B737NG and A320ceo backlog

Scott Hamilton posted a story last week commenting on the backlog situation of the B737NG. He Comes to the conclusion that there is a rather large gap and Boeing would need more than 350 more orders to fill the production until the B737MAX takes over in full.

How large the gap is depends on when exactly EIS of the B737MAX will be and how fast Boeing (and the suppliers) can ramp up production:

A320neo testing running out of time for EIS 2015?

Yesterday Flightglobal reported that this year Boeing could, for the first time since 2001, deliver more narrowbodies than Airbus. Boeing delivered 243 civil B737 plus 6 for the US Navy until June 30, Airbus delivered 238 A320. Although normally Airbus delivers more aircraft in the second half of the year (H1 2014: 237, H2 2014: 253) and Boeing had also more deliveries in the first half o f 2014 (239), it will be hard for Airbus to beat Boeing this year. This has to do with the transition to the A320neo, where production times should be a little bit longer initially than for the A320ceo.
Also it is questionable if all planned A320neo deliveries in 2015 will be handed over this year. This is highly dependent on when flight testing with the PW1100G will restart and if there are no more hickups in the flight testing.The Flightglobal article suggests that flight tests will start once the now delivered  engines are podded to the nacelles and integrated into the aircraft. This might be at the end of July. The last flight of a PW1100G powered A320neo happened on April 30th, so three months would be lost by then.
Airbus so far insists that deliveries will start towards the end of the year as planned. With the original first delivery targeted for the end of October, there must have been ample margin in the original flight test program or Airbus has to accelerate testing once the aircraft are back in the air.
But also the CFM LEAP-1A powered first A320neo has not been in the air for two weeks now. We don't know yet what is the reason here, if it is engine or aircraft related (although I would be very surprised if it has anything to do with the airframe). So any learning from the CFM powered aircraft that is transferable to the PW powered aircraft is delayed also.
The margin is getting shorter everyday, and Qatar Airways Akbar Al Baker alias U-Turn Al is probably already thinking about how he can make his "fun" out of the situation.

Is there a China Narrowbody Order Gap?

Looking at data from ASCEND there is a gap in narrowbody orders from some chinese airlines. Look at China Eastern for example: before they announced to order 50 more B737NG for delivery between 2017 and 2019 their last four B737NG deliveries were scheduled for early 2017. So there would have been a delivery stream gap before China Eastern would get their first of 60 B737MAX in larger numbers.
The same can be said for other chinese airlines:

• Shandong, Shenzen and Xiamen all get their last B737NG this year. Xiamen already announced orders for 70 more B737NG and B737MAX and it could already be included as one from an "Unidentified Customer"
• China Southern also gets their last B737NG this year, so either they also have new orders in place as an "Unidentified Customer" or they will order soon
• Air China ran dry of new deliveries for B737NG's and does not have any (official) order for B737MAX

The same can be said - more or less - for Airbus.
Air China and Shenzen already announced orders for a mix of 100 A320ceo & A320neo and I guess it is already in the books as part of the "undisclosed".
The same is true for China Eastern (70 A320neo) and China Southern (50 A320neo & 30 A320ceo). Some of the A320ceo aircraft subsequently trickled from the "undisclosed" to the China Eastern line of the Airbus O&D sheet. The same is true for Spring and Loong. Spring long ago announced to order 30 more A320ceo and they already might have ordered the A320neo. Also you can see some changes at Tibet Airlines.
The order for 60 A320neo from an "undisclosed asian customer" announced at the Paris Air Show might also be from China. 

Bottom line: the most of the "Unidentified" or "Undisclosed" customers should be chinese airlines. There are probably not much more narrowbody orders to expect in the next few years.

A320ceo and B737NG backlog

After the B330 and B777 analysis, here is another update of the A320ceo and B737NG backlog.
Airbus is overbooked on the A320ceo for a long time now and also Boeing narrowed down

Further A320 rate hikes needed!

