June 27, 2023, © Leeham News: Airbus inked a memorandum of understanding with lessor Avolon for 20 A330-900s at last week’s Paris Air Show. When converted to a firm contract, this will bring the -900 order book to 299. Another 12 of the short, longer-range A330-800 make the total 309.
This compares with 664 A330-200s, 784 A330-300s and 38 A330-200Fs. The A330ceo is one of Airbus’ best-setting widebody airliners. The entire A330ceo and neo families are Airbus’ best-selling widebody, followed by the A350 family. The original A300/A310 family is third.
However, the A330neo has struggled in the market. First offered in 2014, it was the last of the new generation twin aisle airplanes up to that point. Boeing’s 787 and the A350 preceded it. Through May, 2,096 gross orders were placed for the 787. Nearly 600 remain in the backlog.
Why hasn’t the A330neo done better? In an interview with LNA at the air show, Christian Scherer, Airbus’ chief commercial officer, said there were two factors.
He said one reason is that when the neo was launched in 2014, the ceo fleet was still relatively young. The last ceo, an A330-300, was delivered in 2020. This means the installed base is still relatively young.
“The bulk of the replacement of those airplanes is not upon us yet,” Scherer said. More than 1,350 remain in operation. “The replacement of that embedded fleet is only just starting. So that’s, that’s one phenomenon. The other is that I think it took the community a while to realize the seed cost potential of the 330.” Conversions of the older A330s into freighters is now well underway.
“And If you’re not necessarily wanting to fly your 14, 15, 16-hour sectors [flown by the larger, longer-range A350], then the 330 is kind of hard to beat from a seat cost perspective.”
Scherer rejected a view from former sales executive Kiran Rao, now a consultant for airlines. In an interview with me for my book Air Wars, The Global Combat Between Airbus and Boeing, Rao said that the sales team neglected the A330neo, favoring instead the larger A350. “I don’t think that’s the case,” Scherer said.
Rao added that the prime reason Airbus launched the A330neo was to put price pressure on the new, much more expensive-to-buy Boeing 787. The A330 was fully amortized except for the new engine, wing and other upgrades. Boeing infamously went billions of dollars over budget and had yet to break even on the program.
When Airbus launched the A330neo, then-top salesman John Leahy and one of the industry’s leading buyers, Steve Udvar-Hazy, predicted sales of 1,000 aircraft. Former officials of Rolls-Royce, which supplies the engines, scoffed at the prediction even then. Total sales would likely be closer to 400, they said.
Despite all the new technology in the 787 and the neo being a combination of old and new, using virtually the same RR engine as on the 787, the operating costs proved to be similar to the 787. The capital cost, however, was much lower.
Still, demand for the 787 is brisk while the A330neo picks up orders at a slow if increasingly improved pace.
Before the air show, speculation was rife that Airbus would launch the long-discussed stretch of the A220-300. The unofficial name is the A220-500. This model would compete directly with the Boeing 737-8 MAX and Airbus’ own A320neo. Yet Scherer thinks the “Stretch,” as he calls it, will complement the A320 rather than cannibalize sales.
As LNA previously pointed out, A320 sales are already shifting to the larger A321neo as the so-called heart of the single aisle market moves upward. Pressed for production slots, the A220-500 would free A320 slots for the more profitable A321.
But LNA’s analysis concludes that Airbus will need production capacity for the Stretch alone of 25 a month to cover the commitments for the A320. The 220’s production rate is just 6/mo and Airbus struggles to meet this consistently due to continued sluggish recovery from the COVID pandemic. It has a goal to boost this rate to 14/mo by 2025, at which point Airbus thinks the program will finally be profitable. Officials want rate 14 and profits before committing to the Stretch.
There is also no uniformity on whether to proceed with the Stretch. Scherer wants to add the CFM LEAP engine as an option to Pratt & Whitney’s exclusivity with the Geared Turbofan engine. The LEAP is more than 500kg heavier, however. Scherer wants to maintain the A220-300’s 3,300nm advertised range. A stretch may trade range for seats. To avoid this, Airbus must consider revising the wing—perhaps to the point of a new one—or the engines must reduce fuel burn by 1.5%-2%. Scherer would like to add an engine option for the A220-300 if a choice is offered on the Stretch.
Some within Airbus favor a simple stretch, one engine and few other changes. Another faction doesn’t want any a stretch.