Airbus’ order rush heals big jets selling woes

Bloomberg

Airbus SE completed the year gone by doing what it does best: selling its bread-and-butter narrow-body aircraft.
The European manufacturer firmed up its biggest-ever order from Indigo Partners for 430 A320 aircraft—a contract that was previously announced— while also unveiling a new deal for 50 re-engined versions of the same jet.
All told, the flurry of activity during the recent past has totalled 705 single-aisle plane orders with a sticker price of $81.5 billion, pushing its full-year tally ahead of the figure at rival Boeing Co.
The A320’s success, coming in the final days of retiring sales chief John Leahy’s two-decade tenure, provides some respite for Airbus following a tumultuous few weeks after the planemaker unveiled a top management shakeup. The orders for smaller jets also expose the flank that’s opened up at the other end of the manufacturer’s product line-up: wide-body and ultra large jumbos that are becoming increasingly hard to sell.
The final burst of deals pushed Airbus’s net new orders for the year to just beyond 1,000 planes, including 48 wide-bodies. The company was expecting the total to lag behind the 700 or so aircraft it planned to deliver in 2017. At Boeing, net orders for single- and twin-aisle models amounted to 844 planes, and the US company hasn’t announced any sales contracts since then.
As if to hammer home the weakness of wide-body demand, Airbus also confirmed that an event scheduled to mark the delivery to Qatar Airways Ltd. of its first A350-1000 twin-aisle plane will be delayed until early in the new year as the aircraft undergoes final preparations.
The move is the latest in a series of setbacks for the biggest A350 version after United Airlines and Cathay Pacific Airways
Ltd. switched to the smaller-900 model, and adds a blemish to
Airbus’s push to bring that jet
to market.
Airbus shares fell 0.3 percent to 83.69 euros in Paris trading. The stock has gained 33 percent this year to value the manufacturer at 64.8 billion euros ($77.7 billion). Boeing’s shares have surged 91 percent in 2017 to a market value of $176.7 billion.
The delay is also further evidence of Qatar Airway’s fickleness as a customer after past postponements and outright refusals by the airline to take deliveries of both narrow and wide-body jets, including a move earlier this year to scrap orders for four A350s. The carrier’s order backlog has come into focus amid the Saudi Arabia-led isolation of its home country that has forced the airline to scrap and divert routes.
At the same time, a much-needed follow-on order for Airbus A380s from Dubai-based
Emirates, the biggest customer for that aircraft, remains elusive, despite signals by the manufacturer just a few weeks ago that a deal could materialise before year-end. Toulouse, France-based Airbus, which was widely expected to sign the A380 contract at the 15th Dubai Air Show in November, 207, needs the order to bulk up its backlog for the double-decker aircraft and keep the loss-making program alive.
Gaining clarity on the future of the A380 will be at the top of the to-do list for outgoing Chief Executive Officer Tom Enders, who revealed plans in December 2017 to step down in 2019, and his second in command Fabrice Bregier, who will be replaced in February by Guillaume Faury, CEO of the helicopters business.

Emirates Demands
Expressing disappointment that a deal with Emirates failed
to materialise at the Dubai event, Bregier said in November 2017 he was confident Airbus could secure an order before the end of the year. The executive has since said that should an order come, Airbus would be willing to commit to keeping the program going for another decade.
Emirates President Tim Clark has said talks derailed in part because of the airline’s concerns about the future of the model.
While Chicago-based Boeing Co. has had similar difficulties winning orders for its biggest wide-body jets, it has managed to sell the smallest version, the 787, and has committed to accelerating production rates for the aircraft. The lull in orders for twin-aisle planes could ease with the growth of long-haul, low-cost operators including Norwegian Air Shuttle ASA and Singapore Airline Ltd.’s Scoot unit, both of which are still in the first stages of expansion, Jefferies International Ltd. analyst Sandy Morris said.
“You can be slightly curmudgeonly and say that the orders were almost all single aisle, but you have to believe that, if low-cost has the same effect on long-haul, the orders for wide-bodies could follow,” he said.

China Aircraft to buy 50 A320neo valued at $5.42bn
Bloomberg

China Aircraft Leasing Group Holdings Ltd. agreed to buy
50 Airbus SE single-aisle airliners with a combined list price of $5.42 billion to help meet surging air travel demand in an aviation market set to surpass the US as the world’s biggest.
The transaction for the A320neo aircraft was done through an amendment to a 2014 purchase agreement, and the European plane maker granted “significant price concessions,” the Hong Kong-based leasing company said. Deliveries are expected in stages in 2023, said the lessor, which counts Air China Ltd. and ANA Holdings Inc. among its customers.
China Aircraft Leasing is expanding its fleet along with competitors amid a flying boom that would make China the largest air-travel market possibly as soon as around 2022, according to estimates by the International Air Transport Association. Boeing Co. expects China needs 7,240 new planes valued at almost $1.1 trillion in the two decades through 2036, with narrowbody aircraft making up for three quarters. With the latest agreement, China Aircraft Leasing’s total order book will rise to 252 aircraft—202 from Airbus and 50 from Boeing, according to the company. The company has 107 planes in its fleet.
During a visit by Chinese President Xi Jinping to Berlin, Airbus said it won a $22 billion order to supply 140 planes to China, including 40 widebody A350s and 100 of its narrowbody A320-series jets. After a meeting between Xi and US President Donald Trump in Beijing in 2017, China Aviation Supplies Holding Co. agreed to buy 300 aircraft, including 260 narrowbodies from Boeing.