Just a week after – unsurprisingly – announcing a further rate increase for the A320, John Leahy yesterday at the ISATAT Americas talked about further increasing production and potentially announcing this until the end of the year.

Given the current backlog of the A320ceo the rate increase perfectly makes sense –

After Airbus Press Conference: Rate Increase and LEAP-1A delay?

Airbus today announced their final 2014 orders and delivery results. Beside a new delivery record there is one noticable item that begs two questions: the increasing backlog of the A320ceo shouts and screams for a (very) near term announcement of a rate increase, which was probably decided some months ago. Also, it puts into question if the CFM LEAP-1A, the second engine for the A320neo, will be available on time. The PW1100G seems to be "out of the woods", getting certification late last year and Airbus CEO Bregier during the Investors Days in December said that he expects the first delivery of the A320neo in November 2015.
The backlog for the A320ceo stands now at 1508. This is 38 more than at the end of November, which I analyzed here. Subtracting all 102 "suspicious" orders gets us to 1406 open orders. The still not booked order from CASGC would lead us then to 1476 open orders for about 1164 delivery positions until 2018. So Airbus overbooked the A320ceo lines by 250 aircraft at current production rates.
Now, as I said above, I think a rate increase is coming for sure. For one to clear the A320ceo backlog as soon as possible, but also to be able to offer earlier production slots in upcoming campaigns.
As for the overbooking of the A320ceo, there could also be another reason: the LEAP-1A has still not flown on the GE Flying Testbed. At the time the LEAP-1C began the test campaign on the other GE testbed in early October CFM said that the -1A would follow within a month. Now we are two months later...maybe something was found during the -1C test campaign that needed a change for both variants?

A320ceo and B737NG backlogs

As I wrote briefly last week, it looks like Airbus is increasingly overbooking the A320ceo. But what does "overbooking" mean? Well, I always compare the remaining backlog to what I think was the

Airbus A320ceo overbooking

Today the Airbus Order & Deliveries spreadsheet for November 2014 was published. There are 89 new orders for the A320ceo family (the most from unidentified customers and my feeling is that these are chinese airlines). There is also the cancellation of 10 A321ceo's from Jetblue - they are taking 10 more A321neo instead. So there are 79 more net orders for the A320ceo line, which was heavily overbooked even before these new orders. I will do a deeper analysis next week, also including the situation for the B737NG.

Airbus converting ceo to neo, Boeing looking for NG sales

This is an update to an entry I wrote earlier about Airbus overbooking A320ceo slots.

Apparently Airbus now can easily convert A320ceo orders to the A320neo, as previously Airbus overbooked the remaining A320ceo slots. At the end of July 1503 orders for the A320ceo were in the backlog (3251 for the A320neo).
I expect a few more cancellations and conversions from A320ceo to A320neo:

• Kingfisher     67 A/C
• Alphastream 15 A/C
• Sri Lankan      6 A/C
• Mexicana        4 A/C
• Croatia            4 A/C
• Hamburg Int.  2 A/C
• AirAsia           3 A/C (conversion to neo)
• Wizz             10 A/C (conversion to neo)

On the other hand, there are a few more announced orders which are not yet shown in the Airbus order book:

• Qingdao Airlines    5 A/C
• Zhejiang Loong    11 A/C
• Spring                   30 A/C
• Juneyao Airlines   20 A/C

This would lead us to net reduction of 48 orders, leaving 1455 orders for the A320ceo lines. I counted 1804 on July 31, 2013, so we have a reduction of 349 aircraft in the backlog with 494 build in these 12 months, thus having 145 net orders between July 31, 2013 and July 31, 2014 including the now-in-the-orderbook A319ceo/A321ceo for AA (and including some speculation about new orders, cancellations and conversions). Not bad for an aircraft that is going to be superseeded by a version that is 15% more fuel efficient...

