Posts Tagged “A321neo”
As we all watch carefully while Boeing takes its deliberate steps towards unveiling its NMA, it is useful to see how the market has been behaving. Markets are not waiting for Boeing it seems, despite we may be hearing. Fleet decisions are choices made that are lived with for 20 years. Circumstances change rapidly – like oil prices for example – and traffic is growing above its typical rate. Airline fleet managers cannot wait for a silver bullet to emerge that somehow will solve their tradeoff dilemmas. Moreover, OEM backlogs demonstrate that fleet managers and the lessors make moves now because markets require it.
Airbus and Boeing made very smart moves with their recent single-aisle refreshes. Both OEMs have built about a seven-year backlog in orders at current production. Because this is too long for them, given their own product refresh cycles, they are planning to speed up production to whittle down these backlogs.
What do the active fleets look like? In the table below we list the in-service models. Next to each of these is the current order for the newer model.
Boeing does not break down the MAX models in their orders, so we have to reconstruct where possible. There are 1,616 MAX orders with no model number attached. Note also that both OEMs have big orders listed as “Undisclosed” customer. This means the Operator bucket in the table understates the numbers of customers with orders.
If we can assume that these Undisclosed customers are roughly equal, we can infer some information from the table.
- A320/A320neo – ~93% of the A320 fleet is likely to be replaced by the A320neo.
- A321/A321neo – 117% of the A321 fleet is being replaced by the A321neo. Clearly, this high number suggests that many customers are moving up from smaller to larger models. It also suggests that this larger aircraft is attracting more customers.
- 737-800/MAX8 – 50% of the 737-800 market looks like being replaced by the MAX8. But we would think that at least 1,000 of the 1,616 undeclared orders are likely to become MAX8 orders, driving the number to over 72% of the current 737-800 fleet. Boeing has a winner in the MAX8 and it is highly competitive with the A320neo.
- 737-900ER/MAX9 – If we can apportion some of the undefined MAX orders to the MAX9 backlog, based on the current fleet breakdown, we estimate that there might be another 115 to add to the 88 already defined. This is a soft market for Boeing and the MAX9 does not look competitive with the A321neo.
- MAX10 – This is a new model and, in the view of many, the better competitor to the A321neo than the MAX9. There is no previous model to provide a fair comparison. However, it has slightly more announced customers and more than triple the orders.
Based on the data (and admitting its limits) it appears that Airbus is doing a lot better than Boeing. Boeing’s reluctance to breakdown MAX models in its own orders does not speak of confidence. If Airbus can do this, why can’t Boeing? Both OEMs see customers chop and change the models frequently.
Whereas Boeing and Airbus are nearly equal at the center of the market, Airbus is much stronger on the larger size of the market. When we apportion undefined MAX orders and gave the MAX8 at least 1,000 more, this was a lowball. Based on the active fleet, it should be 1,212 of the 1,616. The outcome of this still shows the MAX8 to be highly competitive with the A320neo. But it also highlights the weakness in the MAX9 and MAX10 against the A321neo.
It would seem the market has sent a message, especially with the A321neo . Airbus is winning at the top end and every A321neo sold is a MAX9 or MAX10 order Boeing cannot win back and it is also an NMA order missed.
At present, it is still a rumor. But the decision process dates back at least four months. Hawaiian has been the “last man standing” on the A330-800 with six orders. The airline has made it plain months ago they were uncomfortable with this situation. Nobody wants to own an orphan aircraft. Besides, no lessor or bank would do a sale and leaseback.
The current airline position on this story is: “It is well-known that Hawaiian Airlines has been negotiating with both Boeing and Airbus for the next addition to our fleet. We have not signed an agreement with either manufacturer. We look forward to announcing the conclusion of those negotiations when it is appropriate to do so.”
Airbus advises us the airline has made no announcement and they will not comment on any rumors. Boeing also says it does not comment on “customer discussions”.
From our perspective, it makes sense that Boeing is trying to ensure the A330neo program does not gain any traction. If Hawaiian switches away from Airbus, the A330-800 has no orders. We can understand why Boeing might be prepared to be aggressive with the Hawaiian order.
Airbus has, so far, made the most market gains in the single-aisle side of the middle of the market segment. For example, Hawaiian recently introduced the A321neo in its fleet which has taken over some routes traditionally using 767s.
Boeing is at a critical juncture; it is paramount that the Airbus infiltration of Hawaiian is halted. After all, the airline was an all-Boeing fleet once. It could be that the geographic position of the Honolulu hub also drives Boeing’s effort as it will ideally suit the 797 potential capabilities to serve Asian and North American routes. In short, the Hawaiian deal could be more influential than it looks.
The crucial issue here is this: If Boeing is prepared to aggressively move to win the airline, is this a strong hand or a weak hand?
The A330-800 is supposed to seat 257 and have a range of 7,500NM. The 787-9 should seat 290 and have a range of 7,635NM. Several years ago, in an interview with CEO Mark Dunkerley, he spoke of looking at markets from Hawaii as far as the UK. Honolulu to Heathrow is 7,237NM. Therefore, the range is of great interest but possibly not the primary driver.
But looking at the choice, if the airline goes with the 787-9 it is listed at $281.6m and seats 290. The A330-800 lists at $259.9m, seating 257. The A330-900 lists at $296.4m and seats 287. If Hawaiian is really looking for a ~290 seater, the A330-900 was likely to be a better bet than the 787-9 because almost certainly it is cheaper, regardless of list prices. Almost certainly Hawaiian looked at converting to the A330-900 but might have demurred because it is just too big.
