A330neo backlog faces challenging skyline

Discussion

There are now more than 250 firm orders for the A330neo, up from 222 a few months ago. This does not include an order from an Unidentified customer announced Nov. 9 for 10.

There are about two dozen customers, but there are some highly concentrated deals and a few customers that have to be classified as Red on anyone’s watch list.

AirAsia X

AirAsia X has 66 A330neos on backlog and at the Farnborough Air Show announced a Memorandum of Understanding for 34 more. Founder Tony Fernandes publicly flirted with the idea of ordering the Boeing 787 instead of more A330neos. The move was seen by some as a negotiating ploy.

This is by far the largest single backlog for the A330neo. AirAsia X has struggled at times to report profits and it also has an order for Airbus A350s. Some worry about an over-commitment and its long-haul, low cost business model. So far, however, the airline has dodged financial bullets.

Last week, Fernandes told Bloomberg News that he’s in talks to convert some of the -900s to A321neos. The model wasn’t specified but most likely is the A321LR or the A321XLR, with ranges of 4,000nm to 4,500nm.

The A321neo is better suited for medium haul routes than the much larger A330-900, which now has a range of up to 7,200nm in its high gross weight version and—in shoe-horn configuration can carry more than 400 passengers compared with a maximum of 240 in similar crammed pitch.

A swap of some of the A330neo MOU airplanes to the A321XLR would launch this program. If this happens, look for any such announcement at the Paris Air Show, where Fernandes likes to make a splash.

Lessors

Air Lease Corp and Avalon have almost an equal number of A330neos on order, with each other and with AirAsia X when combined.

These are the second largest backlogs for the plane.

Few leasing placements have been announced.

Avalon inherited its orders when it acquired CIT Aerospace, which was an early backer of the plane. CIT’s president at the time, Jeff Knittel, is now president of Airbus Americas, a position he took after the sale of CIT to Avalon several years later.

When CIT placed the order, Knittel pointed out that there were more than 1,000 A330s in service with more than 100 customers. The first A330s were going to reach retirement age beginning in early 2020. He felt there would be a good market for the airplane.

This is the same argument Airbus makes. But so far, sales have not taken off.

Iran Air

Clearly the most at-risk order is with Iran Air, which ordered 26 ceos and mostly neos. Deliveries are from 2019-2024.

This purchase was always at risk once Donald Trump won the presidency. A critic of the Iran nuclear deal that made the order possible, Trump vowed to withdraw. After taking office, Trump confirmed he would drop out and block not only the Airbus transaction but also one from Boeing.

Boeing never booked the order, given the uncertainty.

Given Airbus’ history, look for these orders to be deferred past 2020 in hopes Trump will lose reelection (assuming he runs again, which he has every intention at this point of doing). But these orders are, for today’s context, moot.

Jet Airways

A small order for Jet Airways is as good as dead. The airline is on the verge of bankruptcy.

 

To read the rest of the article Login or Subscribe today.