With the same calculation I did last year (42 aircraft per month and 11.5 months of production per year) I get 638 deliveries until the end of October 2015, when the A320neo should go into airline service, leaving 817 A320ceo in the backlog.
At the end of December 2016 the backlog would be down by another 464 aircraft (I just saw that I made a mistake here last year), leaving 353 A320ceo in the backlog.
Building another 194 A320ceo in 2017 leaves Airbus with 159 A320ceo family aircraft in the backlog in 2018, where production of the A320ceo should end.

The situation is (still) very much different at Boeing - although Boeing always states that the B737NG is sold out.
There are 1755 open orders for the B737NG production line at the end of July 2014. I do not expect any cancellations (but there could be coming more conversions from the NG to the MAX). There are a few announced but not yet finalised NG sales:

• Xiamen      40 A/C
• Air China   20 A/C
• Ruili           14 A/C
• Yakutia      12 A/C
• Oman Air     5 A/C

This would sum up to 1846 open orders.Considering a rate of 42 aircraft per month there will be around 1500 deliveries until August 2017, which I choose as EIS for the B737MAX, leaving around 350 B737NG's in the backlog, around 280 less than Airbus will have at EIS of the A320neo. So there are still open slots for the B737NG. How many exactly is not clear, as Boeing will change to a build rate of 47 per months in 2017 and Boeing did not indicate if some of these "extra aircraft" will be NG's.

So while Airbus can now make (some) customers happy by letting them convert A320ceo's to A320neo's, Boeing has to look hard for some more B737NG customers, while Boeing did let customers convert from NG to MAX very much earlier.

UPDATE:
As I wrote this BOC Aviation ordered 30 B737NG (along with 50 B737MAX)...

Airbus Order and Deliveries 2013

The final numbers for orders and deliveries from Airbus came out yesterday. There were no big surprises - just a few things to clarify...
The "mystery buyer" of 100 A320 appears to be Air China and Shenzen. Compare the numbers that Airbus reports to the numbers when the upcoming order was announced back in May.
I have no clue however who is the unidentified customer for the 20 A320neo. Loong was reported to have ordered 20 A320 at the end of December, but this should be a mix of 11 A320ceo and 9 A320neo and this order is missing in the 2013 table.
There are quite a few A320ceo&neo orders to be firmed up in 2014:

• VietJet for 20 ceo and 42 neo
• Qingdao for 5 ceo and 18 neo
• Spring for 30 ceo
• Lybian Wings for 4 neo
• Hong Kong Aviation for 60 neo
• CASC for 42 ceo (but that could disappear now that individual chinese airlines place orders themselves)

as well as

• Doric for 20 A380
• Chinese airlines for some more A330

So the offical goal of  book-to-bill just simply greater than 1 does not seem overambitious. Chinese airlines are still behind in the race for reengined narrowbodies, despite the 100 A320 order and probably some of the unidentified orders for the B737MAX coming from China. So I guess we will see some more A320neo and B737MAX (maybe also CSeries) orders from China this year.
An announcement to increase production for the A320ceo before production ends and for the A320neo to a range of about 50 per month seems to be inevitable and we should expect it soon.

The possibility of a A330neo was downplayed by Airbus officials yesterday. It would be just one option and not the main one...of course they have to downplay the possibility as long as possible as they have to protect sales of the existing model. But I would not be surprised if we would see a move in the first half of the year.

Fifth Season Time in Toulouse

The end of the year is near and so it is fifth season time again for John Leahy. Tomorrow we will see if he can sell some 60-90 aircraft to Air Canada, believed to be A320neo and A321neo's (or B737MAX-8/-9 if his counterparts at Boeing succeed).
But there are quite some more sales to complete this year and chances are good that Leahy will top the old record from 2011, when the A320neo had it's first full year of sales.
So what can we expect apart from Air Canada? Another awaited order for narrowbodies could come from Monarch. Both Air Canada and Monarch could also put a CSeries order in their shopping cart,

