It was reported in Germany that the airline has a big order coming – maybe up to 150 planes. While the excitement is justified, note that the mother ship orders for the whole family. Therefore such an order is likely to be doled out across the entire airline’s sub-brands.

Like AK/KLM, Lufthansa will want to split such an order. First because it’s good business, second because the lessons of OEM risk is fresh – do not put too much into any one program.

If one looks across the airline families within the group, we would suggest the key part of a big order will focus on the mid size segment. In other words, 787/A350. Clearly Lufthansa has to know the AF/KLM deal could slow down their own deliveries. So what we may be seeing here is a jockeying for deliver positions. American’s pending order is in the single aisle segment and may cause its own problems for both OEMs also.

It does not take many “mega orders” to mess up the market for other airlines trying to update their fleets. So with AF/KLM and Lufthansa both trying to plan huge orders, you can imagine the production planning at Airbus and Boeing being under pressure. For example, Delta is also in play along with American. Think about these four airlines – they could easily account for 400-500 planes between them. If any other reasonably sized airlines want or need to step in to do their own updates, delivery slots are going to be about three years out.

Given the cycles in the industry, any deliveries three years from now could be right in the bottom of the next slump. What a business. Feast to famine is “normal”.

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