Airbus won’t hit 1:1 book:bill this year

April 14, 2017: Airbus won’t hit a 1:1 book:bill (sales:deliveries) this year and maybe not for the next few years, it was revealed at the annual general meeting Wednesday.

Credit Suisse issued a note late yesterday on a variety of topics that included this:

Airbus makes several key announcements at the annual shareholder meeting: First and foremost, Airbus now expects 2017 book:bill to dip below 1.0x. However, with backlog continuing to hover at historic highs from years of robust order activity the slowdown is as we would expect. The more concerning aspect is the open ended commentary by CFO Harald Wilhelm that it could be lower for “some time,” which we feel could further raise concern over the maturity of the current cycle. Despite this, CEO Tom Enders, with a dismissal of his retirement as a near-term possibility, intends to proceed at the current build rates, offering that he now expects 720 delivers for 2017, 20 more than previously guided.

Boeing’s guidance in January was that it will be a challenge to hit a 1:1 book:bill. It’s off to a good start this year, certainly better than Airbus.

63 Comments on “Airbus won’t hit 1:1 book:bill this year

  1. Now may be the perfect time for JL to ride off into the sunset.

    • Old people are not necessary ready to ride off into sunset .. their employers may want to keep their experience inhouse

    • OK its flying, but I would rather have added an extra flight or so on high frequency flights with the MAX8 and standardize the fleet with it.

      The MAX9 is a (Boeing) PR/spreadsheet aircraft.

      Cost of managing different aircraft sizes, schedules, range capacities and niggling small differences are not worth it.

      • I think you are wrong.

        AK Airlines Lion etc did find its worth it.

        Again I don’t believe nor claim as Boeing has that its an A321 competitor, but it is a useful adjunct to the 800/8.

        And it seems to suit Delta who bends to Airbus.

        Hard to argue with the people who make the decisions I would think.

      • RE: I would rather have added an extra flight or so on high frequency flights with the MAX8 and standardize the fleet with it.

        That might be a good option for an airline whose service is mostly point to point and doesn’t offer much in the way of connecting flights, or for a network carrier on a particular shuttle type route that has a low percentage of passengers making network connections, but in general it is not a good solution for network carriers who have a high percentage of passengers making connections to other flights. For such carriers, as least the ones in the US that I am often fly on (American, Delta, United), flight frequencies are synchronized across their network. At these carriers, flights converge at their major hubs from across their network to exchange passengers at set times during the day, perhaps every 2 hours or so at a major hub. I believe that the way such carriers see things is that if at a particular non-hub city there are typically 200, 180, and 160 passengers wanting to make connections at the local hub, or travel to the hub without connecting, at the 8AM , 10AM and noon ramps respectively, then that non-hub city needs to be serviced by a 200 seat plane that arrives at the hub at a little before 8AM (A321 or 757 for Delta), a 180 seat plane that arrives at the hub a little before 10AM (737-900ER for Delta), and a 160 seat plane that arrives at the hub a little before noon (737-800, A320 or MD90 for Delta). Three flights with 180 seat planes could accommodate the same number of passengers as one flight with a 200 seat plane, one flight with a 180 seat plane, and one flight with a 160 seat plane, but many of passengers who wanted a 8 AM connection at the hub (especially the business and First Class passengers who buy non-cheap tickets) may not be willing to wait until 10 AM or noon for a seat. They may instead buy a ticket from another carrier that has an early AM departure available, drive to the regional hub at the low end to catch the early morning departure that they want (maybe on another carrier), or at the high end charter a private jet to get them where they want to get to, when they want to get there (the LCC oriented commenters of Leeham may be surprised to know that NetJets has about 700 private jets available for charter and Delta Private Jets has about 70).

        https://www.deltaprivatejets.com/

        If airlines were restaurants, if your tables are all full at breakfast, but you have tables available at lunch, not all customers who you turn away at breakfast will be willing to wait until lunch to eat, they may instead find another restaurant that can serve them breakfast at breakfast instead of at lunch.

        • And I have seen AK shift them to other routes when they had weather delay back ups.

          It allows them to clear the backlog out a lot quicker as they are scheduled with smaller aircraft, each one can carry another group of people out of the lines .