Boeing B737NG order drain

Last week Boeing announced that production of the B737 will be ramped up from currently 38 copies per month to 42 next year (that was not new) and then 47 per month in 2017, when the B737MAX enters service. Boeing did not elaborate further if only MAX production will be higher from the start or if also the NG will see higher production meanwhile. But we can presume that a step of 5 more aircraft a month cannot be taken at once, so there should be a more or less gradual ramp up from 42 to 47 over a year or even more than that. That means that at least in the last year of full B737NG (before B737MAX enters service), Boeing has to sell even more B737NG's. I wonder how Boeing wants to manage this without substantial price cuts - even more substantial we are seeing today for

Airbus overbooking A320ceo slots

With Delta Air Lines today announcing the plan to purchase 30 A321ceo (along with 10 A330-300) it becomes clear that all the remaining A320ceo slots are booked now and that it is very likely that Airbus overbooks the slots.
As of July31 there were 1.787 open orders for the A320ceo family in the orderbook. Now let us consider the following orders to get cancelled:

• Kinfisher/Kingfisher Red 67 aircraft
• United Airlines                 30 aircraft
• Alphastream                     15 aircraft
• Northwest Airlines             7 aircraft
• Croatia                                4 aircraft
• Hamburg International       2 aircraft

There are now some announced orders which are not yet in the Airbus O&D table:

• Delta Airlines                       30 aircraft
• Vueling                                30 aircraft
• CASC                                   42 aircraft
• Air China / Shenzen             40 aircraft

This is a net of 17 orders, so we get 1804 open orders as of July 31st.
With a production rate of 42 and 11.5 months of production per year another 1092 aircraft will have been delivered until the end of October, when the A320neo will enter airline service, leaving .
A320ceo production will ramp down from that point in time. Assume Airbus can hold the rate of 42 aircraft per month steady.
I read somewhere that 12 A320neo should leave the factories in 2015 and 100 in 2016. So from the 564 aircraft produced from November 2015 until December 2016 464 will be ceo's, leaving the ceo backlog at 374. For 2017 I guess that around 60% of all produced A320 will be neo's (289 from 483), so the ceo number delivered in 2017 would be 194 and the remaining backlog at the beginning of 2018 would be 180. Airbus said before that the A320neo should reach 100% share in early 2018, so it is clear that the A320ceo are overbooked at the moment. Maybe this is not unwise as one of the two neo engine suppliers could be late - who knows...

UPDATE: I forgot to mention the American Airlines order: the order for a combined 130 A319ceo and A321ceo is not part of the orderbook. The first two aircraft were delivered in July, then three in August and another one in early September. Airbus leases these aircraft directly to American and then sells them with the lease attached. Not all deliveries will follow that procedure: ILFC ordered 15 A321 recently to lease to AA, so these 15 A321 are part of the orderbook and we do not know how many aircraft from the recent order for 3 A319 and 5 A321 from CIT are destined for AA and how many aircraft will come from other already existing orders fom leasing companies. But Airbus already said that around 30 aircraft will follow the procedure of the first four A319, which were sold to Avolon. So we have another expansion of the orderbook and further overbooking of the A320ceo slots.
             

Southwest launches the B737MAX-7

Yesterday Boeing and Southwest Airlines announced that SWA will be the launch customer of the B737MAX-7. The launch of the B737MAX-7 with an order for 30 aircraft of that type comes with

• a cancellation of 30 orders for the B737-700NG
• Southwest substituting 5 -700NG to the -800NG variant
• Southwest firming 5 options for the -800NG
• the cancellation of 5 options for NG aircraft

Pricing pressure on the B737NG

Boeing for the first time acknowledged pricing pressure for the B737NG yesterday, when Ray Conner, CEO of Boeing Commercial Airplanes spoke at the JP Morgan Aerospace Conference. A synopsis can be found here at Leeham News and Comment. Read also the comment to get an insight of what readers think about how Boeing handles the battery problem of the B787.

Conner also said that there was (and is, I suppose) pricing pressure on the B737MAX, but this is normal for new aircraft entering the market.

