Huge surge of A320 orders greatly exceed near-, mid-term A320 retirements

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Introduction

Oct. 4, 2018, © Leeham News: The huge surge of orders for the Airbus A320 family far outstrips the aging aircraft statistics, an analysis shows.

Airbus has a backlog of more than 6,000 A320 family members, with more than 1,700 sales potential just for retirements.

There is a backlog of more than 6,000 A320neo family members, with the near- and mid-term delivery schedule far exceeding A320 retirements. Photo credit: Airbus.

There are more than 4,300 A320s scheduled for delivery from 2019 through 2025.

There are just 765 A320s that hit 25 years old during the same period.

The surge in A320-family aging aircraft begins in 2030, just as the bulk of the current backlog ends, according to data bases maintained by Ascend and Airfinance Journal’s Fleet Tracker.

Summary
  • Useful lives of A320s in passenger service historically have been 25 years. Till now, no P2F programs existed to extend the useful lives.
  • But, some passenger airlines are returning A320s off lease in 12 years or less—accounting for some of the surge in orders vs aging aircraft.
  • Supply-demand imbalance in the secondary markets could emerge.

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Airbus posts strong earnings; ‘hell of a ride’ ahead, says CEO

By Dan Catchpole

July 26, 2018, © Leeham News: Airbus posted strong earnings for the year’s second quarter, thanks to better profitability on its A350 and A320 programs. Investors rewarded the news by pushing Airbus share prices to a 52-week high Thursday morning.

However, Airbus lowered its earnings for the full year due to its takeover of Bombardier’s troubled C Series program, since renamed the A220. Airbus plans to deliver 18 of the single-aisle jetliners this year.

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Farnborough: Day 4 orders

July 19, 2018, (c) Airfinance Journal: Announcements at today’s show followed the same pattern as earlier in the week a fair amount of undisclosed orders. The first three days of the air show saw 292 aircraft orders undisclosed.

Of today’s total, undisclosed orders represented 125 Airbus and Boeing aircraft, while AirAsia X, Hawaiian Airlines, Vietjet and lessor Novus Aviation Capital announced commitments for 108 aircraft.

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AirAsia India looks to break-even, international flights

April 24, 2018, © Leeham News: AirAsia India is a newcomer to the Indian commercial aviation scene.

It began service in 2014 and, at Dec. 31, served just 17 cities with 14 Airbus A320s.

It had a 4.5% market share by the end of last year.

AirAsia Berhad holds a 49% stake in the airline. India’s Tata Sons holds 49% and the balance is held by Indian nationals which ties to Tata.

The AirAsia entities are tied to the AirAsia Group of Malaysia, the largest low-cost carrier in Southeast Asia.

Bangalore is AirAsia India’s headquarters.

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Asian airline shift portends big ramifications

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Introduction

April 17, 2017, © Leeham Co.: A shift is underway among Asian airlines that could have ramifications for the airframe and engine manufacturers and, by extension, their suppliers.

It doesn’t appear, however, that aerospace analysts in the US and Europe realize this shift. At least none has written about it that we’ve seen among the research notes we receive.

Summary
  • The creation of the Value Alliance of Low Cost Carriers brings together eight LCCs under one alliance.
  • AirAsia faces a competitive threat.
  • Full service carriers also face a threat, particularly those in Japan, concludes one aerospace analyst team in the region.
  • Airbus, Boeing have a backlog of more than 1,000 airplanes with the VALCC group and hundreds more with other airlines.
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AirAsia X; the long route to profitability

By Bjorn Fehrm

March 1, 2017, ©. Leeham Co: AirAsia X, the long haul sister of Tony Fernandes’ AirAsia, finally turned a profit during 2016. The airline, which started operation in 2007, had a bumpy ride from the start.

Initial operations were when fuel prices was at the highest, and the aircraft chosen, the Airbus A330-200 and A340-300, weren’t the most economical.