          I do find it funny that those not running the airlines are saying how they should.

  2. And we begin to maybe see the United and Delta delays play in.

  3. In this context I would be curious to know what is happening with the plans to increase production of the A320 at Airbus and the 737 at Boeing. Considering the backlogs at both companies they don’t necessarily have to decrease production, but it would certainly be more prudent not to increase it further.

    • High-count backlogs are a poor (even foolish) way to ensure the future of any of A, B, C or E. It is a fallacy to “preserve” the backlog in the name of preserving jobs. Adding EFFICIENT production/delivery capacity to meet the desired dates of the purchaser (carrier or lessor) will accelerate revenue receipt, open delivery slots sooner (thereby encouraging additional bookings), and further accelerate cost reduction efforts. Assuming unit net revenue exceeds total unit net costs, the cash flow is available for growth. No delivery, no cash. No cash, no growth.

      These (A, B, C, E) are system integrators, who must also manage the complex networks of suppliers, including the quality of those components/subsystems. The unit is not deliverable if it does not have all the parts. [Yes, I am the Master of the Obvious :-)]

      If the list of available and competent (roughly equals ability to pay on time) purchasers (carriers, lessors) is finite, accelerating deliveries removes those opportunities from the available market of your competitor. What’s not to like about that?

      • “A, B, C, or E” should have been “A, B, Bom, E” (#forehead slap!)

      • “If the list of available and competent purchasers is finite, accelerating deliveries removes those opportunities from the available market of your competitor.”

        That is assuming the purchaser doesn’t care if the product is from X, Y or Z as long as he gets it when he needs it. But if he does care he will just wait his turn, especially if he can get what he wants at te price he wants.

        In a purchase there are many other variables to consider; like for instance quality, reliability, availability, commonality, affordability and many additional “lities” to evaluate individually and add together.

        And in a downturn availability can actually become a hindrance for the buyer rather than an advantage. That is why deferrals exist. And I expect lots of them in the coming years, both in the narrowbody and widebody markets.

        • Agree with you Normad, I think the single aisles are “heavily” over sold/ordered.

          Some (rough) numbers I could get in indicate a delivery backlog in the order of ~10800 aircraft (includes ~700 C919’s and MS21’s), 737MAX/NG’s 4500 and 32X’s CEO and NEO 5600. Maybe things has already started as the 320/1’s order book for 2017 stands at -13 (MAX at 97)?

          Think that some customers could roll over/convert to the NMA’s? An only 10% conversion from SA to NMA will already result in 1000 MoM orders.

      • Only things don’t work that way.
        ( you can work that for simple consumer goods.)

        Boeing is distinctly nearer your ideal than Airbus.
        But Boeing has much more issues with their “breathing workforce” than Airbus with its “socialist jobs programme”.

        Waves break when the water depth changes.

  4. Let’s not forget this is pre-Paris Air Show time with Airbus accumulating future announcements.

    • The only announcement Airbus will make this year at PAS is the following one: John Leahy, COO of Airbus, is retiring after 32 years of service.

      Just joking. 🙂

    • A new front stair case for the A380, its actually not bad. Will look good in the Airbus museum.

      But watch, another JL white elephant, the A350-2000?!

      • Careful what you ask for!
        The updated version of the Concorde without afterburners and more range was ready to go into production at about #17 or #18.
        The 757 is a more recent example of a plane that was really useful but went out of production too soon.

          • @PDiddy: the 797-7 would kill the A330, but the business case for only a 797-7 isn’t there, we believe.

    • The 350-800 could have been a 787-9 “killer”, 8200Nm, 280 pax, MTOW, 259T, 76K-Lb thrust engines, but now Airbus twin aisles are getting the kill.
      …except it wasn’t really selling.

      Thanks Mr. JL, there is your white elephant with 6500Nm (if?) range standing at Tolouse without engines since 23 Dec 2017.
      Yeah, well, it’s known RR is a bit behind on delivering the first flight test engines. Hardly JL’s (or Airbus’) fault and hardly a showstopper for the programme itself, which has sold more copies since its launch than the 787 in the same timeframe.

      Regarding the book:bill ratio – hardly surprising given the unprecedented order inflow over the last few years. I’d expect Boeing and Airbus to be equally affected, and like Credit Suisse, I don’t really think it’s much of a problem given the backlog both OEMs have.

