ISTAT Day 1: Leahy’s biggest fear: producing enough planes to meet demand

Feb. 29, 2016, (c) Leeham Co: Aircraft lessors financed 48% of the Airbus deliveries in ISTAT-logo_no_tag-(2c)2015, with direct sales and sale-leasebacks, says John Leahy, chief operating officer customers for Airbus.

  • We’re at the 2016 ISTAT AGM in Phoenix and will be reporting today and tomorrow on presentations and news from the sidelines.

“Lessors are a key and integral part of our strategy,” Leahy said. Airbus only financed 2% of its own products last year. Export Credit Agencies financed only half the numbers of Boeing, he said.

Leahy does not see a downturn any time soon.

“We’ve flattened down production and then went back up” through previous cycles, he said. In recent years, Airbus figured out that not all customers will take deliveries through financially depressed years, so the company has an “excess backlog” to what Airbus is producing. (In other words, overbooking its sales.)

“Somebody better come to us and cancel airplanes,” or reschedule them, Leahy said. “This is no longer a cyclical industry. My biggest fear is being able to produce them.”

The middle class in Asia Pacific is driving continued airline passenger demand more than any other region in the world, he said, compared with flat demand in North America and Europe. Latin America and other markets trail the Asia-Pacific growth, but these are growing.

With tongue in check, Leahy suggested Boeing re-engine the 757 to meet the middle of the market demand.

He said there will likely be an MTOW increase for the A330-900 announced at the Farnborough Air Show. An update whether Airbus might stretch the A350-1000 could also occur at the FAS.






11 Comments on “ISTAT Day 1: Leahy’s biggest fear: producing enough planes to meet demand

  1. Hello Scott

    Interesting A330-900 potential MTOW boost
    If not covering some deficiencies or weight creep

    Thanks for the report

      • Scott,

        I think the A330-900 might…just might…become a deadly competitor to the 787-9. I think there is a chance that Airbus has “Cracked the Code” so-to-speak and are developing a jetliner that can exceed the 787-9 in Ownership and Operating Cost (maybe not the right terms, but I think you know what I mean).

        Or…maybe I am wrong.

        But history tells me (personally) that it is crazy not to bet against Boeing – they always seem to find a way to lose.

      • I think the strong points of the A330 are its load margins inherited from the A343, fleet commonality with 1000 aircraft/100 operators, optimal cross section, extensive options catalogue, attractive pricing and pre 2020 delivery slots.

        Increasing A330-900 MTOW pushes it into A350-900 territory. Apparently this doesn’t keep Leahy awake at night if it increases his marketshare in 777 classic/787 territory. I even see little complications in increasing A330 seat capacity for medium range markets such as China / Asia and transatlantic because those aren’t real A350 markets anyway.

        • Why should Airbus be afraid to sell A330-900 instead of A350-900? Airbus then can sell more A350-1000 and -1100. The A330 will even get cheaper with a Chinese FAL.

          A330 and A350 are a mixed calculation. The A350 does not has pay the costs for his development. The A330 can pay better for his bigger and younger brother.

          • The A350-900 is some 10 percent bigger than the A330-900 and it has ULR capability. Hence, the A339 – even with higher MTOW and additional range – will IMJ complement the A359 rather nicely.

  2. Can we see 737-10MAX or 737-11MAX? How about that? Will they ever consider it?

    • They do. Requires bigger engines -> new landing gear -> new wing though.

      • So it would not be a MAX. It would rather be a MAX-XXXL

        I would call such an aircraft 757MAX.

      • And more range, more capabilities, and more fuel-efficient, as well. Can the 737-10 will go on TATL flight?

    • Maybe we will see such a Max version in case Boeing sells such an aircraft with the required runway length to each airport.

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