Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Bjorn’s Corner: New engine development. Part 4. Propulsive efficiency April 19, 2024
- Boeing unlikely to meet FAA’s 90-day deadline for new safety program April 18, 2024
- Focus on quality not slowing innovation, says GKN April 18, 2024
- Boeing defends 787, 777 against whistleblower charges April 17, 2024
- Dissecting Boeing CEO’s statement next new airplane will cost $50bn April 15, 2024
Airbus raises list prices about 2%; more profits or bigger discounts?
Jan. 17, 2018, © Leeham Co.: Airbus announced a list price hike Monday of just under 2%.
The popular A321neo goes to $129.5m from $127m. The A350-900 goes to $317.4m from $311.2m, for example.
Such price hikes are common. Boeing hasn’t announced whether it will raise the list prices this year, but in the past, it’s typically done so.
Airbus continues to list the A318 and A350-800 in its price list. There hasn’t been a commercial sale of the A318 in years and Airbus skipped creating a neo version of this double-shrink airplane.
Ostensibly, Airbus continues to offer the aircraft as an Airbus Corporate Jet (ACJ), but sales of this are few and far between.
Airbus also continues to list the A330-800 despite having only one customer with a small order for the airplane.
A330-800
Hawaiian Airlines is the only customer for the A330-800. The first A330-800 test plane is now in production.
Airbus vacillated whether to even proceed with the model. At one point, the market was under the impression Airbus would abandon the sub-type. Later, Airbus officials publicly endorsed the airplane, but no additional sales have been forthcoming.
In a Dec. 6 post, LNC reported officials believe the market will emerge for the -800 beginning in 2020, as A330-200s begin hitting the end of initial lease terms and as the long-haul, low-cost carriers proliferate.
Officials also claim the A330-800 represents Airbus’ entry into the upper end of the Middle of the Market sector (the lower end is covered by the A321neo, they say). With Boeing nearing a decision whether to launch the New Midmarket Aircraft (NMA) this year or early next year, Airbus is pitching the A330-800 to remaining Boeing 767 operators as the replacement solution that’s available now, rather than in five or more years.
A350-800
The A350-800 remains on Airbus’ price list despite having abandoned this airplane several years ago.
At one point, there were nearly 200 orders for the model. But as the A350 program ran over budget and encountered delays, along with other costly developments (like the A400M) that ate into cash flow, Airbus encouraged airlines to upgauge to the A350-900.
This helped “de-risk” the production, cutting back to two models (the -900 and -1000) vs having three, it was said.
The larger -900 was more profitable for Airbus, officials said. The -900 has a list price that is $30.2m more.
The larger issue, however, appeared to be the realization by airlines that the operating costs for the -800 were about the same as the -900, but with fewer seats—an endemic problem with a “shrink” airplane, as the -800 was.
A318
Which brings us to the A318.
The A320 is the baseline of the family. The A319 is a shrink of the A320 and the A318 is a shrink of the A319.
The A318 was Airbus’ response to the McDonnell Douglas MD-95. The 737-600 was Boeing’s response. Squeezed between the two airplanes, and hobbled by its own strategy and management, MDC gave up and merged into Boeing. Boeing killed the MD-95, renamed the 717, after a production run of 156 aircraft.
Few A318s were sold to airlines and they were quick to find their way to scrapping as economics—already marginal—went upside down with rising fuel prices.
Yet Airbus hasn’t officially killed the airplane in its price list.
This isn’t unusual, either, with Boeing. The 737-600 similarly sold poorly, but it was years after the last sale before Boeing dropped it from the price list.
The 767-200ER hadn’t seen a sale for years. Like the 737-600, it was long after the last sale before this disappeared from the price list.
There have been no sales of the Boeing 777-200ER for years, but there it was, on the Boeing price list last year.
List price to sales price
The list price is meaningless when it comes to actual sales prices or aircraft valuations.
Airbus and Boeing—and their smaller counterparts, Bombardier and Embraer—heavily discount the list prices when it comes to orders.
Discounts of 50%, regardless of the model, is not at all uncommon, up from 40%-45% in years prior. On occasion, discounts of 60% or more have been seen in the market—and it’s not all that rare.
The discounts off a higher list price theoretically mean a better sales price—but it also could mean a larger discount to get to the final sales price.
2% price rise is conservative. The supply chain does a bit more.. but as you it has little to do with the prices that are paid.