      • The NEO was a very low risk/input/effort from Airbus. Aircraft improvements is a few percent and let the engines make it work.

        Boeing had big “you know what” with the 787-8, it was high risk and new technology.

        But what has Airbus done lately that is on time and schedule (if they have one).

        Losing and not getting orders from Tear-1 airlines are obvious.

        (By the way, who chose RR for the 330-NEO?).

        • Hi anton

          You are entitled to your opinion but I feel you not commenting on what you see but rather contriving to make what you see fit an agenda. This last comment appears to be an incoherent rant if you don’t mind me saying.

          • Hi Sowerbob,

            No problem, you are most likely right. I am just utterly frustrated with Airbus.

            They just seem to have stagnated at best, if not going backwards?

            Tired to hear of cancelled orders while Boeing had 3 first flights in the last year.

            The three 32- Neo’s were basically just re-engined platforms of already existing aircraft.

            Apologies if I offended anyone or stepped on wrong toes but hate to see the demise Airbus, especially if you have flown in an A350, exceptional aircraft.

            Having been on the board of several companies you can see the red lights flashing red and bright fairly early whilst others think it is business as usual.

            p.s. I have no involvement in the airline business (and definitely no shares) except coming from a family that were serving fighter (Korea) and military (Sabre) and civilian (B707/727) test pilots, myself being only a (very) regular passenger.

      • “which has sold more copies since its launch than the 787 in the same timeframe.”

        About 70 more copies, of course airlines had already ordered 450 787s by then.
        To put it another way the 350 in it’s first 11 years has secured 819 orders. The 787 in it’s first 11 years had 1071 orders.

  5. “Boeing had 3 first flights in the last year.” Thats just because Airbus was first out of the gate with neo program ( Sep 2014)
    In just over the last year they have had 3 .
    A321 neo ( Feb 2016),
    A350-1000 ( Nov 2016)
    A319 neo ( Mar 2017)

    A330 neo – in next 4-6 months

    Anton , you cant see the wood for the trees.

    • Hope you right, I have real concerns about Airbus twin aisle future.

      Lets see what UA, Delta do about there Airbus twin aisle orders.

      We know what SIA and Emirates did and will know what Air Malaysia will do within a few months.

      Air France-KLM have more 787 than 350’s on order (no 330’s). BA will have 42 B787’s and 18 A350’s (no 330’s) – 58 x 777’s 12 x 380’s. Lufthansa have more 777-9’s on order than 350’s (no 330’s). TAP have 330NEO’s on order which will be X-months late to deliver.

      You right, I can’t see the wood from the trees.

      • @Anton

        You’re right, it seems like you can’t see the forest for the trees.

        Airbus had secured some 130-plus orders for the A330-300 before EIS of the aircraft in January 1993, while Boeing had only 82 firm orders in the backlog for the 777-300ER when the first aircraft was delivered to Air France in April, 2003. In contrast, the A330neo already has more than 200 firm orders some two months before first flight of the “prototype” A330-900.

        Perhaps the 787 order bonanza in the heyday of the “drug-like-rush” environment, a decade ago, started a paradigm shift by “helping” to massively shift a lot of people’s expectations about when exactly one can determine a civilian airliner programme is successful — based, apparently, on sales accumulated before first flight. Before the 787, one couldn’t really determine whether a LCA programme was going to be successful or not, before at least half a decade after EIS. Now, the expectations of too many individuals/observers seems to be that the criteria for measuring the success of a LCA programme is solely based upon the number of sales before first-flight.

        • Correction

          The first 777-300ER was delivered to Air France in April, 2004 — and not in April, 2003 — while the EIS of the first A330-300 occurred in January, 1994 — and not in January, 1993.

          • OV-99: Wow, that first one was well put. Nicely done.

            And there in lies my condundrum. I am a histoaric avage sort of guy. YOu get to ge older and you hjave seen the rock and roll (ups and donws) and you get a feel for what is reality vs alternative facts (we used to call them white lies, emblesslishe and downright lies back in the day)

            On paper the A330-900 made some sense, I won’t say a lot to me but some. What made me skeptical was the biggest roar was 3 entity, Air Asia (ugh) Delta (usually good) and Hazy (mixed feelings as he killed the first A330+.)

