Today Airbus announced their numbers for 2015. Let’s take a look at what they tell us. Airbus had fewer orders in 2015 than in 2014. Its deliveries stayed essentially steady – which has been an item COO John Leahy has often touted as a point of pride.
Airbus beat Boeing in orders for the year and Boeing beat Airbus in deliveries for the year. The chart below shows Airbus detailed O&D for 2014 and 2015.
For orders we combined CEO and NEO for the A320 narrow-body family. Consistent to what we have seen before, there is a swing from smaller aircraft to larger aircraft in the A320 family. On the wide body side, A330 orders look soft, as does the A380, while the A350 looks the worst with negative net orders.
In terms of deliveries, the A321 program is up in 2015 compared to 2014 and accounts for virtually all of the growth in 2015. Airbus lost the deliveries battle not just because Boeing’s 787 program is gathering pace, it lost because its some of its production did not deliver as planned.
Deliveries on A380 has been slowed because of the backlog not growing. (Boeing has done this too on their 747-8) The A350 program suffered because of parts being delivered late and missing delivery targets. The net result is that while Airbus did grow in deliveries in 2015 to 635 aircraft versus 629 in 2014, the company remained below its potential, notably with the A350. The record deliveries could have been higher.
Next we dig deeper into the narrow-body CEO vs NEO projects. The following chart shows the swing away from CEO programs to NEO programs, as one might expect with the NEO entering service this year.
The A319 program looks as soft as the Boeing 737-700 and 7MAX. Mr. Leahy’s comment today that “When Airbus moved to NEO and Boeing moved to MAX, the reason for a C Series evaporated” is odd. After the C Series, neither Airbus or Boeing have maintained previous traction in the sub-130 seat market. We continue to think Bombardier and Embraer are going to be successful in this segment because they have better products with better economics. The 130-seat segment may not be as big as the small duopoly hope, but it will be larger than the big duopoly thinks, offering enough demand to keep the small duopoly in the black. Historically the A319 was about 12% of orders and for 2015 it went negative. The A319NEO’s future is as an ACJ, at best.
In terms of the A320, the NEO is again the story. We suspect CEO deals were offered at irresistible pricing to keep the line busy as it transitions, and that transition is now well underway. A number of recent sales have been combination deals. Even so, the initial hunger for NEOs seems to have softened. Is this because the market is becoming saturated, and with a seven year backlog there is less urgency to order? Or has cheaper oil started to play out, making the NEO less attractive? By the way, the A320CEO was historically at 55% of family orders, but for 2015 the NEO is at 62%. That swing is significant.
For the A321 we again see the NEO is where the future lies. Note the higher NEO numbers for 2015 than for 2014. Happily for Airbus its A321NEO is doing a lot better than Boeing’s 9MAX. The A321 was historically 14% of family orders and in 2015 it is at 33%. This aircraft is coming into its own and only underscores the swing to larger aircraft that is happening in the 180+ seat segment.
There are mixed results for the A330 program. Consistent with other sources, we see the freighter market isn’t a great business these days. For passenger models we note a lower interest at the smaller side of the market; 2015 saw no -800 orders. But at the larger end there has been robust interest. This is noteworthy because there are many reports about lack of interest in 777-200s which is the seat segment where the A330-300 sits. It appears the segment is still attractive to lessors and airlines because Airbus is trading well there.
The A350 has a substantial backlog, but lost ground in 2015 with net negative orders. (This is turning in 2016 with the upcoming Virgin order) With deliveries slow, and well below target due to vendor issues, Airbus needs a strong bounce back in 2016. In 2016 Airbus plans to deliver 50 A350s, which will be a major improvement.
The A380 program is also stalled; discussions of an A380neo that Emirates desires is muddying the waters. The A380 hasn’t sold well, and the production rate is slow given the program backlog. A NEO decision will be important to the program moving forward. The win at ANA (not officially announced yet) can be an important confidence boost to the current program.
In summary, Airbus has two bright spots in the A321 and the A330-300, and the potential for a bright spot with the A350, if it can produce them faster. The A320NEO program is looking great going forward and has outsold Boeing competitors. For both Airbus and Boeing, the sub-130 seat segment is no longer viable. With 2015 deliveries only slightly better than 2014, Airbus will need to solve its supply chain problems to ramp-up production if it is going to catch Boeing for the deliveries lead.