Airbus, Boeing Order Books Will Be Closely Watched
Following this week’s announcement of the two major orders
from Cebu Pacific and GoAir, the heat is on in the Airbus-Boeing
order feud at the Paris Air Show. That analysis comes from Frost
and Sullivan Commercial Aviation Principal Consultant Diogenis
Papiomytis. He says the latest orders for the new A320neo take the
number of firm orders for the type to 434 and the number of
operators, with plans to introduce it, to 7. This is an important
announcement for Airbus, leading up to the Paris Air Show, but
definitely not a surprise nor a major breakthrough for the
re-engined A320.
A320neo Computer Rendering
Four of the seven operators are low cost airlines with
aggressive growth plans and with an existing all-Airbus fleet;
their decision is driven by their business models, where economies
of scale through fleet commonality would have excluded them from
ordering any new B737 variant.
In addition, ILFC that has ordered 100 A320neo, is a major lesson
with a clear objective to stock any aircraft required by their
customers. Their decision to order the Neo is not the result of a
major fleet assessment; they will also order the new B737 variant
as soon as it is announced.
The only airlines with Neo orders and a relatively diversified
fleet are legacy carriers Lufthansa and Brazilian TAM. Nonetheless,
both of them have showed preference for Airbus short-haul aircraft
in the past. Lufthansa operates mainly A320s and some B737
Classics, while TAM operates only A320s short-haul.
As a conclusion we do not view these latest orders as either
surprising or a major win for Airbus. As the Neo enters operations,
older A320 variants will be discontinued, thereby offering no
alternatives to airlines that operate Airbus fleets short-haul and
have ambitious growth plans. However, if airlines that have yet to
make announcements, like Scandinavian Airlines, China Southern or
BA-Iberia were to make firm orders for the type, it would be a
major blow to Boeing.
B737 Production Line
Should Boeing continue to delay its announcement for either a
re-engined B737 or a completely new aircraft, only then will we see
the first airlines shifting to Airbus, to satisfy medium-term
growth plans. However the timeline for a Boeing announcement is not
as tight as it may seem; we expect a decision by end of the year
and one that confirms reports about a complete replacement to the
B737, rather than a re-engined model. Getting it right to begin
with is far more important than making rushed decisions and
changing aircraft specifications later; as witnessed by the U-turn
on the A350-1000.
Based on market sentiment, the Paris Air Show is due to follow
the early recovery signs of Farnborough 2010 (237 Airbus/Boeing
orders), though the number of orders will most likely trail behind
Farnborough 2008 (480). We expect Airbus to win this battle, as
they’ve done in recent years, with approximately 200 orders,
for a total between the two manufacturers of 300-350. Airbus should
dominate narrowbody orders, while Boeing aims to further establish
itself in the widebody market.
Airlines that could have an impact this year are the Chinese
carriers, particularly China Southern, Air France-KLM, BA-Iberia
(widebodies), Scandinavian Airlines, Monarch, Qatar Airways and Air
Canada. Unlike past events, we expect more active role from the
European carriers that have been going through phases of
consolidation and network restructuring. Their orders will both
serve the purpose of replacing older fleets and allowing further
expansion.
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