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Commercial Aviation Analysts

A320 NEO

The engine battle on the A320neo family is underway, and of the 3,678 orders to date for the family, decisions have been made for about 60% of orders, with 40% remaining undecided.

The market share, as of March 19th, is shown in the following chart. Since undecided at 40% is the market share leader at present, those customers will clearly be the swing votes in the market share battle, which is ramping up in competitive intensity.

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It is our understanding that CFM’s LEAP is coming along according to plan. The program has had no unusual events to cause either OEMs or airlines any concerns. The promise of the LEAP is to deliver 15% improved fuel burn and 50% margin on NOx as well as a substantially lower noise footprint.

The LEAP has a tough act to follow; CFM promises the LEAP is going to offer the comparable maintenance costs to those of the CFM56. The CFM56 is the most popular turbine engine in use among single aisle airliners. Take a look at this table to see what we mean. Continue reading

In the business of buying airplanes, an airline will always seek the lowest cost.  Just as they do with every other production input – lowest cost wins every time.   So how is it that with the pending Azul order, “Boeing has not been given the opportunity to present a proposal for single-aisle airplanes“?

On the face of it, this looks like a selection that could not secure the lowest costs for Azul.  How does this make sense? As an Azul shareholder you would want to be certain your company secured the lowest cost option. Let’s go through some data points and thoughts to see if a pattern emerges.

Airbus wins the deal:

  • Creative marketing on the side of Airbus.
    • Driven by the fact the airline already committed to A330 and A350-900s
  • Which offers common flight-deck ratings
  • And, lets say it again, creative marketing. Volume drives discounts.

The most brutal area of commercial aerospace is the single aisle market. Competition between Airbus and Boeing is fierce.  So fierce that new entrants rightly fear the news these giants are going to increase production.  The pool may be growing bigger, but it is also getting tougher to enter as the two OEMs swamp the market with aircraft.  Between them, Airbus and Boeing are heading into a situation that sees them delivering over 100 single aisle aircraft every month.

Take a look at the situation from another angle.  Airbus and Boeing are doing very well selling single aisle aircraft.  The chart illustrates the state of play.  Even at ~100 aircraft deliveries per month, with no new orders, the two OEMs have over five years of production in backlog. (Note how much better Airbus is doing in the largest size. )

2014-09-18_9-03-18Now consider this.  The smallest models in the chart account… Continue reading

The two big OEMs tell us they have a ”natural” replacement for the 757 — the A321neo and 737-9MAX. Unfortunately, neither option appears optimal, as both fall short on range, payload, and runway performance.  Is there a market for a true 757 replacement, and should this be the next airplane developed by Boeing or Airbus?  Let’s take a look at the 757 market, operators and outlook.

The current status of 757 fleet is that 1,049 were delivered, and 986 are still flying. The following table lists the active fleet by the largest 757 operators. A total of 63 aircraft, or 6.4% of the fleet is parked and more than half of those aircraft are currently parked by the largest operators. Continue reading

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