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February 26, 2024
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Based on news that MEA, the national airline of Lebanon, had signed a deal with Rolls-Royce, we can infer the airline has selected the A330neo for its fleet.  The rumor mill suggests the model selected is the A330-900.

Currently, the airline has five A330-200s and the order is expected to be for four A330-900s.  MEA has been a long-time Airbus customer and sports an all Airbus fleet. The selection of the larger model suggests the airline has plans for longer hauls. The airline’s route map shows that its current focus (blue lines) is Europe and some African markets.

But with the A330-900 it can use its own aircraft to serve markets in North America directly, rather than depend on SkyTeam partners.

The selection of the A330-900 by MEA is not a surprise given the airline’s loyalty to Airbus.  However, there has been some concern with how slowly the market is moving towards the A330neo.  The MEA deal comes soon after an earlier deal by Kuwait for A330-800s.  Airbus has not formally announced the MEA deal.  It is likely to come by year-end when the OEM will announce it’s year-end orders – as are other deals that are currently under all sorts of pressure at both big OEMs to close by month end.

The A330neo program has been slow to catch on because the program is focused on replacement and the current A330ceo fleet is young and with low fuel costs, there is no urgency to go for the much more advanced A330neo.  However, as the replacement of other models in service approach, key ones being 767s and 777-200ERs, the A330neo becomes a formidable competitor to the 787-8 and -9.  These are the markets Airbus will focus on while it waits for the A330ceo fleet to move towards replacement.  There are plenty of those aircraft (767/777) for Airbus to focus on first. An example of this is Delta, which has accelerated A330-900 deliveries to replace aging 767s and A330ceos.  Delta’s 777-200ERs are clearly in Airbus’ sights as Delta has shown no interest in the 787, having canceled an order it inherited from Northwest.

From an analysis we previously undertook comparing the A330-900 and the 787-9; the 787 carries 10% less fuel but offers a 3.6% greater payload with 5.5% more range. We estimate, based on Airbus and Boeing data, that for a 5,000NM route flown daily, a 787-9 would cost $36.9m per year compared to $38.8m for the A330-900 at a fuel price of $2.50 per gallon. The A330-900 is nearly as capable as the 787-9 at substantially lower capital cost.  Looking at it another way, the ~$37m difference in acquisition costs equates to ~$2m in savings per year for a 787-9 operator.  Which means an A330-900 operator potentially has an 18.5-year period to break even, all things being equal and if fuel prices remain low. And it looks like lower fuel prices are here for a while yet. Concern about the “slow” A330neo program may be misplaced because airlines seek the lowest costs and the A330neo offers a compelling case. There are three leasing companies with orders (Avolon, ALC, and BOC) and there likely will be more, as target customers process and build an understanding of what the aircraft can do.

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Co-Founder AirInsight. My previous life includes stints at Shell South Africa, CIC Research, and PA Consulting. Got bitten by the aviation bug and ended up an Avgeek. Then the data bug got me, making me a curious Avgeek seeking data-driven logic. Also, I appreciate conversations with smart people from whom I learn so much. Summary: I am very fortunate to work with and converse with great people.

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