            Hawaiian and Fininaiar were smaller outliers, with Hawaii being the smaller. Both initially wanted smaller than A350, even the dead -800.

            So, the A330NEO got is influx of orders and has stalled.

            The 777X looks to be about the same but with more orders and a highly shaky ME x 3 that could have serious impact (never ramp up past rate 5)

            Its either a historic mix that works out or its the sudden rush that does not.

            Like Travel, I see the 787 continue to makes sales, not huge lumps like before, but decent enough.

            I though Hazy was crazy (pun) on his over 1000 A330NEO. And he is not going to buy if no one is offering to lease.

            My take was 250. Looks good prediction but early days really.

            So of the 210, Air Asia is the biggest and highly iffy with their history of kicking the orders down the runway.

            Iran is probably solid as its a good bird and type for them.

            Lease guys have to have places to put them.

            Delta iffy.

            Now Delta looks to at least delay and they were a blue chip. Maybe still pick up in long term but the longer the term the more the fleet need may change.

            So I am caught between on the A330NEO with shades of negative leanings that could be wrong and the wisdom it might sell 500.

          • @TransWorld

            There are more than 100 A330ceo operators worldwide — 10 of which have also ordered the A330neo. Having that amount of operators is a substantial advantage going forward; that is, with respect to getting new orders. IMJ, 1000-plus A330neo sales should be quite doable over the next decade. In fact, I’d expect total orders from China to be at least half that number if Airbus were to launch a larger A330-1000 stretch-version of the A330-900 — a version especially suitable for intra-Asian route sectors. An A330-1000 would carry the same number of passengers as the 787-10 and have similar cash operating costs. However, the direct operating costs would be lower due to the significantly lower capital costs of acquiring an A330neo vs. a 787. I’d suspect, therefore, that Boeing is much more concerned about the competitiveness of the 787 vs. the
            A330neo — due to the pricing pressure of the former — than some of the people who are posting comments in this blog seems to be.

            Now, all this was really not what my point was — which was the astounding early order expectations from some quarters — in addition to a seemingly blatant obliviousness on how many orders were actually in the backlog for aircraft such as the A330-300 and 777-300ER before EIS.

          • Addendum

            May I add that JL is on record — shortly after the launch of the A30neo — saying that Airbus was prioritising A330ceo sales over that of A330neo sales in order to bridge any gap in the production of the A330ceo and the A330neo. In contrast, that seems not to have been the case in Seattle where securing enough early orders for the 777X seems to have been the priority.

          • OV-99: I agree with the numbers logic, what I don’t see is it producing results.

            Don’t get me wrong, I am not a the world has ended when the B to B falls below 1. Ebbs and flows.

            But there are some indicators that look worrying.

            Airlines not locking in A330NEO positions even if down the road a ways is one.

            Two big carriers waffling on Airbus orders of A350 and A330NEO.

            I am a rubber meets the road kind of guy.

            And I don’t know if we are seeing a return to normal, the bubble ahs popped and we drop below normal, but I do believe that there was a bubble and its no longer inflated.

            Caution: There may be strong headwinds.

    • Anybody know what the holdup is with the a330-900 first flight. Where/when is the Trent 7000 being delivered? All seems very/oddly quiet on that program!

      • Thanks for raising that, I asked it several times and got answers as if I look like an octopus with a hangover.

        Something, somewhere, is not 100%!

        • Anton:

          I never though I would be counseling a despondent Airbus enthusiast. .

          You can’t come out with a new aircraft every 5 years.

          I do not say the A330NEO was the wrong move, I just don’t know if it really is as supported as airlines said they would be.

          One reason I was skeptical was the initial efforts to update it got shot down badly. When they did it, it was all aga ga. Hazy claiming over 1000 seemed way over board. Air Asia being a main supporter also did not give me a warm fuzzy.

          Boeing had that issue with the 747-8I. The would not have launched it if no interest, not so much when it cam to putting money down. their only saving grace is the freighter end.

          If three is anyti9ng to take from Airbus current struggles, it just proves that aircraft production is not easy and the Chinese and Russians do not stand a chance!

