Today Reuters published a story about Airbus’ 2016 order projections to reach 700. This is a huge drop (-32%) from last year’s 1,034. Looking at Airbus’ order history since 2010 we see the following:
Notice how the single aisle market is truly “bread & butter”. Then notice how radical has been the swing away from the ceo to the neo in the past two years. Another way to look at this is using an area chart which better highlights the changes.
We took a crack at trying to figure what kind of orders Airbus needs to secure in 2016 to reach their 700 goal. Note our earlier post about their really slow first quarter. The airshow season starts soon and of course Airbus will deliver news daily, as they have for years. People might be correct in thinking orders are being banked for Farnborough. The OEMs claim they don’t do this, but many of their customers like it. This is the best way for small airlines and lessors to make a media splash they could never achieve outside of the trade press glare at the show. Without naming names, industry followers know which airlines get airshow fever.
Below is the table behind the our chart and we get close to 700. For us one of the biggest impacts could be decisions by Iran’s private airlines. The state has moved for Iran Air. But the nation’s private airlines have yet to move on their own fleet renewals. This could materially impact projections. Unlike Iran Air, these privately airlines have to seek capital and financing – they will not be benefiting from the cash inflow from state sanctions relief.
Besides Iran, there are the usual customers that top up or secure deals on favorable terms given the state of the business cycle. Opportunistic buys happen – the recent A380 buy by Emirates is a case in point. Airshows offer a good time to be a buyer.
For Airbus to secure 700 orders looks highly plausible. But if Airbus’ 32% decline is a guide, what might a similar decline at Boeing look like? The chart below illustrates what such an outcome might look like by year end. Almost certainly if lessors or airlines are in a buying mood, 2016 is looking like an excellent year to secure the sharpest pricing in years. As United Airlines recently already demonstrated.
Views: 1
