Today the industry saw two nice aircraft orders. In total, Airbus and Boeing booked (at “retail”) nearly $6bn today. That is a big number given that airlines are only now starting to see profits after years of losses. The old adage is, when airlines make money they buy planes, and take delivery during the next recession when they don’t need them.
Airbus started the news today with an order for eight A319s, 24 A320s and eight A330s. These airplanes are destined for Lufthansa, Swiss and Germanwings. Total order value (caveat, retail) is about $4.3bn. The timing on the A320 family orders is interesting because A320NEO news is imminent. Might these airplanes become NEO? Nothing hints to this in the official announcement.
Lufthansa is now Airbus’ largest customer with 325 planes in operation. It is fair to assume that anything NEO related will have been shared with them by Airbus. You have to wonder if these orders will be converted after the official launch – especially since the airline’s Executive Vice President, Group Fleet Management, Nico Buchholz has already committed to the CSeries and its P&W GTF.
Then Boeing announced that Cathay Pacific committed to six more 777-300ERs. Retail order value is $1.6bn. Cathay’s 777-300ER fleet will grow to 36. They also operate 12 777-200s. Cathay’s CEO echoed the sentiment of 777-300ER customers: “We have been very impressed by the operating economics of these aircraft, while their high efficiency has resulted in a reduced environmental impact. As we continue to enhance our fleet, the 777-300ER will play a crucial role in our operations in the years to come.” This airplane has become the benchmark for longhaul airliner economics, despite United’s Glenn Tilton calling it “old technology”.
Orders from such important customers indicates a willingness to invest and this is a signal to the market that it may be time to re-enter the market. Other airlines may now be encouraged to accelerate their fleet decisions. The airline industry is in some ways, lemming-like. When a few leading carriers act, the herd reacts. Part of the reason is that this is such a competitive industry that an airline can’t allow anyone else an edge. And great airplane delivery slots are a key advantage. Look for a spate of new orders soon.
