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 5. Turbofan design problems April 26, 2024
- Airbus 1Q2024 results: Airbus CEO: “A350 in-service experience drives positive reputation and orders” April 25, 2024
- A350-1000 or 777-9? Part 3 April 25, 2024
- Boeing CEO promises company is turning around…again April 24, 2024
- Solid start for stand-alone GE Aerospace despite cuts to LEAP output April 23, 2024
Day One at Paris: Airbus lands record IndiGo deal for 500 A320s
By Bryan Corliss
Monday, June 19, 2023, © Leeham News – Airbus landed a huge but widely expected order for 500 A320s from Indian carrier IndiGo, as the 2023 Paris Air Show got underway Monday.
Analysts had issued pre-show forecasts that orders for as many as 3,000 jets will be announced this week at Le Bourget, as airlines place big bets on a continuing industry recovery from the Covid-19 pandemic worldwide.
Despite the lofty projections, the show got off to a slow start, with only a handful of minor announcements until IndiGo’s big splash late in the Paris afternoon.
- IndiGo has nearly 1,000 Airbus jets on order
- Airbus snags A350 order; could add more
- Boeing announces pilot training deal
- De Havilland Canada plans upgraded Twin Otter
IndiGo now has nearly 1,000 Airbus jet on order
The Airbus deal with IndiGo was widely expected, but monumental nonetheless.
“It is difficult to overstate the significance of IndiGo’s new historic order for 500 Airbus A320 family aircraft,” IndiGo CEO Pieter Elbers said. “An order book now of almost 1000 aircraft well into the next decade, enables IndiGo to fulfil its mission to continue to boost economic growth, social cohesion and mobility in India.”
IndiGo, which now operates a fleet of about 300 aircraft, a mix of A320 models and ATR turboprops. It had 477 Airbus jets on order before today’s deal.
The deal comes a few months after IndiGo rival Air India placed an order for 470 commercial jets, split between Boeing and Airbus. It sets the stage for significant growth and a major confrontation between the two carriers and a handful of smaller competitors in a fight for market share in the world’s largest country.
Currently, there are about 700 aircraft in the combined fleets of all Indian airlines, which will need to increase infrastructure and hire flight crews and maintenance technicians to support all the new planes coming to them.
IndiGo could be back with another order before the end of the air show. According to Indian media reports, the airline is in talks with both Boeing and Airbus on a potential order for 20 widebodies. The airline is said to be leaning towards 787s or A350s, but may order A330s, according to the reports.
IndiGo currently wet-leases a handful of Boeing 777s that fly routes between India and Turkey.
Air Mauritius orders three A350s
Airbus photo
The first order of PAS 2023 came just after lunch Monday, when Air Mauritius announced it has finalized an agreement with Airbus to purchase three additional A350-900 aircraft. The airline wants the additional widebodies to expanding its network across Europe and South Asia.
The order will give Air Mauritius a total of seven A350s. It is the national airline of the island nation of Mauritius, in the Indian Ocean.
Report: Bangladeshi airline could order A350s
Reuters reported today that state-owned Biman Bangladesh is set to order 10 A350s, quoting a state civil aviation minister.
It’s not clear if the deal will get done this week in Paris, the news service said.
Biman operates a fleet of 16 Boeing jets, a mix of 737s, 777s and 787s.
Boeing signs deal for pilot training
Boeing and CAE have signed an agreement making CAE the first Boeing Authorized Training Provider to offer Boeing’s Competency-Based Training and Assessment (CBTA) curriculum.
It was the only deal Boeing announced Monday.
The companies said they aim to expand access to flight training globally, using digital tools and data for customized training. CAE will initially launch the program in India with plans to expand to other markets.
De Havilland announces Twin Otter update
De Havilland Canada unveiled plans for a DHC-6 Twin Otter Classic 300, an upgraded version of the iconic aircraft. The company says the new model features enhanced performance, new avionics and improved passenger comfort, and is aimed to meet growing demand for reliable regional transportation.
Raytheon reports hybrid-electric milestone
Raytheon said its Collins Aerospace unit had successfully completed a test of its new 1 megawatt electric motor. The company aims to pair that with a thermal engine built by Pratt & Whitney for a system that will be four times more powerful than current hybrid motors, while cutting carbon emissions by 30%.
EVTOL builder predicts hundreds airborne by 2028
Archer Aviation CEO Adam Goldstein anticipates hundreds or even thousands of electric eVTOLs to be operational during the Los Angeles Olympics in 2028. Archer and Dutch carmaker Stellantis (which owns brands like Alfa Romeo, Chrysler, Dodge, Jeep, Maserati, Opel and Peugeot) announced construction is underway on their joint eVTOL manufacturing plant in Georgia.
And in football news (soccer for us Yanks)
Etihad photo
Over the weekend, Manchester City — the recently crowned Champions League cup-holders who also were champions of the English Premier League and winners of the FA Cup — announced it has chartered an Atlas Air 747 to fly the team to its upcoming games in Japan and South Korea. The friendlies will precede Man City’s campaign to defend its Treble in the 2023-24 season.
Man City, which has a sponsorship deal with Etihad Airways, chartered Etihad’s 787-9 with a custom team livery to carry the team back from its recent win over Inter Milan in the Champions League final in Istanbul.
The noisy neighbors are going to be insufferable. Ten Hag better get his butt moving…
Also
Saudi Arabia’s flynas firms up 30 more Airbus A320neo Family aircraft
https://www.aviation24.be/airlines/flynas/saudi-arabias-flynas-firms-up-30-more-a320neo-family-aircraft/
And Qantas exercised options on 9 more A220s.
