Airbus set to widen lead over Boeing http://on.ft.com/1SqCkAC
Airbus has won the first new customer in two years for its A380 superjumbo, giving the aircraft programme a new lease of life.
ANA Holdings of Japan has agreed to buy three of the world’s largest passenger jets, which retail at a list price of $428m each, although this is rarely the price paid. Just a year ago, Harald Wilhelm, Airbus finance director, suggested that the A380 programme — which cost more than $10bn and took a decade to develop — could be scrapped without new orders.
The deal rewards the European aerospace group after it backed ANA’s plan to turn round the bankrupt domestic rival, Skymark Airlines, last August.
Airbus would not comment. ANA insisted that no decision had yet been made. However, two people familiar with the situation confirmed that agreement had been reached to buy three superjumbos and the details were being finalised before a formal signature later this month. The story was first reported by Nikkei.
Airbus is also understood to be in discussions for the sale of up to 30 A380s with other potential customers. It is under pressure from the superjumbo’s biggest user, Emirates Airline, to relaunch the aircraft with a more fuel-efficient engine. However, the group is keen to secure more orders for the existing programme before deciding to invest more in an aircraft that is unlikely ever to recoup its development costs in full.
The news comes as Airbus is set to widen its lead in net orders over US rival Boeing for the third consecutive year. By the end of December Airbus had 1022 firm orders against 743 for its US rival.
Official figures, net of cancellations, will not be published for several days, but the trend is clear. Though Boeing is expected to lead on aircraft deliveries, the re-engined Airbus A320neo short-haul aircraft is strongly outselling the rival 737 Max single aisle. Europe’s aerospace champion now claims about 60 per cent of the booming market for short-haul jets, which accounts for about three-quarters of all aircraft sales by volume.
The widening gap in orders is putting pressure on Boeing to fight back, possibly by accelerating plans for a new midsize passenger jet, to fill the gap between its 737 short-haul workhorse — including its more fuel efficient Max version — and its long-range 787 Dreamliner.
“Boeing does not have a lot of choice,” said Nick Cunningham of broker Agency Partners. “Narrow bodies are 50 per cent of the total market in dollar terms and the A320neo has been outselling Boeing’s 737 Max by two to one over the past two years. That cannot be acceptable to Boeing.”
Boeing insists no decision is imminent. “There is no change to our development profile for the balance of the decade,” a Boeing spokesman told the Financial Times. But the language it uses when discussing the possible launch of such an aircraft has noticeably changed over the course of 2015.
After ruling out any new “moonshots” in 2014, Boeing top management is now talking about the potential for a “middle of the market” aircraft to enter service in 2022. To meet that target, Mr Cunningham said, Boeing would have to make a launch decision during 2016.
The launch of a new aircraft is a huge financial commitment for Boeing — and potentially for Airbus which might feel driven to respond. It also could have a depressing effect on orders for existing jets, which is likely to intensify the nervousness that investors are feeling as growth begins to slow after a six-year boom.
Boeing and Airbus are expected to report combined net orders of about 1765 for 2015, a sharp drop on 2014’s 2,888. But those figures still leave the companies with 10 years of production in their backlogs. Given forecasts for continued strong growth in passenger traffic and the need to replace ageing jets as well as expand capacity, many industry observers are reluctant to call the turn of the cycle just yet.
Robert Stallard, aerospace analyst at RBC Capital, said there was a question mark over the quality of the backlog. Airlines could begin to defer their commitments — one of the first signs that the good times could be coming to an end. “Emerging market carriers have been a particular focus, given the double whammy of economic issues and foreign exchange impacts,” he said. “So far there’s been nothing meaningful — but we are ‘on watch’ for this. Many investors share our view that aero cycles don’t last for ever.”