RE: A350-800, I think the A330-800/-900 made it obsolete..
Yes, the sales for the A330-800 seem poor at the moment but there are other applications as well.
Only the -200 exists as freighter version, however I cannot find a list about the ration for P2F-Versions.
Also the MRTT is based on the -200 and especially for a tanker aircraft a neo version would be a lever to improve it’s performance. It can either stay longer in the air or give more fuel to other planes if it consumes less on it’s own.
I will be curious as to what they do about the A330CEOMRT (not that is a mouthful of acronym!)
As this category of Aircraft (tankers and or freight pax carriers) economics are not a high concern, will they just keep making the -200?
And that gets into commonalty for repeat orders.
As we have seen wit the KC135, these operate for 40+ years easily. So its not like someone is going to replace an old MRT with a new one.
Subsequent orders if any, commonality is more important and the fleets taking the MRT are taking the 200 MRT as there is no 800MRT.
As would be upgrades to existing to have it more in line with what the KC46 can do.
I am going out on a prediction limb and contend the -200 will continue in producible for future orders.
Bringing the 800 into certification’s would be costly and no return I think.
I don’t see a freight future for the 200, but if there is any, the money has been spent and that would be the default.
767F is still the default in that category and is a prime example of an old dog still being viable for the F mission.
It will also be intereisn gto see what Boeign does long term aorudn the 777F.
In that case dual issues, the certiaion for an F in a 777-8 and the fact tghat the 777-200 was chosen for its size/payload vs a 300.
The 777-8 is in fact a 300 size not a 200, so its a stretch and may not meet the need for floor loading.
Ergo, the 777-200ERF may keep on being default.
UPS and FedEx might take a 777-8F due to their floor loading, but is that enough of a market to created it?
Seems pretty narrow with UPS, FedEx, DHL and Amazon as the only likely buyers.
The 330-800 is piggy backing on the 330-900 program so its R&D plus certification costs would be minimal.
The 777-8 is sized half way between the 777-200 and 777-300.
“Missing” Atlas and Airbridge….
I think demand for the smaller NEO models is dampened largely by the wide availability of the CEO versions. Operators are very happy to keep flying the A319 and A330-200 planes. In fact Airbus are still selling top-up orders of the A330-200. Operators typically buy the larger planes to upgauge their mix. It doesn’t mean the A319NEO and A330-800 are necessarily undesirable planes absent the glut of older models.
Isn’t that the definition of undesirable when no one is buying them for any reason?
Well all its not what it seems.
Yes, no one is essentially buying the 319neo/max 7 versions of the ses planes .
However ‘Airinsight’ asked Southwest a big -700 operator, who said :
“The 140-150 seat market is very important to Southwest Airlines, and we expect it to be for the foreseeable future. The Boeing 737-700 represents approximately 70 percent of our fleet”.
If they arent buying the long established models, doesnt mean there isnt a strong need in the 140-150 seater market.
Hello Airbus/Bombardier and Boeing/Embraer
If its big and heavy no.
If its light and capable, there looks to be quite a market.
Distorted in the US due to Scope Clause of course.
God, Stalin, ALPA, and the APA bless the Scope Clause! LOL
How do you set a price for something built ten years in the future? What if the parts and materials go up in price over the years.
You keep increasing your prices 2 or 3% a year and you stay even or more.
To me the question is base cost, do the discounts go up to ignore the increase or do they say sell a 737 at 40 million instead of 38 million now?
I think that LNR have said before the yearly increases apply to any contracts that have been priced into the future, eg 5 deliveries every year for every 5 years.
don’t sales contracts have a price escalation clause attached?
317.4 million? If aircraft are discounted 40% to 60%, what’s the point of four significant figures of precision in the list price, why not just say 300 million? Unless the precision tells us exactly the premium by percentage, Boeing and Airbus charge for an option to convert from an A320 to an A321, or a 789 to a 7810.
$0.4 mill might be the sales commission ?
It can be that aircraft and engine purchases for future deliveries are increased in price escalation by the same percentage as the list price, hence discounted aircrafts get price increases as well, the longer you wait the more compund price increases you get, hence aircraft manufacturer can give good discounts for aircrafts delivered years from now,
Regarding the comments regarding the MoM manoeuvres – – what is primary in the definition of this concept?
Range or real estate / seats?
Range seems the issue for me.
The gap seems to be 4000NM to 6550NM or possibly even 7250NM.