Another nine or is that the 9 they exercised in Feb-ish?
They have 29 firm orders, so this makes 38?
Voilà !
“PARIS, June 19 (Reuters) – Qantas Airways QAN.AX is firming up options in view of ordering 9 more Airbus A220 narrow-body jets, sources said on Monday as the Paris Air Show was getting underway.”
https://www.nasdaq.com/articles/qantas-firms-up-options-for-9-extra-airbus-a220s-sources
Recycled previous announcement
‘Firmed up options’
Is that even a thing
meanwhile the Australian pilots unions are fuming over Qantas recruiting A220 pilots from overseas ( apparently they cant find any in the country …looking over the shoulders of their B717 pilots)
Your recycling old news Bryce, Qantas has 29 a220’s ..on order.
Your misleading information,intends to firm up options ,.Is all that article stated . Nothing was signed as of yet !!!
Even Frank is confused ,🤭☺️Lol…
No Frank their still at 29 firm ordered A220’s…
@ Robert L
Take it up with Nasdaq if you don’t like the reporting…
No, take it up with the ecco chamber and its good to do research and understand the area commenting on otherwise credibility takes a further shellacking.
@TW @DoU
Did you guys read what’s in the report? 🙄
@DoU
Exploited by Big Corp under a highly financialized capitalist system? Cry a river.
More interesting news today:
“Rolls-Royce, Absent From Busiest Jet Segment, Studies Path Back”
“(Bloomberg) — More than a decade ago, Rolls-Royce Holdings Plc walked away from the market for single-aisle aircraft when it sold its stake in a venture making engines for the Airbus SE A320. Now the UK manufacturer is looking for ways to get back into the most widely flown segment of commercial aviation.
“Rolls-Royce would be open to becoming a partner on single-aisle engine programs, said Rob Watson, who leads Rolls-Royce’s civil aerospace business. While there’s “always room” for such collaborations, teaming up with another engine maker depends on how the market develops, he said. ”
https://www.bloomberg.com/news/articles/2023-06-18/rolls-royce-absent-from-busiest-jet-segment-studies-path-back
RR recently indicated that the Ultrafan concept could be made available in a variety of sizes.
Extra engine choices on the A320/321, A220 and C919 could really change the landscape.
The quote you reference says a partnership, but everyone but Rolls already had a date to the dance. I’m not sure why C919 or a320 would need another engine, LEAP is doing just fine and Comac would probably not put another non-Chinese engine on the wing.
Extra engine choices allow higher aircraft line rates, since engines are currently the bottleneck. With a third engine choice on the A320/A321 neos, AB could potentially go to over 100 frames per month.
The Chinese are predominantly US-adverse at present, and more open to working with the EU. Against that background, a European engine would be preferable to a US one.
As regards dance partners: there’s always ITP in Spain.
“The Chinese are predominantly US-adverse at present, and more open to working with the EU.”
I agree……………… Interesting, what changed your mind? A year ago you were arguing this political-economic situation between the two countries was overblown.
Wrong again.
I pointed out that — with specific regard to the lack of Chinese re-cert of the MAX — one didn’t have to fall back upon chilled Sino-US relations, since there were also technical reasons published by the CAAC.
China goes as Xi dictates (literally ) and you have to do some dives into what is going on in China to understand all that goes on in China (and I can only dip my toe as info is hard to get)
-> [There] is a major reason why many people don’t have to know that much about China to have strong opinions about China. Because it’s not actually about China, it’s about themselves and their own country, and China is just an imagined contrast.
Agreed China has a degree to its rights internal. That clearly is Xi issue, things are looking poor economy wise and when there is trouble is River City (Shanghai to those not familiar with Americanism) then there is trouble all over and the biggest Chinese Communist fear is mass protests and worse.
During the US era of Slavery other countries were abhorred and rightfully so (I am still abhorred and unbelievable for those enslaved)
So yes, protesting labor camps is a valid criticism as are the claims of owning the West Philippines sea and Tabet.
Equally wrong and worse was the US move into Iraq.
Talk about justice? Crimes??
Wow! What kind of bad example was set:
-> US threatens to arrest ICC judges if they pursue Americans
-> US Again Threatens International Criminal Court
-> The United States government imposed sanctions on the International Criminal Court (ICC) prosecutor
No wonder Americans are so eager to point fingers at others.
From the Economist:
U.S. / China
GDP
Q1 actual growth + 1.6% / + 4.5%; 2023 full year (forecast) + 1.0% / + 6.1%
Inflation
Q1 actual + 4.0% / 0.2%; full year (forecast) + 3.8% / + 1.2%
Look, who is fast becoming a laughing stock on the net?
https://twitter.com/pstAsiatech/status/1670783375144112133
@TW
Why America doesn’t stop selling armed drones and fighter jet technology to countries that denies rights to minorities and workers, muzzles press freedom, and uses the power of the state to intimidate its political opponents while promoting nationalist ideology?? 🙄
I don’t see how designing and certifying a new engine, setting up an all new supply chain and then getting it onto the wing of existing aircraft will be a faster route to more engines per month than ramping existing designs.
Wishful thinking. Pratt wanted to work with RR on GTF but RR didn’t. Now Pratt has Japanese Aero and MTU as partners. GE and SAFRAN have their amazing CFM marriage.
Third engine option is not an option as both Pratt and LEAP went in knowing it was only two horse race.
If there is an increase in airframer production then so will CFM/LEAP and GTF engines. Third engine option is not an issue for ramp up its raw material and labor. Which will also be issue on RR.
