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Airbus SE said this week it had completed a record-setting order for 430 jets from four airlines. These four airlines are linked to a U.S. private-equity firm. This one announcement narrows the gap opened up by rival Boeing Co. on new plane deals in 2017.
The European plane maker booked the order first outlined at last month’s Dubai Airshow for A320neo family jets. These 430 jets are destined for carriers linked to Indigo Partners LLC: Frontier Airlines in the U.S., Hungary’sWizz Air Holdings WIZZ PLC, Mexico’s Volaris and JetSmart, a new Chile-based carrier.
The sale is the biggest-ever bulk buy of planes in terms of aircraft number, with the jets carrying a list price of $49.5 billion before discounts that analysts estimate could run as high as 60%. Airbus and Indigo didn’t disclose the actual terms.
Boeing says its time for a new aircraft. The next new Boeing, known as the “new midsize airplane,” and unofficially, the 797, would likely be a double-aisle jet. The long process of design, building, testing, etc would mean the aircraft is not intended for delivery until around 2025.
The goal is to meet airlines’ needs for a plane bigger than the single-aisle 737, and smaller and with less range than the 787 Dreamliner. The new plane would overlap with the discontinued but still widely used 757 and 767, ferrying 200 to 280 passengers up to around 5,000 nautical miles.
The market for such a plane is questionable, which is one reason Boeing has not started developing it yet. The last 757 came off the line in 2004, and while airlines might like a replacement, it hasn’t been a major priority.
And Airbus has an aircraft in that space already. It can elongate the popular single-aisle A321. This would be at a lower cost and lower execution risk, since it wouldn’t be a completely new plane.
Boeing Reported First-Quarter Profit Down 9 Percent due to a $156 million charge for the KC-46 program, and a $70 million pretax charge for its 747 program. The U.S. Air Force aerial refueling tanker program is over-budget and behind schedule, while the weak air cargo market has slowed sales of the jumbo jet freighter. Earnings fell to $1.22 billion, from $1.34 billion a year earlier, but first-quarter revenue increased 2 percent to $22.6 billion.
Boeing still forecasts that its full-year profit and revenue will match 2015 and it is confident that other parts of its business would make up for the added expenses. The defense business was better than last year’s first quarter. Chief Executive Officer Dennis Muilenburg said, “Higher year-over-year deliveries of military aircraft and continued solid operating performance on core production programs drove revenue growth and strong cash flow for Boeing in the first quarter.”
Boeing did not report a 787 charge and said the program’s deferred costs rose by only $141 million to $28.65 billion, less than prior quarterly increases, but still the hole deepens. Commercial Airplanes first-quarter revenue decreased to $14.399 billion on 4 percent lower delivery volume of 176 aircraft. First-quarter operating margin was 7.2 percent. In the previous year, revenue was $15.381 billion, and the operating margin was $10.5 percent.
Earnings from commercial operations fell 36 percent to $1.033 billion from last year’s $1.617 billion. Commercial Airplanes booked 121 net orders during the quarter. Backlog remains strong with over 5,700 airplanes valued at $424 billion. In the first quarter of 2015, Boeing sold 116 aircraft, so sales this year are still strong, but some of those new sales were order changes to different types, which allowed at least one customer to delay delivery. In January, Mr. Muilenburg said Boeing will build between 740 and 745 commercial jets this year, down 20 from the 762 delivered in 2015, and the high-value 747 and 777 wide-bodies will be most affected. Expected revenue and cash flow for the year will drop accordingly. Boeing will build several flight test 737 MAXs this year, as well as the first production versions that cannot be delivered to customers until certification in 2017.
Airbus A350 deliveries are also delayed due to shortages of cabin equipment, such as seats and toilets. There are at least six A350s parked and awaiting delivery in Toulouse. Airbus delivered four A350s in the first quarter, while its target for 2016 is more than 50 deliveries. The manufacturer intends to deliver approximately 650 airplanes this year and forecast that hopes to sell 700 new ones. So far, the A350 problem has not reached the same level as 787 delivery delays that strained Boeing’s finances, but the Airbus Group is expected to report a larger than usual seasonal outflow of cash in the first quarter due to comercial jet delays and problems with the A400M military airplane. One analyst predicts a cash drain of €3.2 billion in the first quarter, and a 23 percent drop in operating profit.