If the B767 is brought back to life then the top end of the gap reduces to 6000NM approx.
Consequently what OEW figure would allow a range of 5000NM and how many seats would it have?
Stake in the ground:
SA = 70T plus possibly 75T.
TA = 80T at the very least with 85T as probable.
Engines would be similar at 45K to 55K lbs of thrust.
10 hour plus flight means flat beds in business which suggests a significant amount of real estate.
Boeing says the mare kt is defined by 5,000 miles.
If you keep increasing it, then you have a 787.
Low cost economics and build at a lower price and you give up that longer range and cargo that is not the core of it.
Rightly or wriggly that is how they defined it.
Right — The BA view of MoM is a range of 5K NM.
Next step is what is the lowest amount of OEW weight that would deliver the range and with how many seats?
Outliers to be ignored would be business jets.
Would an A321++ — same fuselage / Higher MTOW — manage to offer the 5K mile range and the 196 seat two class cabin?
Would that be the smallest acceptable aircraft?
Could you work the CS300 out to that level of range?
5K NMs work for me at a local level as it brings Glesga within the range of LA, Texas, the sub continent, Shanghai and Tokyo with HK a possibility.
The 787 was over sold as a game changer regarding point to point connectivity. It was heavyweight TA with an 8K NM range potential, 125T plus of expensive low volume OEW and a lot of seats to fill.
It was and is many things but a point to point game changer it is not.
However a high volume aircraft at 75T OEW and a 5K NM range could be.
However
B787 was designed when freight market was tops. None of those buyers where looking for 7000 nm range, hardly any of these aricraft are flying over 12 hr sectors, it was freight cap which operators where buyng. Now freight isn’t worth so much and airlines pack pax like sardines trying to get revenue out of their to much aircraft.
A combo order of the a330-800and A321neo LR can cover all the routes by the 767 whilest making more money on the shorter routes with the A321Neo LR.
I don’t think the A330-800 is dead. It’ is “cheap”, capable, and versatile. Let’s wait and see if all those airlines who purchased the 321 will also order the A330-200 and then finally put the 767 to rest.
I wonder what price Emirates will be paying for the 20 new A380 orders with 16 options just reported by FlightGlobal ?
Is this order enough to keep the line going until other new orders come in ?
Yes I think so. BA, ANA and the Chinese seem not far off.
where did you see any news about the other carriers ordering the A380?
At the rate of 6 per year, the last Emirates order is more than enough to keep the line open for many years (20 years in theory). And Leahy has just said that he’s expecting three more orders in the coming 30 to 60 days. Leahy’s (and Bregier’s) swang song is now clearly a big fireworks. As many people including so-called analysts are always pessimistic about Airbus, the Airbus stock share is still pretty low. Lots of capital gain in sight …
EK will control the next model’s development, A380-900 NEO at about the same time as A330 NEO mk 2 or 787 NG?? Same size engines.
If Boeing goes for a 5000nm widebody Aircraft that should take 240pax in 3-class it is between 767-300 and 767-300ER capability with OEW of approx 190 000lb. The A321 has a OEW of 48100kg= 105,820lb. So the MoM will land somewhere in between.
The problem is that a 767 need to be reinforced to take the corresponding A321 cycling. With 20% better Engines than the CF6-80C2 you can reduce the fuel load by 20%. That is 161,740 lb *0,8= 129,392 lb of fuel. A more fuel efficeint Engine of approx 50k thrust is heavier. Carbon wing +wingbox is smaller and lighter by a few tons and a carbon or Al-Li fuselage saves maybe 1 ton. You need reinforcements to take 30 000cycles. Making for a reduction of empty mass of maybe 10 000lb. An A322 with revised Engines, new bigger carbon wing and wingbox and landing gears might add max 7000lb in OEW. This makes for a 797 of 180 000lb and an A322 of 112 820lb empty, a difference of 67,180lb approx 30ton difference. This difference indicates that the 797 should maybe be a bit bigger, taking 360pax in 2-classes to get competetive profit per pax-mile on the same route as a fully loaded A322 making room for a selling price of up to 50% higher than the A322’s. Engineering comments are welcome.
If you make a prospective 797 360 pax in 2 classes it will need to be much bigger, and heavier than your 180 000lb, and would potentially cannibalise 787-9, and 787-10 sales on some routes. You’d also need to factor in the cost of more cabin crew.
