Airbus announced its 1Q15 numbers today and they look weak. Airbus delivered 134 aircraft in the first quarter and took orders for 102 net aircraft, representing a 32 aircraft shrink in backlog. This contrasts with Boeing, which delivered 184 aircraft in the first quarter and received orders for 110 aircraft, a backlog drop of 74 aircraft. Is the order bubble in narrow-body aircraft, just as Boeing and Airbus plan to ramp production rates?
The chart below summarizes the Airbus numbers by aircraft model.
The A319 received no orders again, and Airbus is delivering orders it received some time ago. With only a handful of orders for the A319neo, will Airbus face another potential A340 market misjudgment by going through with production plans for an aircraft with little demand?
Airbus remains highly dependent on the A320 program. About 23% of orders and 47% of deliveries are A320s. Airbus has -5 net orders on the A320ceo but +28 on the A320neo – leading us to believe that customers are switching to the newer model. With the new model entering service later this year, well ahead of the competing Boeing MAX, we would expect to see switching at this point in time to the more fuel-efficient alternative.
Airbus’ A321ceo has a -1 net orders, but +45 orders for the neo – once again we suspect customers are switching. The A321neo order book is a bright spot and the single most-ordered Airbus aircraft during the quarter. The introduction of the A321LR should only improve its position as the closest aircraft to a 757 replacement in the market. With a weak competitive offering in the 737MAX9 from Boeing, we expect the A321neo and A321LR to be best sellers in their category.
The A330-200 program seems stable with orders and deliveries about equal. The A330F program is small potatoes but positive. The A330-300 program received no orders, and 13 were delivered in the period. The A330neo program won some orders, but not as many as we would have expected, given the LOIs from last year that haven’t yet been firmed-up. Perhaps, with a weaker order outlook, these will be held for Paris.
The A350 program once again has seen no orders and only one delivery this quarter. We are concerned at how slowly the A350 deliveries are going, and we understand through industry sources that a supply chain issue has occurred with raw materials. This program should be ramping up production to three per month by the end of this year, and has fallen behind. Airbus has not spoken about this and we wonder why the normally outspoken Akbar Al Baker, Qatar’s CEO, has been so quiet too. It’s not like him.
Finally the A380 program continues its order drought but four were delivered, only about half the rate of 30 per year we were expecting.
The Bottom Line
Airbus remains highly dependent on the smaller aircraft in its portfolio. The twin aisle aircraft obviously are impacted by two new programs; the A350 in production ramp-up, and the A330neo in development. As a result, Airbus does not seem to be getting as much traction as Boeing has for its twin aisles.
Orders for both OEMs are running slower this period than last year, an indication that the industry order bubble may be coming to an end. At the higher end of their portfolio, which typically generate higher margins, Airbus looks vulnerable. One way to demonstrate strength will be a much faster delivery rate on the A350 as the year progresses.
The delivery deficit of 50 aircraft in the first quarter will be difficult to make up, and it appears Boeing has a strong lead in the race for most aircraft delivered in 2015.