Yesterday Airbus published their February O&D numbers. They were tough reading – only four orders and 103 cancellations.  The orders were on the smallest model side and the cancellations were “top heavy”.  Was this bad news?

The cancellations include 42 A350s for Etihad, 25 A320neos for Germania and 23 A380s – 20 from Amedeo and three for Transaero. But there is another side to the news.  The numbers mentioned also allow the company to clean up its order book – the Amadeo order was aged.  Transaero and Germania are out of business.  Etihad nearly was out of business. There is also the 39 A380s for Emirates that have to be cleaned out but replaced with 30 A350s and 40 A330neos.

The lack of orders is not surprising.  The market is slowing as we have noted in our monthly transactions tracking.  Airbus has a seven-year backlog.  So does Boeing. The order spree cannot continue forever.  We are almost certainly at the tail end of the supercycle. So the report wasn’t as shocking as it appeared.

How did the market react to the Airbus numbers? Rather well.  The slow order news first emerged on February 14.  Take a look at the chart to see how the market reacted to the news.

That little spike at the end indicates a positive reaction to the order book cleanup.   Moreover, Airbus has a new management team and the cleanup may allow for a fresh start.

Moreover here is the analyst summary reported by Business Insider.

The O&D news isn’t as bad as you may be led to believe.  Besides the most important number to watch these days is deliveries.  And on that score Airbus is doing very well – deliveries are up over 35% year on year.

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Co-Founder AirInsight. My previous life includes stints at Shell South Africa, CIC Research, and PA Consulting. Got bitten by the aviation bug and ended up an Avgeek. Then the data bug got me, making me a curious Avgeek seeking data-driven logic. Also, I appreciate conversations with smart people from whom I learn so much. Summary: I am very fortunate to work with and converse with great people.

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