RR is getting desperate. At one time the CEO made a comment that if RTX was to spin off Pratt then RR will collaborate with Pratt. What a joker.
RR have the Pearl 10X engines, might be suitable for the A220-330 after a thrust bump to 20k. The BR715 is a bit old by now and the Pearl engines are of a new core design generation.
The show isn’t lost yet for BA: it’s working diligently to try to get an Akasa order finalized before the end of the show.
The order may comprise up to ten MAXs (probably whitetails)
https://www.bloomberg.com/news/articles/2023-06-19/india-s-akasa-air-in-talks-for-follow-on-boeing-jet-order
This must be the type of thing to which The Dave was referring when he said that airlines would flock to BA for its “early slots” 🤔
That’s a rather large order for Airbus, no?
Yah. Gotta be deliveries in 2030…
Anyone know what the mix is?
From the link:
“This IndiGo order book comprises a mix of A320NEO, A321NEO and A321XLR aircraft, it said.”
“…This will provide IndiGo a further steady stream of deliveries between 2030 and 2035,” the airline said.”
https://www.telegraphindia.com/business/indigo-to-buy-500-airbus-planes-in-mega-aviation-deal/cid/1946227
The value of the order at list price will be around $60B.
Applying AB’s 55% discount for big orders, this becomes about $27B.
Using AB’s recent average unit margins on aircraft (about $8M per frame), it amounts to about $4B in EBIT.
Purty good! Think of all the additional R&D they can afford to do.
LOL……Do you think Indigo settled for the “regular” discount? Airbus will still make bank, especially the after sales service, but it will not be lost on Indigo how “special” this order is.
Congrats to Airbus and Indigo
The NEOs and MAXs will be for sale well into the 2030s.
I’ve never found evidence for any AB discount greater than 55% — and I have a lot of data.
But I continue to collect data, so do feel free to post any discount evidence that you have 👍
For every $2 million in bottom line margin, that’s $1 billion, for the order.
That’s about 8 aircraft per month, for 5 years straight.
And you will not. Terms are never disclosed for a reason. If it was so easy to discern discounts by looking at the “data” their would be no need for NDAs. Just call up the account and pull an OEMs financials.
@ williams
Plenty of backdoor ways of finding data on discounts. Many have been discussed here on LNA by myself and @ Frank.
It’s really quite easy.
Poor BA looks empty-handed on day 1. 🙁
Airlines like United and Ryanair also got very, very good deals from BA, don’t you agree? 😄
I have evidence for 60% and 69%, respectively.
Good to point out: with nominal unit production costs at 35% of LP, giving a 60% discount instead of a 55% discount results in a halving of unit margin.
Over at BA, those unit production costs appear to be even higher, resulting in greater profit erosion.
A discount of 69% results in a straightforward loss.
@ Frank knows an industry insider who indicated that BA won’t make a cent on the UA deal.
Oh yes, I do agree. And its funny to think a major blue chip will pay one OEM more than the other.
Discounts tend to go up at desperate, cash-strapped vendors with severe reputational damage 🙈
True, my point still stands.
“And its funny to think a major blue chip will pay one OEM more than the other.”
Because the other is better/superior?
Which one is literally at the end of the line? Is it possible to have a next generation evolution?? 🤔 Which one has suffered from repeated quality issues??? Which one was grounded across the globe recently? BA offered United “unprecedented” discount to avoid it from ordering from Bombardier? Hahaha. Don’t you remember?
” … a major blue chip will pay one OEM more than the other.”
They may think that they get what they pay for. i.e. a better value offer.
Whats the actual deposit put down by the mega wealthy carrier …cough , make that loss making.
is Airbus vendor financing the expected payments as well?
Not that the orders have any accounting standards of probity applied but must be a dream selling point for the salesmen/women to claim ‘Our order books are filling fast 5 years out , get in now or miss out”
When its really just another Air Asia X syndrome – Fly hard and die trying
“Our order books are filling fast 5 years out , get in now or miss out””
Actually, that was exactly the sales pitch that The Dave recently tried to direct at the Chinese.
They didn’t bite.
😏
They did bite…hook line and sinker after *their* planes were offered to India
https://simpleflying.com/boeing-gearing-up-resume-737-max-deliveries-china/
is this another ditch you are going to die in after refusing to accept Max were flying again in China.
Your claims are like the front line in Ukraine, a lot of ditches/hills given up
Duke
That article you quoted was from about a year ago. Has BA resumed deliveries from the Inventory of Max’s it’s has sitting in Renton?
@DoU
Calhoun has to talk up future orders from China even though not a single 737 MAX is delivered since the grounding.
China’s big three are going to take up a few dozen Airbus this year. How many can Boeing deliver?? 🙄
Always a few years behind the curve – more copium. 😄
https://simpleflying.com/airasia-x-adds-airbus-a330s-returns-strong-q1-profit/
Its a large order period. On Anet its being discussed. Apparently Indigo leases their planes for 6-7 years and return them. Keeps MX cost to near nil. The lessor gets its aircraft back with plenty of equity left in it, and Airbus keeps the factories churning. Everyone is happy.
Other LCCs have the same business model and the only reason IMO, its sustainable is the somewhat finite life of aircraft. Normally 20 years and turned into Coke cans, so there is always aircraft needing replacement.
Looks about right
https://www.planespotters.net/airline/IndiGo
They have two A321-200’s that are left at over 15 years of age and twenty one A320-200’s that are almost 10 years old.
