’s not let facts get in the way of a good bashing, eh? Will you pop up in the Boeing order thread complaining they have yet to remove the Transaero orders from their books?
I am not contending that Airbus makes up orders.
I do contend they juggle the orders they have, in some cases magically appearing to beat out Boeing, orders that actually occurred in the following year but were listed in the previous.
As we have seen, publicly traded companies can lie through their teeth, Prime Mortgage and the 2008 crash anyone?
So yes, the evidence says in this case Airbus made the sale occur in 2015 so that they could claim to have sold A380s in 2015. All it takes to seal the deal is $1.
I did post previously that it would occur late in the year or not until late next year. Obviously I was spot on. ANA had all the power there as they could leverage Airbus (Leahy) intent to have a sale on the A380 in 2015.
The terms are going to make a fire sale look mild.
The broader issue or question is can they sell the A380 and right now that answer is no.
Yeah, I don’t think even Airbus will call it an “order” (or else you’d have seen a lot of press clippings proclaiming another NEW customer) for the 3 A380 that basically have been built, were for a customer (Skymark) and said customer was basically absorbed by another airline (ANA).
So, no, not a new order for 3. Just the 3 white tails finally being taken by the original customer under a new flag.
Well, they’ve booked it as a new order in 2015 having previously removed the Skymark order from the books. Bregier did confirm at the press conference that the order was for a new customer, who currently chooses not to be identified.
All will likely be revealed on Jan 29th.
How is this any different to what Boeing’s done with AirBridgeCargo and plenty of other customers over the years?
No one said it isn’t.
This is an Airbus sales and delivery discussion.
You can note that discrepancy or fabrication in the Boeing section in this blog.
A320 delivery delay more serious in that the P&W seems to be at its heart and the paperwork seems to be instructions on how to avoid bending the engine until a fix is made.
Not an Airbus issue but an Airbus impact
Airbus has booked 160 orders for A330-900neos but the smaller -800neo only 10.
Is there any economic reason for Airbus to build the -800?
I find it interesting, because quite a few -200s have been sold. Why is the neo version so limited in sales?
The A332 CEO had a significant range advantage over the A333. That payload-range advantage has been reduced by activation of the center tank on the A333 and higher MTOW’s. Airbus working is testing the water for a 245t MTOW version.
How much difference does the 3t (245t vs 242t) really make to customers?
About 3 t more cargo.
The A350-800 will be good for a freighter derivative, MRTT NGs etc. Also, if the MTOW is increased further to 245 tonnes, then it will fly even further by a couple of hundred nautical miles. It will also keep Boeing at bay with the 787-8. As for your last question, it may look as if sales for the 787-8 has stagnated, which would seem to indicate that the market is more interested in larger aircraft.
Of course you actually have to sell freighters, A330 not doing so good, let alone a NEO.
In the meantime, Good old 767 is buzzing right along and the777 is not doing too badly either!
And the 747 not so much of course
Thats 106 firm orders from Fedex for 767-200F through to FY23 (last years delivery of around 17, 11 for next year), and theres the KC-46 build of 7 in 2015, 12 in 2016 and 15 each year after till 2027.
So it seems that 767 build rate this year will be close to 2 per month, commercial – military combined
And its 491 A320s delivered. 41 a month. Couple shy of Boeing deliveries.
Boeing gets the majority of the market by a hair (breaking my previous comment on Boeing comments)
If I have it right that Boeing delivered 495 737s in 2015, that gives them a 50.3 percent market share!
Looks to be a the same for foreseeable future (i.e. one has a shade more deliveries one year, the other the next etc)
“Sales were above 1.5 times times deliveries for the third year in a row at 1,036 net orders. 879 of these were for A320, over 100 were for A330ceo, 50 for A330neo, 16 for A350 and three for A380”
Net orders for the a350 was -3 not 16 according to Airbus.
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