After scaling back operations in 2012 and focusing the fleet on the more economical A330-300, the business gradually turned. The low fuel prices of 2015-2016 finally brought the airline profitability for the last fiscal year. Read more

AirAsia: More and more congestion for Asian airports

By Bjorn Fehrm

July 13, 2016, ©. Leeham Co, Farnborough Air Show: AirAsia Group Chief Executive Tony Fernandes said yesterday that increased congestion the group has seen for several of the airports AirAsia operates to in the Asian market motivated an order for 100 Airbus A321neos.

“We are slot constrained on several of our destinations and when we can’t get any more slots from an airport, it’s better to take-off with the 50 more passengers that an A321neo offers rather than the 180 seat our standard A320 have,” said Fernandes.

A321neo_Air Asia_.2016-07-12-16-40-31

AirAsia Airbus A321 as ordered yesterday at Farnborough Airshow. Source: Airbus

“The congestion has grown to the point where it will no longer be optimal for AirAsia to only operate with our standard-size aircraft, our fleet of 200 A320ceos with 180 seats, which will be gradually replaced in coming years by our order for 304 A320neos with the same seating,” Fernandes said. Read more

Pontifications: ICAO continues to drag feet on real-time data transmission

Hamilton KING5_2

By Scott Hamilton

May 23, 2016, © Leeham Co.: Malaysia Airlines MH370. Air Asia 8501. Egyptair 804.

Three passenger flights lost over the oceans. One, MH370, remains undiscovered to this day. Air Asia took a couple of weeks to locate. Egyptair debris took about 36 hours. The black boxes are still  missing from MH370. Once the Air Asia wreckage was discovered, the boxes were recovered fairly quickly. According to media reports, the black boxes of 804 have been “generally” located, but Egypt has dispatched a submarine to more precisely locate them.

The absence of real-time data transmission from the Flight Data Recorders contributed to the mysteries of what happened to these aircraft and spurred wild theories and conspiracies. ACARS, which does transmit data from airborne aircraft, does so at intervals–not real-time. Real-time data streaming from on board transmissions could provide immediate answers to what happened to an airliner.

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Six year turnover in sale/leasebacks put supply-demand balance at risk

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Introduction

August 24, 2015, © Leeham Co. When airlines like Indigo of India, Air Asia, Norwegian Air Shuttle (NAS) and Lion Air have outstanding orders for Airbus A320s and Boeing 737s that number in the hundreds, far more than operations and growth appears ready to support, the deals raises the natural  question: What are they thinking?

As LNC’s Bjorn Fehrm explained Friday, one aspect of these big orders is to “flip” the aircraft every six or seven years, a time that roughly coincides with the maintenance holiday/warranty period. Sale/leasebacks are used to finance these huge purchases.

The practice is hardly new. The USA’s JetBlue Airlines, Ryanair and others practiced this flip for years.

Carriers like the new LCCs mentioned above not only plan to do so to avoid major maintenance costs, but also to fuel their growth. In the case of Lion Air and NAS, these companies also plan to lease out aircraft to other airlines.

But there remain risks involved for the companies and for the industry.

Summary

  • The growing practice of flipping aircraft every six or seven years presents risks to lessors.
  • Indigo Airlines has 96 aircraft in service, 430 on order.
  • Select LCCs in Asia, Europe, India have 1,000 A320s, 737s on order.

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Bjorn’s Corner: Sale/Leasebacks

By Bjorn Fehrm

By Bjorn Fehrm

21 August 2015, ©. Leeham Co: IndiGo Airlines firmed up Airbus’ largest aircraft sale by unit numbers in the week. The order is for 250 A320neos. This means the airline goes from 180 A320neos on order to 430. The airline is just finishing off its first order with Airbus for 100 A320ceos, the final eight being delivered over the next months.

How can an airline that did not exist 10 years ago order 430 A320neos?

There are a couple of things that makes this possible, one of them being the Sale/Leaseback. Before we go to Sale/Leaseback and how this enables this magnitude of business, let’s take a quick look at IndiGo. It has certain similarities to other airlines that also close large aircraft deals.

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