Order and Delivery Trends

Following the aerospace industry closely does not always give one the necessary perspective.  We decided to step back and take a look at the bigger picture and share these charts with our readers.  The idea in stepping back is to get a sense of what is going on within the industry by seat segments.  The information is illuminating.

The first chart is orders by the listed OEMs from 2000 through 2014.

• The 50 seat market has gone away.  What remains of it is now handled by turboprops. It is a niche and well covered by ATR and Bombardier.
• Similarly the 51-75 seat segment is being squeezed – likely by the turboprops.
• The 76-100 seat segment looks reasonably robust. Mitsubishi‘s entrance serves to make it even more competitive.
• The 100-130 seat market appears to be shrinking.  We think this because airlines are being persuaded to up-gauge from typical A319s and 737-700s.  As air travel becomes a commodity, there is a relentless search for the lowest seat mile costs on short to medium segment flights and the next size offers this at low risk.
• The chart shows the volume sweet spot is between 131-200 seats. This segment has seen steady growth throughout the period.  With Airbus and Boeing increasing production, its clearly a reaction to where the market is headed.  Indeed it would seem new aircraft from Bombardier (CSeries) and Embraer (E2) face competition from the A320 and 737-800 more than their smaller stablemates. Which makes it awkward for the entrants.
• The 200-299 seat segment has shrunk steadily since 2007.  In 2014 there was a small recovery as the 787s and A330s got some new orders.
• The 300-399 seat segment has been a reliable source of business for the period.  Both Airbus and Boeing have seen interest from customers on a regular basis. These sized aircraft have been eating into the next highest segment.
• The >400 seat segment saw a better 2014 than the previous years primarily because of the 777X.

Next let’s look at deliveries.

• Turboprops, intriguingly, are equal in volume to VLAs.  This is an overlooked area but a good line of business.
• As we saw in orders, the 50 seat and 51-75 seat segments are being squeezed out.  Up-sizing is happening.
• The next size up 75-100 seats is much more active and growing.  Although we treat turboprops separately, this is also where they top out in seat count. Overall the sub-100 seat segment is bifurcating into turboprops and larger regional jets.
• Orders indicate lower interest in the 100-130 seat segment. In deliveries this is trending lower. It will stay lower until the CSeries and E2 start deliveries.  One has to ask whether the A319 or 737-700 sizes have a future at Airbus and Boeing?
• In the 131-200 seat segment we have the sweet spot by volume. As we have reported before we think this is where Airbus and Boeing have been up-sizing their customers.  Deriving better economies of scale by using their medium single aisle aircraft as “standard” the two big OEMs can tread on the upstarts below and hold on to their customers.
• In the 200-299 seat segment there has been growth as 787s start being delivered and Airbus keeps delivering the A330s.
• In the 300-399 seat segment we have remarkable steady deliveries, primarily driven by the 777.  This has proven to be a deep vein that Boeing has exploited very well.  Although lower in volumes, its dollar value is far greater.  Airbus can’t get its A350XWB into this segment fast enough.  Readers know we are Super Twin boosters; we think this this is going to be a superb segment for airlines to select from.
• Finally the VLA segment shows steady deliveries mainly from A380s coming off the line at a steady rate.  The pressure is on Airbus though to get more sales and maintain its deliver rate.

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