WOW-Icelandair combo may help Airbus, hurt Boeing in A321LR/XLR-NMA campaigns

Nov. 5, 2018, © Leeham News: The announcement that Icelandair will acquire competing low cost airline WOW Air seemed the inevitable conclusion to the financially-strapped WOW, which aggressively expanded against the entrenched incumbent.

The combined carriers may help Airbus and hurt Boeing in current campaigns to sell the A321LR/XLR and NMA to Icelandair.

The combined carriers will serve 63 cities from their home base in Iceland. Icelandair serves 46 cities. WOW serves 40 and recently announced expansion to its 41st, Vancouver.

There will be 19 common cities and routes (see Chart).

Struggling WOW

Click on image to enlarge to a crisp view.

WOW has been struggling financially, following rapid route expansion. It operates an all-Airbus fleet of 20 aircraft, comprised of the A320 family, including the new A321LR about to come on line; and the A330-300. It has four A330-900s on order.

The privately-held company has been losing money, according to documents filed with Iceland’s equivalent to the UK Companies House. It’s struggled to obtain new financing.

WOW began operations in 2012.

Icelandair is an all-Boeing operator, with three dozen aircraft in service. The 757 and 767 have been the backbone of the airline. It’s adding the 737 MAX 8/9 and one 787 to the fleet.

It was founded in 1937.

Both airlines follow the LCC business model. For long-haul service, each offers wide, recliner seats in lieu of a lie-flat business class.

One airline or two

Icelandair said that WOW will be operated under its own brand. Mergers and acquisitions often follow this, at least initially, while integration, systems combinations and personnel matters are sorted out.

Alaska Airlines initially said Virgin America would be operated as a separate brand, without an end date. Eventually officials acknowledged the two airlines would become one. Today, the airlines operate under the Alaska certificate and all systems are integrated, but there are still Virgin-branded airplanes flying the Alaska system.

This may prove the case one day with Icelandair and WOW.

Implications for NMA, A321XLR

There seems little reason to operate two brands indefinitely. Nineteen routes overlap. Maintaining two certificates and systems only add to costs.

The WOW Airbus fleet gives the all-Boeing operator Icelandair the opportunity to compare operating costs and, in the case of the Icelandair 767s that are aging, the chance to one day replace these with the WOW A330s.

Icelandair’s 757s are also aging. The new 737 MAX is replacing the 757 on many routes, but the MAX is both shorter-ranged and has less capacity than the 757.

WOW is just about to introduce the A321LR into the system. Days before the merger announcement, the airline revealed it will begin service to Vancouver (BC) with the A321LR.

Airbus salesmen have been pitching the A321LR and A321XLR to Icelandair, noting it has better range and more capacity than the 737-8 and 737-9 the carrier has on order.

Boeing targeted Icelandair as a customer for the prospective NMA, aka 797.

Icelandair officials haven’t been ready to proceed to a decision on either airplane any time soon.

With the acquisition of WOW and the Airbus operating data that comes with it—rather than numbers pitched by Airbus that are always subject to debate—Icelandair now has hard information to evaluate.

As for Boeing, the NMA is a paper airplane at this stage, and one for which decisions over materials and configuration still are fluid.

This acquisition may well work to Airbus’ benefit and to Boeing’s detriment.

20 Comments on “WOW-Icelandair combo may help Airbus, hurt Boeing in A321LR/XLR-NMA campaigns

  1. It may work to Boeing benefit and Airbus detriment as well or be a mixed bag.

    First they share the common engine (not exact but CFM) for all their variants Boeing or Airbus on one form or another. As that is a bit driver, it simplies things somewhat – no parts are not common but as a mechanic you get used to a certain mfg and how they do it and that helps the troubleshoot and repair as well as relationship with the mfg.

    Clearly the A321NEO has a better profile than the 737MAX. No reason you can’t operate both types.

    It also puts side by side the simpler maint 737 vs the more complex A320 series.

    Again mechanics get used to one type and sometimes a mfg makes it more complex or hard to access and deal with than another. Some of it is what you get used to and some is they just didn’t think it through.

    767 and A330 are clearly different though overlapping markets. Does the route setup drive one over the other is the question.

    With the 787 coming along that may just go that route.

    The 4 WOW A350-900s also is of interest. Just where were they going to fly those? (no I am no Wow expert).

    As they went belly up did they have a clue what they were doing? (not that I don’t love the crazy bright colors!)

    And all in one fleets are not a given, Delta operates about as diverse a fleet as you can find and does well.

    So its another one that the sky is not falling, interesting and a good second view along with AK Airlines and how the A321NEO is viewed side by side.

  2. With the A321 at 100t MTOW, and the A330 at 250t, Boeing still has a lot of space to position the 797. It can provide an upguage in payload, passengers, or range over the A321 as needed, even if the per seat economics are similar. The 797 can improve on the economics of the A330 with a much lighter frame where the large range and freight capability of the A330 is not needed. How close will they go to the A321 in size remains to be seen

    Seems like the 737 and A321 are overlap, but the 797 and A330 would fill different roles. I guess if you have a merger, you make do with what you get.