          This too will pass.

          • There are more than 600 A330-200 out there that is less than 20 years old. Airbus can make it 600+ 330-2xx’s.

          • @TransWorld

            “If three is anyti9ng to take from Airbus current struggles, it just proves that aircraft production is not easy and the Chinese and Russians do not stand a chance!”

            Struggles???

            The A330-900 is all ready to go soon after the engines are delivered from RR. This has got nothing to do with aircraft production. What you’re saying, therefore, seems to smack of crisis maximisation rather than a real understanding of what’s going on.

            As for the future of Chinese and Russian civilian airliner programmes, I’d frankly be more concerned with the long term viability of Boeing. In contrast to Chinese OEMs that operate in an environment where thinking long term (>50 years, etc.) is the name of the game, Boeing is operating in world of destructive “quarterly capitalism”.

          • ” Boeing is operating in world of destructive “quarterly capitalism”.”

            Seems to have served them pretty well thus far.

          • @Geo

            “Seems to have served them pretty well thus far.”

            Well, changes implemented by Boeing for the 7E7/787 programme — caused in part by the modus operandi of quarterly capitalism — appears not to have served the company well.

            Sacrificing a company’s health — or an entire economy’s health, really — for the sake of short-term gains will ultimately lead to disaster down the road.

            Boeing’s launch of the 787 was marred by massive cost overruns and battery fires. Any product can have technical problems, but the striking thing about the 787’s is that they stemmed from exactly the sort of decisions that Wall Street tells executives to make.

            Before its 1997 merger with McDonnell Douglas, Boeing had an engineering-driven culture and a history of betting the company on daring investments in new aircraft. McDonnell Douglas, on the other hand, was risk-averse and focused on cost cutting and financial performance, and its culture came to dominate the merged company. So, over the objections of career-long Boeing engineers, the 787 was developed with an unprecedented level of outsourcing, in part, the engineers believed, to maximize Boeing’s return on net assets (RONA). Outsourcing removed assets from Boeing’s balance sheet but also made the 787’s supply chain so complex that the company couldn’t maintain the high quality an airliner requires. Just as the engineers had predicted, the result was huge delays and runaway costs.

            Boeing’s decision to minimize its assets was made with Wall Street in mind. RONA is used by financial analysts to judge managers and companies, and the fixation on this kind of metric has influenced the choices of many firms. In fact, research by the economists John Asker, Joan Farre-Mensa, and Alexander Ljungqvist shows that a desire to maximize short-term share price leads publicly held companies to invest only about half as much in assets as their privately held counterparts do.

            https://hbr.org/2014/06/the-price-of-wall-streets-power

          • OV-99:

            Airbus has had its struggles. It does not matter it was Zodiac, once that cleared other issues popped up.

            The A320NEO is having its struggles (with reports of CFM issues as well)

            A330NEO has not flown.

            It does not matter what the cause, they are struggles.

            Maybe take a step back and a deep breath.

            I did not predict a death knell, I didn’t say they were floundering just said they has issue and it is not easy no matter who you are.

            I have said before, Boeing has serious management issues.

            So maybe lighten up a bit?

          • @TransWorld

            Airbus was struggling with the A380 programme. The A350 programme was “challenging”, but Airbus IMJ didn’t struggle developing it. On the A320neo, Pratt & Whitney is seemingly struggling a bit with the PW-1100G engine. For Airbus that’s much more of a nuisance than a struggle. Same thing with Zodiac.

          • I call a space a spade.

            Aircraft not delivered means a struggle.

            As the A350 underwent significant material changes from after line number 17, that also may be a factor.

            I continue to say, its not easy.

          • Aircraft not delivered means a struggle.
            Firstly – no, it does not. It means a problem/issue.
            As OV-099 pointed out, Airbus had its struggles with the A380 and continues to struggle with the A400M, just like Boeing struggled with the 787.
            Late-delivered engines and toilet seats are not struggles. They’re problems/issues. Annoying and costly because of delayed deliveries, but still. (As has been said – P&W seems to be struggling a bit on their end, but that’s their struggle – and Airbus’ problem.)

            Secondly – let’s go back to your original statement:
            If three is anyti9ng to take from Airbus current struggles, it just proves that aircraft production is not easy and the Chinese and Russians do not stand a chance!