Airbus has a growing backlog of undelivered passenger jets crowding the tarmac outside its factories, which is putting pressure on its cash generation this year. More than two dozen A320neos are waiting for Pratt & Whitney engines to be installed, and some plane spotters say that Airbus is running out of room. Only five NEOs have been delivered and several airlines announced delays in taking their planes. Qatar Airways is so angry that it is talking about cancelling its whole order for 50 A320neos and replacing them with 737NGs immediately and 737 MAXs later.
Aviation analysts say that the problem could tie up around €1 billion ($1.14 billion) in cash this year. Boeing had the same problem with its early model 787s several years ago and is only now finding customers to take the planes. Airbus declined to comment except to say it remained confident of meeting its published delivery targets. Further, the output of the company’s assembly lines is not being disrupted, which means more engineless A320s in the near future.
Adding to its woes, several Airbus customers officially took delivery of A320ceo Family aircraft but the planes were flown to Spain for storage.
Airbus Increased its Average List Prices by 1.1 Percent across its product line. The new prices came into effect on January 1, 2016. The price increase was calculated according to Airbus’ standard escalation formula over the January 2015 to January 2016 period and takes into account the drop in materials and commo-dities prices. John Leahy, Airbus Chief Operating Officer, Customers, said, “Our new 2016 price increase reflects the strong appetite from customers around the globe for Airbus’ comprehensive, modern and innovative product range. We see demand for our aircraft contin-uing to grow across all size categories as our reliable, efficient product line enables custo-mers to grow their businesses profitably as well as being favored by passengers who want to travel in the most comfortable cabins.” Airbus has sold 16,307 aircraft to more than 380 customers worldwide, and 9,520 aircraft have been delivered.
Airbus Aircraft 2016 Average List Prices in Millions.
A318 $75.1, A319 $89.6, A319neo $98.5,
A320 $98.0, A320neo $107.3, A321 $114.9,
A321neo $125.7, A330-200 $231.5,
A330-800 $252.3, A330-200F $234.7,
A330-300 $256.4, A330-900 $287.7,
A350-800 $272.4, A350-900 $308.1,
A350-1000 $355.7, A380-800 $432.6
The prices depend on design weights, engine choices and level of selected customisation.
Airbus Sold 60 Aircraft in December, bringing the year’s net orders to 1,036, from 53 customers, including eight new ones. It sold 897 single-aisle aircraft and 139 widebodies. Airbus reached an industry record backlog of 6,787 aircraft as of December 31, with a combined value of $996.3 billion at list prices, and equaling 10 years of production at current rates. Airbus delivered a record 79 jetliners to customers raising the 2015 total to a new annual record of 635 deliveries.
The Manufacturer Sold 36 A320neo Family (New Engine Option) versions of the A319, A320 and A321, and three A320ceo (Current Engine Option) aircraft. Turkish Airlines firmed-up its commitment for 20 A321neo aircraft, which were added to the 72 A321neos it ordered previously. The International Airlines Group (IAG) purchased five A320neo aircraft each for its subsidiaries, British Airways, Iberia, and Vueling, while an unnamed private operator acquired the first ACJ319neo Airbus Corporate Jet. China Aircraft Leasing (CALC) bought two A320ceo aircraft, and Air New Zealand contracted for its 18th A320ceo. An “Unidentified Customer” (All Nippon Airways) placed orders for three flagship A380s and another Unidentified Customer signed up for two A350-900s. AirAsia X switched previous 11 A330-300 commitments for the new A330-900 New Engine Option type. It no longer has any A330-300s in backlog. South Africa Airways cancelled its last 10 A320ceo orders and purchased five A330-300s instead.
Airbus delivered 55 A320 Family aircraft, 17 A330s, four A350s (including the initial A350-900 for TAM Airlines), and three A380s to Emirates in December. The European airframer handed over a record 635 aircraft during 2015, and it exceeded its targets for the year. This marked the 13th consecutive annual increase in output. Airbus delivered 491 A320 Family aircraft, 103 A330s, 27 A380s, and 14 A350 XWBs to 85 customers, of which 10 were new. This production surpassed the previous yearly delivery record of 629 aircraft set in 2014.