They probably try to dump them before their first D-Check, but I suspect that isn’t always the case. Those planes have most certainly already been through a heavy maintenance cycle.
But it’s a good plan.
Strangely, Planespotters is showing 4 Neo’s in their historic fleet. I wonder what’s up with them…
Believe Spirit airlines uses the same business model. At one point Spirit had no long term debt on the books though they had new NEOs arriving on the property. Spirit were doing sales leasebacks as soon as the NEOs reached the tarmac.
Fascinating model.
Financial leases are part of debts (long-term) under current accounting rules.
@ Pedro
Thank you
Spirit (symbol: SAVE) has $5.66 billion long-term debt (including capitalized finance leases) as of y.e. 2022.
https://www.marketwatch.com/investing/stock/save/financials/balance-sheet
The two A321-200 are converted freighters.
Indigo usually returns aircraft before the D-check (https://m.economictimes.com/secret-of-indigos-consistent-profits-what-makes-it-prosper-despite-a-troubled-industry/articleshow/27747179.cms).
Without Covid, delivery delays and PW GTF issues, the number of retired A320neos would certainly be higher (retired A320neos have been leased to Marabu).
Many of the aircraft ordered today will likely replace A320/1neos that have not yet been delivered to Indigo
The size of their orders still doesn’t really make sense to me. Currently they have approx 300 planes. Assume in that 7 years they grow 100% and turnover 100% of their fleet, that’s still only 600 planes, yet nearly 1000 on order.
They want to grow more than 100%.
India is a huge market.
Apart from growth, some of these deliveries are so far out that they will replace aircraft being delivered today
@Enrigh above explains their business model:
Many of the aircraft ordered today will likely replace A320/1neos that have not yet been delivered to Indigo
Do you expect no growth in what is potentially one of the largest markets in the World?
Populated by whinning babies?
Was it because there’s a lack of aircraft that Indigo had to lease a dozen aircraft from Scoot/SIA?
AB also bagged a $6.7B helicopter deal with Saudi Arabia:
“AIRBUS has signed an investment agreement worth more than US$6.7 billion to build military and civilian helicopters in Saudi Arabia with a local defence company.
“Airbus and Scopa Industries agreed to develop a helicopter manufacturing facility in Saudi Arabia, with construction of the plant expected to begin early next year, Fawaz Alakeel, Scopa CEO, said in an interview from Paris. The plant will be able to produce up to 100 military and commercial helicopters by the end of the decade, he said.”
https://www.businesstimes.com.sg/companies-markets/airbus-agrees-us67-billion-helicopter-pact-saudi-arabia
These sort claims future aviation factories to be built in the Wahabi state never eventuate
Like this one
https://www.aerotime.aero/articles/28590-taqnia-an-132-the-curious-tale-of-saudi-antonovs
Its helicopter showboating by Macron and Prince Salman Bin Laden
You mean like the Aussie sub deal? 😏
***
Things are changing in Saudi Arabia…hadn’t you noticed?
Bingo 😁
Dont you mean -Golf
That will change Saudi – not
Congratulations to Airbus!
Who will supply the lion’s share of the engines for this order is the more interesting question. Presumably IndiGo will split the order between P&W and CFM.
Not (yet) in the bag, but potentially on the way:
“Mexico‘s Viva Aerobus eyes at least 100 Airbus aircraft: report”
https://www.aerotime.aero/articles/viva-aerobus-airbus-potential-order
***
Udvar-Hazy and AAB said today that airlines may be ordering too many planes.
They might have a point…
https://www.bnnbloomberg.ca/aviation-world-gathers-for-week-of-dealmaking-paris-update-1.1934948
Boeing Forecasts Demand for 42,600 New Commercial Jets Over Next 20 Years
Udvar-Hazy…what percentage of his portfolio is Southeast Asia? (maybe he is outside looking in)
say 2,500 orders at PAS, out 42,600 is 5% no big deal
I suspect that UH and AAB were referring to a much broader order bag than the PAS — e.g. the recent orders from UA, AI, and Riyadh, the rumored approaching orders from Turkish and Emirates, etc.
I sense lots of future deferrals…
> I sense lots of future deferrals…
No joke- especially considering the curious
events of the last three-plus years, and airlines getting bailed out by gov’ts right and left.. the order frenzy does not make sense.
I believe alot of FOMO is going on here. Will there be deferrals, sure. But will one be able to get aircraft in a timely manner in the 2030s unless one gets in line now?
These aircraft on order are replacements for NEOs that have not arrived on the property yet. Let that sink in.
Looking around a little, it seems that UH doesn’t have much business with Indigo. They used BOC and Avolon and were trying to work out getting Go Air’s aircraft from other lessors:
https://www.bnnbloomberg.ca/tata-and-indigo-prepare-to-swoop-on-go-air-s-aviation-assets-1.1917694
Tata and IndiGo Prepare to Swoop on Go Air’s Aviation Assets
‘Go Air’s biggest lessors include Sky High XCV Leasing Ltd., ACG Aircraft Leasing Ireland Ltd. and SMBC Aviation Capital Ltd.
The airline’s other lessors include GY Aviation Lease Co. and Pembroke Aircraft leasing Ltd. ‘
———————————————————-
Hong Kong Aviation Capital and IndiGo Airlines close sale and lease back on new Airbus A320
https://centreforaviation.com/analysis/reports/hong-kong-aviation-capital-and-indigo-airlines-close-sale-and-lease-back-on-new-airbus-a320-49249
————————————————
Williams looks to be correct in his assessment. Not just Indigo, but all Indian carriers:
https://www.cnbctv18.com/aviation/why-sale-and-leaseback-is-the-centerpiece-of-indigos-airbus-300massive-aircraft-orders-4617661.htm
Leasing remains a cornerstone for fleet strategy in the Indian skies
Leasing remains the dominant method for Indian airlines to acquire aircraft and of the current commercial aviation fleet more than 80 percent is leased. Compare this to the global average of around 41 percent.