Apart from the much lower OEW of an A321 / A322, the economics of a single isle versus twin isle due to drag (See Bjorn’s Aircraft drag reduction corner) come into play.
Could airlines fill the ‘797’ if it were in the 360 pax 2 class range ?
If I were convinced there was a market for a ‘797’ (and I’m not convinced yet) I would be looking at a long single isle with a fuselage wide enough for 3×3 seating, and an isle that allows two people to pass each other easily, that also speeds pax loading, and unloading.
Figure out the best carbon tech i.e. compare Airbus, Boeing, Bombardier, and implement where it makes sense for weight, and on-going maintenance, keeping in mind take off, and landing cycles.
Given all of the above, a new airplane versus a modification of an existing one, and the development costs for the perceived size of the market, and what the airlines will pay for the ‘797’ I think I’d rather be in Airbus’ position right now.
Just my 2 cents worth.
I also think 360 pax is a stretch but to make it economical vs the A322 it gets to those numbers, most Airlines will use it in 3-class with less pax to replace existing 767’s on most of their routes that an A322 does not “steal” as the A321 took over many 757 routes. Many 767’s do a number of domestic/short range flights and average hrs/cycles it not that hight for quite a few Airlines. Think DAL is a good example and would be a good launch Customer if Boeing lets them buy it at launch airline prices.
Trying to understand aircraft classifications based on real estate / floor area / seats.
Q+D analysis — use a long haul economy seat / LHES @ 32” pitch x 18” width as a common currency.
B767 300 = 290 in the brochure but 278 in real life.
A321 LR = 210 approx in real life
CS300 = 140 in real life.
A322 @ 110T MTOW = 240 seats in the AD Design Book.
A325 “Super Sixty” = 300 / 304 in the ether @ 5K NM range.
Not sure where a clean sheet design would take BA.
They have the B767 200/300 as data points but they are easily matched by AB getting clever with their SA parts bin.
They might offer range as an advantage but they can’t offer real estate.
Consequently TA only has the 90 to 120T OEW area to play with and that brings cost a internal competition.
All this points to the volume MoM being a SA play.
If SA then either the A320 profile or even better the MC-21 with its 150” internal width for a 24” plus aisle.
What would 75T OEW get you in seats and range?
Do your saying MC-21 is the new MOM? If only the Russians could get their production act together.
Bit more left field — if AB or BA are looking to close the MoM gap with a SA design then one way to do it would be to buy the MC-21 design — either completely or market by market — and then sweat your new assets.
Not sure on the analysis behind it or any evidence but would a 24” aisle be a cost effective way of raising the productivity of an aircraft?
If you go to Super Sixty sized SA with B door loading would the the 150/152” interior width work in other areas?
Allow 4 x 24” wide business flat bed seats to be installed with a TA layout to allow direct aisle access for all 4 positions?
Would it help with trad business seats — allow an extra one per row? Same for premium economy or would it allow for a better offer?
If it works in the MoM product space would it work in the high intensity short range / less than 2 hour duration product space?
Having suffered Front steps only unloading on a packed B737 all too often then it might be worth a punt.
MC-21 seems to me to have a couple of aces up its sleave. As a wider aircraft it won’t suffer so much as it is stretched, although short versions will suffer from the exra width. Front only loading of narrowbodies seems to be going out of fashion, most airlines seem to be using the back door as well, so I have suggested before that a 757-300 sized aaircraft, based on either the MC-21 or the A320, could be viable now, while the 757-300 wasn’t.
SA aircraft — Super Sixty sized — has gone out to a fuselage length of 58.5M with the narrow DC8 cabin at 138.25″ width.
Anything of that ilk would find B door loading useful.
Turn left for first class / Business.
Turn right for premium economy.
Turn right and keep marching for economy.
Enough floor area for 306 good quality 32″x 18″ coach seats.
Enough floor area for 282 good quality coach seats with a 10hr sector galley and extra toilet provision.
Enough floor area for 220 seats / 4 class including lie flat at the expensive end.
A320 cabin width = Good
MC-21 cabin width = Great
Trick would be keeping the OEW under 75T.
Next up would be a 5400NM range with 220 passengers.
Fuel load under 50T with new wing tech and plenty of CFD?
Cost question: Low volume vs High volume
2 x 50K lb thrust vs 4 x 25K Lb thrust.
Just a thought.
360 passengers in 2 classes is not MoM it is B787.