Fabrice Brégier, Airbus President and CEO said that 2015 was a year of solid and wide-ranging accomplishments. The A320neo was certified by the aviation authorities on both sides of the Atlantic just five years after its launch. In addition, Airbus delivered 14 A350s – making good its pledge to the airlines who are now benefitting from the world’s most efficient and advanced airliner. Important progress was also made on the A350 program’s next variant, the A350-1000, whose major components and structures are now taking shape across various production sites. Likewise, parts are now in production for the first A330neo, with the machining of its first engine pylon and center wing-box components. In addition, there has been good news for the flagship A380, 10 years after its first flight, with the program breaking-even for the first time. Another notable high-light was the official opening of the first U.S. Airbus factory at Mobile, Alabama, in September. It will produce between 40 and 50 A320 Family aircraft annually by 2018. On the other side of the globe in China, additional orders for the A330 not only complements our plans for a new A330 completion and delivery center in Tianjin, but also helps to smooth our transition towards the A330neo. Furthermore, in 2015 Airbus launched three new incremental aircraft developments which include the Long-Range version of the A321neo which will offer true transAtlantic operation, the Regional version of the A330 which is optimized to seat up to 400 passengers on missions up to 3,000 nm, and the Ultra-Long-Range ver-sion of the A350-900, capable of 19-hour flights, Mr Brégier said.
The International Airlines Group (IAG) has firmed up options for a further 15 A320neos. Five each will be delivered to IAG’s subsidiaries, British Airways, Iberia, and Vue-ling. John Leahy, Chief Operating Officer, Customers, said, “IAG is one of the biggest customers for Airbus single aisle aircraft and demonstrates the preference of our products amongst the world’s lead-ing airlines.” In November, IAG ordered 12 A320neos and three A321neos for Iberia, and those air-craft orders will be filled between 2018 and 2021. The group has pur-chased 47 A320neos and three A321neos between August and the end of 2015.
Turkish Airlines confirmed options for 20 Airbus A321neos in Decem-ber. The flag carrier already has 72 A321neos and 13 A321ceos on order, and 55 A321ceos in service. The 20 newest A321neos will be handed over in 2020 and 2021. Turkish said it has delayed 17 A321neo deliveries from 2017 and 2018 until 2021 and 2022. The air-line is set to add three A330Fs, five A330-300s and 10 777-300ERs as well. By 2021, the Turkish fleet will total more than 430 units, comprised of 350 narrowbodies, 95 passenger widebodies and 10 widebody freighters.
The Year 2015 Was by Far the Safest Year on Record judged by the number of fatal accidents and it was the fifth safest year ever in terms of fatalities. This comes even though traffic boomed and the jet fleet grew by approximately 1,200 new airplanes. There were 16 fatal airliner accidents that killed 560 people according to the Aviation Safety Network (ASN). The year was marred by several high profile accidents, including the intentional crash of Germanwings Flight 9525. The Airbus A320 crashed in France on March 25, when the pilot apparently committed suicide by flying the plane into the ground, also killing the other 149 people on board. The worst accident of the year happened on October 31 when a Metrojet Airbus A321 was allegedly destroyed by a bomb over the Sinai Desert, and 224 passengers and crew were killed. Seven of the 16 accidents involved passenger flights. These were the only two fatal accidents involving jet airliners. The rest were regional turboprops, with the exception of the crash of one A400M during a test flight. Three of the turboprops were an ATR 42, an ATR 72 and an Antonov An-12 cargo plane. The other 10 were 19-seat or smaller commuter aircraft. ICAO estimated that there were 34 million flights worldwide and the fatal accident rate is one per 4,857,000 passenger flights. ASN President Harro Ranter said, “Since 1997, the average number of airliner accidents has shown a steady and persistent decline, for a great deal thanks to the continuing safety-driven efforts by international aviation organizations such as ICAO, IATA, Flight Safety Foundation and the aviation industry.”