Insight: Airbus’ sleeper – the A330neo (Delta is the proof)

Widebody aircraft are not popular at the moment. Pandemic shutdowns and shutouts limit international air service. Aircraft that are flagships these days are not the busiest and flashiest. Amidst this dismal situation, we see that at Airbus the A350 gets the most attention. Look at the news this week about Qantas and Project Sunrise. The A350-1000 is the week's Golden Child. We think the Airbus A330neo is the sleeper in the range. Yes, the A350-1000 is impressive. Sure Qantas is going to push it hard on these extra-long flights. Airbus takes a big win and the other OEM suffers a painful loss from a long-term customer. Let us tell you about another airplane from Airbus that gets scant attention, but should be getting a lot more attention. Widebody aircraft will make a comeback as travel markest open up and this is starting to occur now. US airlines are able to push up fares to levels not seen for a long time. Demand is strong, and because of labor shortages, supply is constrained. The widebody Airbus that is the sleeper in our view is the A330neo. Using US DoT data we want to demonstrate why this aircraft is so impressive. Let's first look at the overall twin-aisle segment by seat miles/gallon and average stage length. The ball size is driven by the number of flights. Note the A339 (A330-900) is in good company. Among US airlines, the A330-900 is flying, on average, the third-longest routes. The A330-900 has a seat miles/gallon rate of 78, compared to 66 for the 787-9, 76 for the 787-10, and 79 for the A350-900. The impressive economics goes to show just important new engines and the redesigned wing was on the A330neo. The A330-300 is what the A330-900 replaces and its seat mile/gallon is 73. That is a pretty good number, but the A330-900 is a much more capable aircraft as its range shows. It is worth noting that the A350-900 and A330-900 are both operated by Delta exclusively in the US making a comparison between them straightforward. Delta's decision to select these two aircraft was a bull's eye. When we select Delta only, we get the following chart. As you see, the combination of the two Airbus provides Delta with an outstanding toolset. Both are in the top right quadrant where we have the best fuel burn and longest range. The new aircraft outclasses the previous generation substantially. Moreover, the A350-900, A330-900, and A330-300 all fit between 260 and 300 seats. This is one segment, and Delta has it covered. Now let's look at a snapshot of Delta's performance. The chart comes from our US airline snapshot model and we want to draw your attention to the two green circles. Fuel/block hour has declined and seat miles/gallon has improved. Delta used to be famous for its older fleet - but that is changing. Retiring the 747-400 and 777LRs has helped reduce fuel burn which averaged 56.4% between 2010 and 2021. Drilling into the data we note that Delta's (twin-aisle) Airbus fleet has a lower ops cost per seat hour than its Boeing fleet. In terms of fuel burn, we note the Airbus fleet is better at Delta, too. As the data illustrates, at Delta, the A330-900 has amazingly good numbers. The A350-900 which is much more expensive than the A330-900 only saves Delta pennies per seat hour. Notice the impressive A330-300 number by the way. Less capable, but still a compelling tool. We can also see why the 777LRs had to go. Because we know you're thinking about this, here is how the top four competitive twin-aisle aircraft in the US use stack up. One final point, if we look at fuel burn per seat and carbon emissions, the A330-900 is better than the A350-900 and very close to the 787-10. The A330-900 is an amazing performer. In summary: We believe airlines can acquire the A330neo at lower costs than the 787 Based on the data we are confident airlines could get the payload/range needed for most routes from an A330neo And the A330neo could accomplish missions at lower costs if we add capital costs

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