(from 2019)
Leasing must cost substantially more though, right? There must be a premium
attached to the flexibility afforded by leasing.
@Vincent
UH isn’t a billionaire by working for free
@Vincent
Why would it be more expensive? It like leasing a car, the cap cost is reduced because the airline is paying 55-60 percent off list price. Then you pay the amount of wear negotiated with the Lease company. That sets up for a incredible low monthly payment, in most cases no mx issues and no debt recorded on the books.
Its how the lease company makes money that fascinates me. A couple of percentage points here and there adds up.
The other way of taking advantage of the amazing 55-60 percent off sale price is a leaseback. But you are stuck with the aircraft longer term.
@Williams
A 7 year lease on an A320Neo will cost you about $27 million over the course of the contract ($325k per month)
https://www.aviacionline.com/2022/08/lease-rates-of-a320neo-and-737-max-rise-due-to-aircraft-shortage/
Lease rates of A320neo and 737 MAX rise due to aircraft shortage
‘According to aviation intelligence, information and advisory services company IBA, leasing a new Boeing 737 MAX increased by more than 20% between April 2020 and July 2022, to 316.000 dollars per month. Meanwhile, leasing an Airbus A320neo can currently require a payment of up to 324.000 dollars per month, up 14% from April 2020. The largest model in the family, the A321neo, could be leased for 375.000 dollars per month in July this year.’
I guess it all depends what the value of it is after 7 years, how much you paid for it and how much you can get for it (either on a new lease or a sale) and what it costs you to change it for a new customer (and if the lessor has to perform the D-Check).
Scott said it’s about $5-7 million to change from one airline to another
@ williams
Renting something for an extended period is (nominally) always more expensive than buying it.
The lessor adds on a risk premium and a profit margin, and the lessee gets no benefit from residual value.
How do you think banks make such fat profits? A loan is just leased money.
williams:
I think its more complex that just low price by leasor. Keeping in mind both mfgs shoot themselves in the foot as those same aircraft then latter compete with smaller carriers for orders.
That said, warranty is 5 years or so (negotiated). So that early use period is not as costly as latter.
@ Frank, purchase price has a big effect on the leasing price. If it didn’t there would be no need to negotiate for it so strenuously if leasing. Are those numbers at book price or negotiated prices?
@Bryce
Depends, if your (using car leasing terminology) cap cost is reduced, the amount paid per month is always lower than purchasing. I have made thousands in equity on my last two leases (hint, always lease Hondas).
@ Transworld
Both OEMs do not want these cheaply bought aircraft hitting the open market any time soon, so as not to compete with new aircraft sales. Many of these contracts have clauses preventing these aircraft from being flipped to the open market. Leasing deals keep the aircraft captive from the open market. For 6-7 years at least.
williams:
They caught up with Ryan Air who did flip them to the open market after warranty was up at one time.
But the 6-7 years is not that much longer (if any depending on the warranty period) and then you have a leasor who has made their bones on the aircraft and they write them down and flip them into the market.
So while not Ryan Air its the same issue, you then compete with your own sales. It may work but its not a free lunch.
Is there a large enough market to pick up all these aircraft when they are return to lessors after ten years or so? Where are all these mid-life NB going to?
Airlines in emerging market don’t have access to long-term low interest financing. It’s an arbitrage: lessors spread out financial risk through its portfolio and have access to lower interest rate for short/long-term financing.
@Williams
Best source is always from the horses mouth:
Here are their financials and I direct you to pg 61
Year…………………2022……..2021……….2020
Total revenues 2,317,302 2,088,389 2,015,439
(in thousands, so that’s $2.3 billion in 2022)
(Loss)/income before taxes (138,765) 541,016 646,678
Apparently they really got stung by this in 2022:
Write-off of Russian fleet, net of recoveries 771,476
—————————————————————–
So they make half a billion in annual profit from leasing on
Net book value as of December 31, 2022 $ 24,538,385
$24.5 billion of aircraft.
———————————————————-
Write-off of Russian fleet
In response to the sanctions against certain industry sectors and parties in Russia, in March 2022, the Company terminated all of its leasing activities in Russia. While the Company maintains title to the aircraft, the Company determined that it is unlikely it will regain possession of the aircraft detained in Russia. As such, during the three months ended March 31, 2022, the Company recognized a loss from asset write-offs of its interests in owned aircraft detained in Russia, totaling approximately $791.0 million.
They also had this to add:
In October 2022, one Boeing 737-8 MAX aircraft that was not operating and had been in storage in Russia since the 737 MAX grounding was returned to the Company. As a result, in the fourth quarter of 2022, the Company added the aircraft back to its owned fleet, recording the aircraft at fair value to Flight equipment subject to operating lease in the Company’s Consolidated Balance Sheet with a corresponding offset to the write-off line item in
the Company’s Statement of Operations of $30.9 million. At this time, the Company does not anticipate the return of any other aircraft detained in Russia.
—————————————————————
There’s an interesting table on pg 74, showing when aircraft are coming back from airlines and what aircraft they are. It’s too big to paste here.