            With all due respect, but calling late-delivered cabin outfits and engines “struggles” and taking them as examples for how difficult it is to build a plane (when Airbus and Boeing are dependent on the same suppliers that the Chinese and Russians are in part going to use) is blowing things way out of proportion. The same would have been true if you’d pointed the the flutter and tail tank issues Boeing initially had on the 747-8 as examples for what a hard time the Chinese and Russians are going to have building planes.

            Also, just for completeness’ sake – the Russians at least have a pretty good idea of what’s involved in building airplanes. The tricky part is get them competitive. But even that they know.

            I call a space a spade.
            I dare to disagree. You’re calling “a situation, person, or thing that needs attention and needs to be dealt with or solved” (problem) “a very difficult task that you can do only by making a great effort” (struggle).

      • @Fergal

        The Trent 7000 is essentially a bleed-air version of the Trent 1000-TEN. Consequently, it doesn’t need a separate flight test programme. The initial flight-test engines will be fitted straight to the first A330-900 (MSN-1795). In order for the A330neo to achieve first flight in H1 2017, the engines will likely have to be mounted to the airframe at least one month before the first flight. In comparison, the first A350-900 flew some 2.5 months after the TXWB engines had been fitted to the aircraft. However, that was with an all new airframe. In contrast, the A330-900 should be ready to go as soon it’s no longer a glider. 😉

        “On the new A330 with the [Trent] 7000 engine – that is about six months behind,” added East. “But it’s on a similar trajectory, and that [aircraft] will fly with its new engine for the first time over the coming months.”

        The engine will not be installed on a testbed aircraft but fitted straight to an A330neo certification airframe.

        Airbus has not narrowed the timeframe for the maiden flight, stating only that it will take place in the first half of this year.

        https://www.flightglobal.com/news/articles/a330neo-maiden-flight-date-still-hazy-434230/

          • “struggling.”

            Boeing was struggling for 787 First Flight.
            They were advancing over a minefield of obstacles.

            This here is a delay. .. caused by an obstacle on the B side of things? 🙂

      • Leeham noted a while ago that RR have a delay with the Trent-TEN and it just carries over the A330-NEO Trent 7000 as they are much the same engine with and without bleed air.

        • What is the main reason/s that the Trent TEN could not be adapted for the 330NEO’s instead of developing the 7000?

          • Trent 7000 is a Trent 1000 TEN with airframe bleed added and downsized generators. a sub-sub type so to speak.

            Therefor the Trent 7000 delays are a direct carry over from Trent 1000 TEN delays. Only nobody seems to think these delays noteworthy on the 787. ( Is the 787-10 late from the Boeing side too? ) IMU the TEN should have been inducted on the 789 already?

          • Thanks Uwe. Will a 76K-Lb variant then theoretically also be available for 7000’s if so required?

          • No idea.
            ask RR 🙂
            ( I see no reason why not.
            Who floated the beyond 250t MTOW bump for the A330 NEO ? )

          • The 330NEO wing can handle 250T MTOW? If there is the necessary undercarriage upgrades it could give the 330-900 a range of 7000+Nm, used in a stretched A330-1000 (787-10) or 330-800 ULR (8000+Nm?).

  6. I keep seeing comments that suggsst concerns about the A350. I still think it is slot restrictions. To be specific, everytime there has been a cancellation, the slots that have been freed up have quickly been taken up. I predict that the A350 backlog will still exceed 700 by the end of this year and Airbus will have difficulty getting the backlog below 600 before 2025 unless they increase production beyond 10/month

    • Without sales picking up fast (9 net orders in over the last three+ years) that backlog will be below 600 rather quickly.

  7. Boeing has been there, done that, has planes full of T shirts.

    I think 8 is a wise figure to shoot for in all cases.

  8. When you have the backlog Airbus has is there any sense chasing sales at any price? I suggest we might be seeing a push for more margin, as we are in a downturn just holding on and waiting for demand to come up is probably smartest.

    I suggest Boing might be doing the same where they can.

  9. It is hard to sell a plane if the customer has to wait for what ?
    6-10 Years (for NB – which are the bread and butter of the business)

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