Where the pricing pressure comes from gets clear when we look at the number of open orders and the orders Boeing has to fill until the B737MAX enters service in late 2017 and until the B737MAX

"Mystery" A320 customer

Airbus revealed the November O&D spreadsheet today and there is an undisclosed customer for 100 A320 family aircraft in it.
Now there are - competing - two airlines which talked about a 100 aircraft strong A320 order or were rumoured to place an order soon: Airasia and Lionair.
So who is the "mystery" customer?
Airasia needs more aircraft soon - their growth strategy especially in Indonesia, where they want to give Lionair a hard fight, took a setback with the failed takeover of Batavia. So to keep or become competitive in Indonesia, they need more aircraft soon. Not just neo's but also ceo's.
Lionair on the other hand has an orderbook large enough to wait for the neo...
Let's take a look at the neo orders at the end of October: they stood at 1469.
We know that Transasia ordered another 6 and Interjet 40 neo's. This is 1515.
In a presentation at the EADS investors day last week John Leahy mentioned to have 1579 orders for the neo - a difference of 64 aircraft that can only be a part of the 100 aircraft strong order from the undisclosed customer.
So I have a very strong feeling that Airasia ordered another 64 A320neo and 36 A320ceo.
And now I wait eagerly for a reaction (read: counterorder) from Lionair...;-)

Lion Air - another Boeing-Airbus splitter?

In one of my recent posts I speculated about a large narrowbody order accompanying the launch of the low cost carrier from Lion Air and NADI, based in Kuala Lumpur and aimed to take on Air Asia. But Rusdi Kirana, owner of Lion Air, said that the aircraft will be B737-900ER and probably later on B737MAX-9 channeled through Lion Air's existing order book with Boeing.
Now there are news out, reporting that Kirana said that Lion Air needs more planes and Scott Hamilton predicts an order for 100 A320neo's to be knocking at John Leahy's door.
I remember (and found) a press article last year, a few weeks after the massive order from Lion Air for B737-900ER and B737MAX-9 was announced, in which John Leahy mentioned that Airbus and Lion Air already had a MoU in place, but then political pressure from the White House inhibited Lion Air from defecting from Boeing to Airbus. Who know - maybe the MoU is still valid?
It looks like there are two 100-aircraft-orders in the works in Toulouse. The other of course being for AirAsia. Reports last week said that this is not only for the A320neo - earlier reports suggested that the A320ceo is the aircraft to be ordered as Tony Fernandes said that AirAsia needs more planes "soon". I guess there will be also a nice number of A330-300 (presumably the new 240t version) and maybe more A350's in the deal. At last weeks ISTAT Europe the A330-300 was one of the most mentioned aircraft (in a positive way): Nico Buchholz, Lufthansa VP Fleet Strategy said that it is a "bloody profitable" aircraft for their North America destinations. But also AirAsia Co-Founder Conor McCarthy was very positive about the aircraft (but he also thanked god that AirAsiaX has just two A340-300 in the fleet).
The new (still to be announced) AirAsia order was public since Farnborough (or even earlier, I don't remember exactly). It will go to AirAsia's board in the coming days and then officially announced. I would guess the Lion Air order for A320neo's (if true) will be announced shortly thereafter.
As boring the summer was in terms of new aircraft orders (at least since Farnborough), as interesting might get the rest of the year...

A320 and B737 backlog burndown

Scott Hamilton has a few more details from the Airbus Innovation Days.

He cites JP Morgan with an observation that not all of the delivery slots for A320ceo's are filled for 2015 (2014 is full) and therefore it would be a good decision not to boost output further.

Let's have a look at the current number of open orders for the A320ceo as well as those of the B737NG.

Here is how the backlog of A320ceo's develops if there would not be any new sale nor any cancellations. Of course there are some "risk positions" in the backlog: Kingfisher, the remaining Delta (Northwest) and United order and  Mandala come to mind...

As of May 1st, 2012, there were 2084 A320ceo and 1286 A320neo on firm order.