‘The following table shows the scheduled lease terminations (for the minimum non-cancellable period which does not include contracted unexercised lease extension options) of the Company’s owned aircraft, excluding one aircraft that is currently not subject to a lease agreement, as of December 31, 2022, updated through February 16, 2023’
@williams
Leasing in general costs more than financing. Financing – you pay higher installment since you’ll own the asset in the end.
‘They might have a point…’
UH may also have an ax to grind.
IMO lessors have two major sources of customers:
1) Airlines who need financing
2) Airlines who can’t get aircraft
IIRC, he was also banging the drum earlier about rising production rates and how that was a bad thing (when Airbus said they were going to 75 a month). Lessors in general have a vested interest in keeping supply low and demand high. Their assets appreciate in value, as do the rates they can charge and the residual values on aircraft taken back after lease expiration.
————————————————–
There is also this:
Lessor: Air India Set to Order Around 500 Jets
‘According to a Reuters report, Air India is near an order of 500 jets through AirLease Corp, one of the largest aircraft lessors in the world.’
So he’s doing business with Air India, but not (it seems) with Indigo.
The Air India order of 500 aircraft is A-OK, but 500 from Indigo are too many orders.
“As a result of this recovery, there is now more momentum for large orders from airlines who have sort of sat back and watched the movie, and now they’re seeing there’s going to be a positive trend.” Steven Udvar-Hazy, executive chairman of AirLease Corp, told the Airline Economics conference.
He sure changes his tune quickly
We have seen this before except it was Lion, Asia X and Norwegian.
I suspect that there is a lot of negotiating on that 1000 aircraft that Airbus offers to buy them back if they need them for other customers and Indigo agrees if they are flush at the moment and just daisy chain.
Not all roses, Airbus was forcing airlines to take aircraft during the Covid downturn.
True, how many A330NEOs did the Asia X actually accept? Didn’t they order a 100?
williams:
As I recall they ordered lots of A330CEO, then changed it to NEO, then it was A350 and then back to A330NEO.
You need an AI to keep track of it.
@TW
Any different from United, enticed by BA’s deep discount, ordered a bunch of 737 NG but never took delivery?? 🤣
https://www.flightglobal.com/fleets/airasia-x-still-committed-to-a330neos-a321xlrs-ceo/149196.article
28 June 2022
AirAsia X still committed to A330neos, A321XLRs: CEO
AirAsia X has 15 A330neos on order following a restructuring of its orderbook earlier this year which saw the carrier slash its previous 78-unit commitment to the re-engined widebody. In addition, it has 20 A321XLRs on order. AirAsia X recently exited restructuring following a two-year “hibernation” amid the pandemic.
@Frank
Everyone is talking about very tight supply of WB in coming years as many airlines are negotiating with airframers. LH went ahead: it picked up a few A350 and ordered more.
What if AirAsia X still holds onto early slots ….
You seem to be in a lot of pain. Are you bleeding?
@TW Don’t forget bankrupted Jet Airways and Go First airline also had massive Boeing orders. 😆
Those aircraft were sold and leased back – how Airbus is going to buy back? From whom?? Sit down and listen. No need to overthink.
Talking about Jet Airways;
The Jet Airways order is still being shown on the wiki as part of the backlog.
List of Boeing 737 MAX orders and deliveries
https://en.wikipedia.org/wiki/List_of_Boeing_737_MAX_orders_and_deliveries
April 23, 2013 Jet Airways — — — — 125
Orders 5,390
Deliveries 1,196
I wonder if there is a relaunch in the works:
‘As a part of the airline’s relaunch, reports have emerged that the airline is in talks with leading aircraft manufacturer Airbus to procure 50 narrow body Airbus A220 aircraft.[125] Some media reports indicates that Jalan-Kalrock is in talks with aircraft OEMs (original equipment manufacturers) to place an order of at least 200 aircraft of a mix of small, medium, and large narrow body jets at the Paris airshow in June 2023 for their growth plan for five years.[126]’
https://www.business-standard.com/article/companies/jalan-kalrock-in-discussions-to-order-200-aircraft-for-jet-airways-123030600567_1.html
Jalan-Kalrock in discussions to order 200 aircraft for Jet Airways
500 A320s. That’s a lot of aircraft. That’s 18.785 kilometres of A320neos, end to end.
Are Airbus going to start selling A320s by the mile?
End to end, flying at cruise speed, it’d take about 1min20sec for all of them to fly by.
Or landing 1 per minute, it’d take over 8 hours for them to get all down.
That’s a lot of Airbuses.
“Are Airbus going to start selling A320s by the mile?”
It’ll be by the kilometre, surely. 😉
It does seem very optimistic, some of the numbers being bandied about. Yes, India is growing and there’s a lot of potential there but all those aircraft (and Air India’s), even if they’re only gonna keep them for six years, is a lot.
I’d guess in ten to twenty years time there’ll be a lot of cheap deals on second-hand A320s. It may encourage some new start ups, or maybe we’ll all be zipping around in flying e-taxis and the whole market will collapse.
You just made Allegiant’ airline’s heart skip a beat, the thought of descent aged A320s flooding the market.
They have dipped their toes into the new market, when the price is right:
‘Allegiant purchased additional new aircraft in January 2022, this time buying 50 Boeing 737 MAX aircraft, taking advantage of low prices as other airlines cancelled their orders in the wake of the nearly two year grounding of the type.’
https://en.wikipedia.org/wiki/Allegiant_Air#Fleet
But yah, they do like ’em old and cheap
‘Allegiant Air is known in the aviation industry for acquiring aircraft at the lowest costs it can find. Since its inception, Allegiant has primarily purchased second-hand, used aircraft. However, in recent years, it has purchased some new aircraft when it could negotiate particularly low prices.’