It depends a bit on range, if the 797 max out at 5000nm with 3 classes it is a big step up to the 787-9 range. I suspect most 797’s will replace 767’s real life operations.
OK — so what would be the OEW of such a beast.
Lots of real estate / floor area.
Big girls blouse when it comes to TA range characteristics?
In other words back to the 1970’s.
Wimpy TA aircraft with limited range.
Interesting to see how much OEW can be saved from limiting the fuel load to 5K NM and saving 40T from TA LR norms?
Breaking: EK signs order for 20 firm + 16 options A380. http://livefromalounge.boardingarea.com/2018/01/18/airbus-a380-emirates/
This after EK leaves AB at the proverbial altar at the Dubai Airshow! I’m guessing even more substantial discounts were wrung out of Leahy & Co.
Emirates is really addicted to the A380 and it’s not new. Emirates needs more the A380 than Airbus itself. It’s quite obvious that the A380 has a bigger part in the Emirates strategy and business than in Airbus business. There’s no solution in the market to replace a large fleet of A380, even if the 777-10 was already on sale. Malaysian airlines or Air France can replace their A380 fleet by a smaller aircraft fleet but for Emirates it’s impossible. Leahy knows that very well. As I guess that he’s not stupid, I don’t think that he needed to make a big discount to win this order.
Can’t help wondering if shelving the A350-2000 was a part of the deal.
One quick comment — if range is the issue then number of cycles becomes secondary.
Medium range = long range cycles x 1.5.
I don’t think a MoM aircraft is going to be designed to be an all rounder — it will have a focus on a certain usage pattern.
Smaller number of longer flights compared to the A320 / B737 norm.
A330LGWs didn’t last long, any MOM will have to be optomized for 3-4 cycles per day.
The A380 has been saved…
And Emirates business at the same time…
What is your explanation for such a large discrepancy, such a large gap, between list price and sales price?
Is it for tax purposes,are higher numbers and volumes looking better on the balance sheet?
Or is it just fancy to have such enormous sticker prices?
Oops, why is my contribution placed in the middle row?
An unexpected sightning of an indent column makes me very sad, please make it go to the left!
Thank you, and sorry for the trouble!
Deal on A380 in the works, extends production 6 years if all taken up (at rate 6 a year)
https://www.flightglobal.com/news/articles/emirates-tentatively-signs-for-up-to-36-a380s-445004/
Like the 747-8(F only) limping along on life support
And to add, there are 6 new and 5 (slowly) coming onto the market.
Does Emirates start to retire their older ones.
No secondary market and why do they not buy the MA one which are newer build and like new?
We don’t know yet if there will be a liquid market for second hand A380-800’s yet, there can be some surprises, like Norwegian 650pax to SIA or BKK?
The market will develop.
The more people fly in them the more people will want to fly in them.
It isn’t for every operator or every route but it will find its own market level.
It has much more to offer the higher ticket price passengers without squeezing out the natural market volumes for economy. If the offer is better then the A380 operators will gain in both volume and price.
They will also get better at utilising and monetising the floor space.
Plus the B747 had a lot less completion for a lot of its production run.
No secondary market either for 777-300ER. Second tier airlines cant afford to run a large plane like that and only a few needed to fill out gaps in existing fleets
Hang the carrot in front of the horse’s nose ,eventually, he’s gunna bite..
Guess it is possible to sustain a program on one customer. .
You wonder why Ab.can’t make much profit, giving away 20 a380’s may have something to do with..
Boeing is doing much the same with its runout 777 till the changeover to 777X. The price is moving metal
Of course Boeing is,but not for one customer, who’s order means life or death for the program. .
Big difference. .
Imagine the bargaining power Emirates managed on this order..
“Officials also claim the A330-800 represents Airbus’ entry into the upper end of the Middle of the Market sector (the lower end is covered by the A321neo, they say).”
So basically, Airbus game plan is to ‘sandwich’ 797(if launched) by a combo of 338 and 321Neo. I hv read about this future product strategy since 338 launch+Boeing MoM/NMA concept is disclosed.
Interestingly, such Airbus product strategy is strikingly similar to Boeing product strategy @ a higher end segment:
Boeing game plan to sandwich 350 by a combo of 77X and 787.
This is partly why I consistently believe that in terms of product planning(i.e. What to develop and when), Airbus and Boeing strategically behave & act more similarly than what most folks imagine(especially those biased towards 1 or the other in their comments).
Well, you have to play the cards that you hold. 🙂