Airbus hosted a Virtual Commercial and & Program Update for the media yesterday. In the absence of what could have been Day 2 at PAS 2021, the event was an overview of Airbus’ current aircraft types and comments on the market.
Readers can view the event and related slides can be found here.
In our view, this decision is not final. It would be better described as “not yet”. Our reasoning is that Airbus has no need for any capital investment in this model because it is under no pressure. The ongoing procrastination at Boeing buys Airbus time.
Several years ago, then GE Aviation President David Joyce noted (at the air show by the way) that GE saw the NMA as facing a smaller market than projected and only large enough for one engine. That was Farnborough 2018. There has still been no move by Boeing. The MAX debacle clearly upset any plans. Moreover, we understand that Boeing President David Calhoun is not in a hurry to move on to an NMA. This despite analysts and observers uniformly seeing the world entirely differently.
Farnborough 2018: then GE Aviation President David Joyce (second from the left) questioned
the size of the NMA market. (Richard Schuurman)
Aerospace is the quintessential “long game”. Every aircraft program is a decision that comes with a twenty-year risk tail. Boeing is currently in a de-risk phase. Several programs are wobbly: KC-46; MAX; 787; 777X. Even if the pundits are right and Boeing should be developing the NMA into something, now is a difficult time to do it. Airlines are also de-risking and the A321 (in all forms) meets their needs as a middle-of-the-market offering that is low risk and well understood.
This is why, in our view, Scherer said what he did. There is simply no need for an A322. For now, that is.
Airbus can continue to refine its new single-aisle wing, review updated engine offerings and avionics options. Airbus capital continues to trickle into research without development. The putative A322 only gets better. Even as Boeing’s own team continues its own research to refine ideas. Neither side wants to pull the trigger.
Airbus gets to continue to pick up the advantage of the better offering in the approximately 200-seat segment. Airbus also benefits from its A220 program’s popularity compared to the MAX7.
The pundits are right about one thing – Boeing must (eventually) do something. We bet that Boeing ends up pulling the trigger first. That is when Airbus will reveal what it has been working on and it may not even be called an A322.
(With Richard Schuurman)