Delta Lite
Keep in mind Alegiant market type, its not officially a schedule airline.
They (at least had) a big base in Bellingham Washington State just across the border from Canada and had huge numbers of Canadians cross the border to take those flights.
Having priced Air Canada to fly into Vancouver from Anchorage I could see why. It may have changed with more low cost Canadian carriers.
I was thinking about Delta in all of this. If I am Delta and have no shame shopping at Thrift Stores. I would make a phone call in 5 years, and start negotiating with the lease company for some A321 NEO Certified Pre Own aircraft with another 15 to 20 years left on the airframe.
Delta Tech Ops is a CFM LEAP mx center.
@williams
How often have Delta bought from India airlines?
Lessors are not to going to sell them at deep discount, unless the situation is dire.
Pedro, are you using Google Translate?
What is Google? Don’t you know LLM? 😉
-> IndiGo had been planning to place a significant order of around 300 aircraft prior to Covid-19, but deferred it due to the pandemic. This is now likely to proceed, and could be even larger than previously envisaged, increasing to around 500 aircraft now …
https://travel.economictimes.indiatimes.com/news/aviation/international/moca-approves-indigo-to-wet-lease-planes-for-us-canada-operations-official/98408581
Bryce,
…”I have evidence for 60% and 69%, respectively….”
——
The problem is that there is NO tangible proof of Airbus’ rebate to Indigo (55?) it can be above and below 55%.
Same for Boeing, NO evidence 60-69%, this may be lower or higher. As long as there are no contracts in front of me, it is difficult for me to believe in this nonsense..
—–
Bryce
…”Good to point out: with nominal unit production costs at 35% of LP, giving a 60% discount instead of a 55% discount results in a halving of unit margin.
Over at BA, those unit production costs appear to be even higher, resulting in greater profit erosion.
A discount of 69% results in a straightforward loss.
@ Frank knows an industry insider who indicated that BA won’t make a cent on the UA deal….”
—–
Okay, I have PROOF of seeing a pink elephant. The EVIDENCE is in front of you…👍
Not convinced…
The danger on the internet these days is that you can say what you want…
Re Boeing discount (alleged)
This (false) rumor that Boeing would grant significant rebates is flawed.
Without evidence, and source it is simply inconceivable.
Moreover if it really was, for those who think a little and make a relevant and logical analysis, why then a major contract for 500 narrowbody such as Indigo, would not have negotiated 79-85% with Boeing?
After all, if Boeing is selling off (no evidence for that) then why would Indigo refuse such a discount?
Why Boeing would refuse a substantial production of 500 737MAX’s
Another advantage, two production sources (AB-BA) would be advantageous for the growth of Indigo because it would receive its narrowbodies (almost) twice as quickly.
All these proofs only annihilate this grotesque hypothesis which does not hold on anything…
Indigo is the Ryan Air of Boeing and clearly Indigo is getting what they want now and padding Airbus Air Show numbers as well as long term sweet huge discount agreements with Airbus.
I am reading where Indigo is only paying 10% list (gasp)
Bryce,
@ Frank knows an industry insider who indicated that BA won’t make a cent on the UA deal….”
—
Lol !!!
A neighbor I know saw the Virgin Mary…👍
@TransWorld,
Absolutely that’s the most PLAUSIBLE reason why Digo can’t go see Boeing.
If Boeing was the specialist, it would have rebalanced the narrowbody 50-50 /MAX-neo market share or even more to its advantage,
if Boeing were forced to lower its dress !👍
Just absurd…
I saw the light!!!
Believe me ! 👍
Lol!…
Spurred on by this comment from Williams (in reference to leasing) ;
Why would it be more expensive?
I decided to have a look-see at the ALC financials.
https://airleasecorp.gcs-web.com/static-files/34d9e15c-283f-4358-b8cc-df08fe5add4f
I’m going to throw out the Russia thing (as a one off) plus the fact that they are pursuing insurance companies to re-coup their monies (and I will use 2020 as a comparison).
The vast majority of their revenue is from leasing:
Revenues
Rental of flight equipment $ 2,214,508 $
Aircraft sales, trading, and other 102,794
Total revenues 2,317,302
After all their expenses, including interest expense and depreciation, they make:
Net (loss)/income attributable to common stockholders $ (138,724)
Add back in the Russia costs
Write-off of Russian fleet, net of recoveries 771,476
And their bottom line, before dividends is $632,752. That’s ~$633 million.
——————————————————————
Which is kinda right in line with previous years, even before the pandemic and grounding:
Net income available to common
stockholders $ 500,889 $ 575,163 $ 510,835 $ 756,152 $ 374,925
Those are the net income numbers from 2020 all the way back to 2016.
—————————————————————
Now in 2020 they made $501 million for this:
‘As of December 31, 2020, we owned 332 aircraft in our flight equipment subject to operating leases portfolio, comprised of 236 narrowbody aircraft and 96 widebody aircraft, with a weighted average age of 4.1 years.’
In 2022 (putting back in the Russia revenues) of $633 million
‘We ended the period with a total of 417 aircraft in our owned fleet. As of December 31, 2022, the weighted average fleet age and weighted average remaining lease term of our fleet were 4.5 years and 7.1 years, respectively.