If Hawaiian did not want to upgrade (like other A330-800 customers) it seems reasonable to assume they may want the range, but not the extra capacity. Ergo, what might Boeing be doing by offering the 787-9 rather than a better-sized 787-8 with 242 seats? The 787-8 has a range of 7,635NM after all.
What seems to be going on – if the “rumors” are true – is that Boeing could be fighting hard to win Hawaiian. Boeing is unlikely to be concerned that the A330-800 program could potentially hurt the NMA business case. Bear in mind that the NMA would be optimized for the segment, while the A330-800 is a compromise. The Airbus may be cheaper, but that does not naturally make it a winner.
It is understood that the business case for the NMA is weaker than Boeing suggests. At PNAA a week ago, Boeing’s Randy Tinseth noted that people who question the segment potential size are not thinking outside the box. Boeing sees a potential market for 4,000 aircraft in the segment.
Bear in mind the 797/NMA will be a family of more than one size. And its market size (4,000 or less, depending on where you stand) is squeezed by the increasingly capable A321neo from the bottom and the A330neo at the top. Boeing faces two pressure points: segment size and pricing.
Boeing, we think, cannot afford a “kick the can” middle of the market strategy”: it has a growth-constrained design in the MAX10. It must, therefore, develop a new aircraft with the associated costs. Meanwhile, Airbus is tweaking existing designs at a fraction of the cost.
If Hawaiian is really moving to Boeing, there are two considerations. What kind of deal must Boeing offer to win them back? And even then, the airline might end up switching away from the 787 for the 797.
EASA today issued an emergency Airworthiness Directive related to Pratt & Whitney Geared Turbofan engines on A320neo family aircraft. That AD can be found here, Apparently, several rejected take offs (RTO) and in flight shut downs (IFSD) have occurred with the PW1127G-JM, PW1127GA-JM, PW1133G-JM and PW1133GA-JM engines having engine serial numbers P770450 or subsequent.
While the root cause is not known, preliminary findings indicate that the affected engines, that had a high pressure compressor aft hub modification that began with serial number 450, are more susceptible to IFSD, which if not corrected could lead to dual engine failure. Pratt & Whitney indicate that the issue is related to a “knife-edge seal in the high pressure compressor aft hub” and are already at work to find the root cause and fix for that issue.
Emergency operational restrictions called for in the Airworthiness Directive include de-pairing affected engines within 3 flight cycles, and within 1 flight cycle eliminating ETOPS operations for aircraft with 1 affected engine installed.
This Airworthiness Directive presents another blow to the GTF program just as production rates had ramped up to planned levels. It appears that because this AD impacts newer engines, Pratt & Whitney will need to stop production to modify the current build standard and fix the cause behind the higher than expected IFSD rate.
At this writing, we cannot project how long it will take for Pratt & Whitney to develop a “fix” for the problem, nor the overall impact on A320neo operations with affected customers. This AD will likely impact about 226 engines on 113 aircraft in service with 18 customers. It is also likely to impact a few more engines currently on the production lines at Airbus and Pratt & Whitney that will likely need to be retrofit prior to installation on new aircraft, as well as spare engines in inventories.
As we obtain further details, we will update this story.
First flights are special events. Occasionally there are first flights that a little different. We would suggest the A321LR first flight are one of those. Here is Airbus B-Roll of the first flight.
Last week WOWair flew their new A321neo from Reykjavik to Los Angeles. This was the first A321neo delivered to a European customer. As you can see from the map, this was an amazing flight for a single aisle aircraft in commercial service. The “Great Circle Distance” was 4,314 miles with a flight time of 8h 40min. It’s hard to imagine that long a flight on a single aisle.
But consider there are 214 seats on the WOW aircraft. It is an LCC after all. The flight certainly stretched the aircraft’s legs. WOW has been using A330-200s serving California. To see their longest California flight using the A321neo is eye-opening and a message to the competition. Bear in mind that on WOW’s A321neo seat pitch is as low as 29 inches. It must have been a grueling flight for passengers seated in the highest section.
We use this WOW example of what to expect next. The A321LR now starts a nearly 100-hour flight test program, including transatlantic missions, for EASA and FAA Type Certification in 2Q18. Entry into service is targeted for 4Q18. The A321LR has an even longer range than the A321neo. In the hands of an airline that wants to push boundaries, the A321LR can be expected to be highly disruptive.
Boeing has made a very good argument of how the 787 has developed new routes and markets. Randy Tinseth noted “The Dreamliner is opening up new routes all over the world. Just a few short months ago, 75 new nonstop routes had been opened with the 787. Today, that total has jumped to more than 100 routes that have been announced or are already in operation.”
If the 787 proved that “hub-busting” is a thing, then we might expect the same from the A321LR. Airlines might not often need all that range, but when you have it, it can be useful to develop a new market. The 787 enables ElAl to serve San Franciso and United to fly from Houston to Sydney. Becuase the 787 is relatively small, airlines do not have to sell as many seats as they would, for example, deploying a 777.
That same argument holds for the A321LR. With just over 200 seats to sell, and an airline can look across the Atlantic from Europe and identify any number of secondary cities where they can pick a new market. We have already seen Norwegian do this with the MAX8. Primera has the same goals. Both are A321LR customers and LCCs.
Network carriers must be watching this activity with some consternation. The only way to beat this activity is to deploy the same tool or its equivalent. Except the A321LR really doesn’t have a direct competitor since the 757 era is largely over. Which must please Airbus no end.