Airbus has been rather quiet about this program since the first flight in October.  The A330neo flight test program has been making good progress.

The program has two of the program’s planned three test aircraft flying.  The two flying are A330-900s, with an A330-800 set to be the third test aircraft to being flying later this year.

EIS for the -900 is planned for mid-2018 with TAP.   These A330neos are to replace the A330-300 and -200, respectively.   There is a lot riding on this program.  CIT and ALC, both influential lessors, have opined that the A330neo obviates the need for the A350-800, and Airbus agreed, dropping the smallest A350 variant.

Given the growing attention to the Middle of the Market, or MoM, Airbus uses the A330neo to serve as the top of its middle-market offerings, with the A321neo taking the 757-200 market at the lower end.  Inside this basket, Boeing has the MAX10 and the 787-8, with plans to introduce the 797-7 and -8.  The current Boeing offerings do not effectively compete, as the MAX10 lacks the performance of the A321neo (Boeing disagrees) and the 787-8 has too much range for this segment (as Airbus discovered with the A350-800).  As a result, Boeing feels the market needs a new aircraft.

Airbus has pointed out to us that they can use the A330neo to box Boeing in by being able to match the key numbers customers need in terms of payload and range, while offering lower capital costs and near equivalent operating costs.  Since airlines are bottom fishers, the Airbus economic story appears compelling.  However, orders to date have been considerably lighter than Airbus hoped for, as the market wants to know what Boeing will do.

There are only six firm orders for the -800, with Hawaiian airline.  But that order looks potentially weak as the airline is said to be looking at the 787.  Hawaiian is the hold out on the -800, with other customers moving up to the -900, which has 219 firm orders.  Hawaiian has eight aging 767s it wants to replace by the end of 2018.  Some of these are going to be replaced by the A321neo in smaller markets.  Even as the airline looks at the 787, it will need to trade-off its small fleet requirement against the 787s costs. The math won’t be an easy slam dunk.

Is there a market for the -800?  Looking at the A330-200 fleet it appears the market is getting smaller for that size aircraft.  Perhaps the A330-800 can revitalize this segment, but it looks like an uphill battle.  It should be noted the A330-200 is the basis for the freighter and also the MRTT military tanker.  Could Airbus be looking at the -800 as the basis for a freighter and MRTT?

By contrast, the -900 is on firmer ground.  There are 219 orders and included in the customer base are bankable brands like Delta Air Lines, CIT, ALC and AirAsia X.  Moreover, the A330-300 fleet remains the larger of the “ceo” variants.

Airbus still has a winner in the A330 program. The program has delivered for customers and the -900 looks like it will be the new standard bearer for the program.  As the A321neo capabilities creep higher, and with a potential “A322” in the wings, Airbus small wide-body faces a decision.  Should it remain to compete on price with the 797, or might the A330-800 go the way of the A350-800?  Can Airbus make the third flight test aircraft work as freighter and MRTT?  Both of which are niche markets.

It will be interesting to watch how Airbus negotiates its way with the A330neo program against future competition from Boeing.

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Addison Schonland
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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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