————————————————
Comparison Time:
$501 million for 332 aircraft = $1.51 million profit per aircraft in 2020
(t’s actually $516 million in profit, as they gave Preferred stock dividends of $15,375)
$633 million for 417 aircraft = $1.52 million profit per aircraft in 2022
So call it $1.5 million in profit, per aircraft, per year.
$125,000 per month IN PROFIT, after everything.
—————————————————-
This is money that the airlines are paying lessors to lease an aircraft, as opposed to owning it outright.
Are lessors just able to secure better pricing? I dunno.
300 to 400 aircraft in a fleet doesn’t seem like a huge number.
My takeaway?
If you have a pile of cash and want to get into the industry, don’t start an airline. Be an aircraft lessor.
Furthermore, I would say that the cost is even higher, because each year ALC has the following expenses:
Selling, general, and administrative 156,855
Stock-based compensation expense 15,603
So add back in the expenses required to operate a separate company, which is $172 million or $413,000 per aircraft per year or $34,000 per month.
I saw the 777X !!!
Believe me!👍✈️
Day : 2
https://twitter.com/BoeingAirplanes/status/1670885519880777763?t=gmj1gSfP5axE6E5txmHBrw&s=19
Did you get a chance to weigh it? 😉
BA doesn’t like talking about the 777-9’s OEW (181.4 tons), since it’s a LOT heavier than the A350-1000 (153 tons).
That difference is the weight equivalent of 284 passengers plus baggage.
No wonder John Leahy used to taunt that “a full A350 weighs less than an empty B777X”.
Lol!
JL must have been racking his brains to see so many 777-X sold VS A350-1000 sold
JL could be funny sometimes
But that’s the dumbest thought I’ve ever heard. And what do you do with an empty 777-X?
What the heck…
An aircraft only works with passengers.
Just see that Bryce is always engulfed little by little in a slimy and viscous hole…
Don’t get mad China Airlines just ordered 787s (Dreamliner
Thks Bryce for the news👍
https://twitter.com/BoeingAirplanes/status/1671084522547421190?t=P6XIp8q4eX6Xop_56iFahA&s=19
“…This firm order, which was previously posted to Boeing’s Orders and Deliveries website as unidentified…”
Looks like BA is recycling existing orders to try to get some positive attention…🙈
https://www.prnewswire.com/news-releases/china-airlines-announces-order-for-eight-787-dreamliners-at-paris-air-show-301855106.html
@Bryce
But it’s ok for Airbus to recycle old orders as well ..
Great call on the Qantas A220 order as well…
Voilá…
@ Robert L
Airbus didn’t recycle that order — Nasdaq did.
And it hadn’t actually been firmed up yet — whereas the BA order from China Airlines was already in BA’s books.
Moreover, AB had more than 500 “real” orders yesterday — so those 9 are just noise in the margins, aren’t they?
Still bitter about something?
Quote – “Airbus didn’t recycle that order — Nasdaq did.”
As of May 31st Airbus show 20 orders for the A220 for Qantas in their O&D file.
The nine options firmed up today are new orders.
Salam Air is adding 3 leased A330neos to its fleet:
https://www.scramble.nl/civil-news/salamair-signs-leases-for-a330-900
Wrong again Sir…
Boeing never officially entered any those orders as final..Just like the Riyadh ,and Air India’s order still not finalized yet…
More research needed please.!!!!
Voilá…
BTW .
Maybe you can help Frank out and apologize for the confusion you caused him ..on the Qantas order !!!
Overuse of your links finally caught up with you !!!
(1) Why are you posting this in a thread relating to Salam Air’s A330 neos? Haven’t you figured out how the reply structure works here?
(2) From my post above, regarding the China Airlines “order”:
“LE BOURGET, France, June 20, 2023 /PRNewswire/ — Boeing [NYSE: BA] and China Airlines today finalized an order for eight 787-9 Dreamliners at the 2023 Paris Air Show. This firm order, which was previously posted to Boeing’s Orders and Deliveries website as unidentified, follows the airline’s first-ever order for 16 787-9s announced last year.”
To use your own words: “More research needed please.!!!!” 😉
Just come clean and own up to your blunder…
It’s no big deal ..
You blotched up the Qantas order..
Simple..
Learn from your mistake and move on !!!
One notes the complete lack of any supporting links to back up your assertions on China Airlines 🙈
That’s rather a pattern for the Boeing Back Office…
https://twitter.com/MCCCANM/status/1669440344507949056
Again with the links .
You already got burned by one yesterday..
Dear Bryce.;
When will you ever learn !!
I note that you still haven’t figured out how the reply function works 🙈
“When will you ever learn !!” [sic]
And the Nasdaq link from yesterday was perfectly correct — even if that wasn’t immediately clear to Frank (or you).
Qantas did, indeed, just firm-up 9 options…
Bryce, Bryce, Bryce…
Calm down,
Boeing doesn’t need Air Show to spank. 👋👋
Unlike Airbus which has a reputation for doing so.
Boeing sells more than Airbus in terms of Widebody outside or during an air show
What do you have to prove except that you’re pissed off from spanking for years…
Selling more widebodies is pointless if Boeing can’t build and deliver them while making a profit. All three of those things have been a major issue for a long time now.
[Edited. Violation of Reader Comment rules.]
@Bryce
Suggest you look back at your “VOILÁ”
Response to your Mate Frank..
No Bryce ..
It’s not 38 ordered A220s.. ordered ..
It remains 29….
Get over it..!!!
I called you out over your mistake, and your still fuming over it !!!
😰👶..
Not my fault that you can’t read…🙈
Be nice if you learned how to count..📝
[Comment deleted as violation of Reader Comment rules.]