    • The 767-300ER at 190T MTOW, even re engined, is said to be not ‘good enough’. So I think the weight range you mention is a lot less. Restricted range and the lower fuel required will dial that back. Could it be 150T ?

      • Agree. I think over-specification of the NMA is a risk. Nobody is asking for 5000NM and it adds weight. Most flight wll likely be <2000NM anyway.

        • Ted:

          You have to tread a bit lightly in the 737 and A320 contrasts.

          Unfortunately Airbus chose to call each variant a model (I guess that jacks up the types you produce) but you range from the A318 to the A321 (call it A320-100/200/300/400)

          They also chose to have the A320 a bit smaller than a 737-800/8. Its close but a slight advantage to the 737 simply due to slightly better pax numbers.

          Then there is the 737-900/9 where there really is no Airbus equivalent as the next up is the larger A321.

          Boeing came out with the -10 to compete but its not as capable as the A321. As long as you don’t need the range or the high hot end it sort of works.

          Clearly there is a weight gap between the -10 and the A321 and the next up be it a 787-8/767 or the A330-800.

          But the reason for that gap is a technical issue with build and costs.

          If Boeing can pull it off with the MOM, then they have a winner. How that all works out is a work in progress and we are looking at least 10 years before we really know.

          • Yes, I guess the MAX 8 and A321 are complimentary as AA is going that route.

          • Ted:

            I think its a case of they CAN be complimentary and not that they are mutually exclusive.

            AK Airlines is another good barometer long term as to how that pairing (and the 900/9) is perceived. A bit muddied with the -10 in the picture now and range/load needs.

            So IA and WOW gives us another benchmark.

            Most of us can walk and chew gum. The stuff about it has to be one or the other aircraft is belied by other companies that offer local and longer range international service manage it just fine.

            If you really like what the one doe4s and you really like what the other does I don’t see any issue with multi.

            Iceland flies 757s and 767s as well (and a 787 on the way)

            Other than some type rating commonality between 757 and 767, the 3 have nothing in common engine, systems wise.

      • Now that Airbus has proven the A321 can fly 4750 miles with 180 passengers, this is a good baseline capability of the A321 for Boeing to target the larger increment of the 797 design. At 25% more payload, 225 passengers, to fly that same distance, with twin aisles, what is the lightest aircraft that can do this? The minimum empty weight and MTOW the 797 can get down to, 65t and 130t? Versus about 50t and 100t for the A321. A gain of 30% more weight for 25% more passengers, but with a more efficient wing and engines, equal economics.

        And, the added bonus of twin aisles , four preferred aisle seats in every row, faster boarding, better passenger and cabin crew circulation on longer flights.

  3. The Icelandair/WOW fleets/orders bit of a mixed bag and consolidation required.

    Maybe keep it simple, A321/(X-LR) for North America, Max8/9’s for Europe and 788’s for higher density routes in the States but also has the range to open new routes into South America and India/Vietnam/etc. if so required.

    To be honest (wearing an AB cap) don’t know where the 339’s will fit in if you want to run a “mean and lean” operation?

    The higher capacity (~265 seats) NMA-7X with 4000-4500Nm could actually have a place in Icelandair for higher density routes, longest destination I see at the moment is SF which is ~3800Nm from Keflavik.

  4. I don’t think that Airbus will just ad some fuel tanks to create the A321XLR. If they meant to do that, it would probably already be on the price list.

    Me thinks that they seriously study the possibilities of a CFRP wing. Apparently the wings of both the A350 and the A220 perform really well. A carbon wing would increase the range of the XLR quite a bit, simply by reducing weight and improving aerodynamics. Such a wing would certainly have an increased span and fuel capacity. A nice bonus would be that the existing engines would suffice.

    It’s not an easy decision though, as the order book is full and the 797 is still not defined. I assume Airbus will take more time to evaluate a CFRP wing further so they can make an offer to Airlines maybe some time next year.

    • Yeah – I do really hope they go for a re-wing and ‘pull the plaster’ on making the rewinged the a321 the ‘base model’ for a revitalized series.

      Incremental is great and to be commended – but a more comprehensive re-wing would keep the a320/21/22 competitive well into the 2030s, while keeping the cargo hold for cargo.

      As for the merger – that’s a lot of different airframes to support. I’d go a320/a321neo for replacement of 757/767 and all others if they can get gotten rid of, and a330-900 for high density routes [if needed at all]. Icelandic based aircraft don’t need the crazy ranges of long-haul.

      • Would a rewing give them the option for taller main gear and better rotation on a 50m long A322? And, will a rewing have folding tips to fit in the 36m wide gates? I think the rewing /stretch could give a big jump in economics for less investment than an all new aircraft.

    • Agree, the 321X wing a major “issue”. Need to reduce wing load, increase MTOW and time to get to FL for longer haul, also for flights of >5 hours max cruise speed need to be increased to compete with an NMA.

  5. I don’t think the table of destinations is entirely correct.
    For instance WOW flies to Amsterdam, but it’s not in the list.

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