Industry

Published on July 20th, 2016 | by Alan Dwyer

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How the big two commercial aircraft manufacturers, Airbus and Boeing fared at Farnborough

Airbus went in the 2016 Farnborough Air show lagging behind Boeing, after ending the first half of the year with 227 aircraft orders, or 183 after adjusting for cancellations. Boeing on the other hand sold 309 aircraft or 276 after cancellations and conversions, between the start of the year and 28th June. Therefore the show was important to both manufacturers; with both anxious to announce orders as worries grow over the state of the global economy. So how did the big two do? Well in summary, Airbus ended the show with a commanding lead, with a total of 279 aircraft, compared to the 182 commercial aircraft orders logged by Boeing. This means that by the end of the event Airbus had 380 net firm orders for the year while Boeing, which had been ahead for most of the year, ended with 321 net orders.

Airbus wins $35 billion of aircraft orders at Farnborough Air Show 2016

For Airbus, the 2016 Farnborough Air Show reaffirmed its market-leading position, winning $35 billion (around €31.61 billion) worth of business, for a total of 279 aircraft, covering both single-aisle and wide-body aircraft families. The deals comprise firm orders for 197 aircraft, worth $26.3 billion (around €23.75 billion) and commitments for 82 aircraft worth $8.7 billion (around €7.85 billion).

Air Asia announcementat Farnbough (Airbus A.Doumenjou)

Air Asia celebrating at Farnborough with a large Airbus order

Sales and commitments at Farnborough of the A320 Family were strong, with business accounting for a total of 269 aircraft, worth $31.3 billion (around €28.28 billion). This total comprises 187 firm orders worth $22.6 billion (around €20.42 billion), and commitments (e.g. MoUs) for 82 aircraft worth 8.7 billion (around €7.85 billion). Notably the larger A321neo model took a lion’s share of the single-aisle announcements – with firm selections from three airlines for 140 aircraft, reflecting the trend for airlines to upsize to larger single-aisle aircraft. Norwegian, is one such customer following this trend placing an order for 30 A321LRs. This follows a commitment signed in June 2012 for 100 A320neo aircraft. The switch from 30 A320neo aircraft to 30 A321LRs will support the carrier’s growth and modernization strategy and allows it to become the first low-cost carrier to operate the A321LR. ALAFCO Aviation Lease and Finance Company, the Kuwait-based international aircraft leasing company, also upsized an order of ten A320neos to A321neos at the show.

Other significant orders included Indian low-cost airline Go Air which opted for the A320neo for its further expansion plans signing a Memorandum of Understanding (MoU) for 72 aircraft. This followed a similar agreement for 72 A320neo placed in 2011 bringing the total order book to 144 aircraft. Vietnam’s Jetstar Pacific Airlines also signed a MoU for 10 A320ceo aircraft, while the Germania Group placed a firm order, this time for 25 Airbus A320neos. Finally, Synergy Aerospace Corporation, largest shareholder of Colombia-based Avianca and owner of Avianca Brasil, finalised a Purchase Agreement with Airbus for 62 A320neo Family aircraft. These A320neo will be the base of the fleet renewal and network growth strategy for Avianca Brasil, and also marks over 1,000 Airbus aircraft sold in Latin America.

In the wide-body segment, Airbus won firm orders for 10 aircraft, worth $3.4 billion (around €3.07 billion) comprising two A330-300s and eight A350-1000s. The eight A350-1000s are being purchased by UK based Virgin Atlantic Airways for deliveries commencing in 2019, and an additional four new aircraft on long term leases from ALC from 2020, including a lease ‘option’ for a fifth aircraft. The order for the two A330-300s are from Aer Lingus which is expanding its fleet by deciding to exercise existing options.

In addition to these new wide-body orders, the show also saw the launch order from DHL Express for the A330-300 Passenger-To-Freighter conversion programme, in partnership with EFW and ST Aerospace.

Airbus John Leahy Farnborough press_conference (A. Doumendou - Airbus Industrie)

John Leahy of Airbus at a Farnborough press conference

John Leahy, Airbus’ Chief Operating Officer, Customers said: “Our orders this week at Farnborough confirm a buoyant industry in which we have once again surpassed our competitor. In addition, airlines upsizing to the A321neo shows that this aircraft is the undisputed ‘middle-of-the-market’ champion.”

Airbus is now the world’s leading aircraft manufacturer of passenger airliners, ranging in capacity from 100 to more than 600 seats. Airbus has design and manufacturing facilities in France, Germany, the UK, and Spain, and subsidiaries in the US, China, India, Japan and in the Middle East (balancing tanks manufacturing, etc). In addition, it provides the highest standard of customer support and training through an expanding international network.

The good result for Airbus at Farnborough is also an indication of some buoyancy in the industry and it follows its excellent results in 2015, when it exceeded its targets and delivered the highest number of Airbus airliners ever at 635. This new record of 635 aircraft saw deliveries to 85 customers, of which 10 were new. The total consisted of 491 A320 Family aircraft; 103 A330s; 27 A380s; and 14 A350 XWBs. This production achievement meant that Airbus’ aircraft deliveries in 2015 were up for the 13th year in a row, surpassing the previous year-end delivery record of 629 aircraft – set in 2014. It was not all good news however for Airbus, which struggling to make money on its A380 double-decker jet, it was forced to admit that it plans to reduce production of this aircraft from 27 units last year to just 12 per year by 2018.

Airbus also achieved 1,036 net orders from 53 customers (of which eight were new) in 2015, comprising 897 single-aisle aircraft and 139 wide-bodies. At 2015 year-end the overall backlog had climbed to a new industry record of 6,787 aircraft valued at $996.3 billion (around €900.13 billion) at list prices.

The good results for 2015 encouraged Airbus to increase the average list prices of its aircraft by 1.1% across the product line with the new pricing structure coming into effect from January 1st 2016. The 1.1% price increase was been calculated having regard to Airbus’ standard escalation formula over the January 2015 to January 2016 period and it took into account the drop in materials and commodities prices.

Airbus Aircraft

2016 Average List Prices (millions of US$)

A318 75.1 A330-800neo 252.3
A319 89.6 A330-200 Freighter 234.7
A320 98.0 A330-300 256.4
A321 114.9 A330-900neo 287.7
A319neo 98.5 A350-800 272.4
A320neo 107.3 A350-900 308.1
A321neo 125.7 A350-1000 355.7
A330-200 231.5 A380-800 432.6

Price depends on design weights, engines choice and level of selected customisation.

Boeing describes Farnborough as “successful” as it celebrates its centennial

Boeing celebrated 100 years since its founding on 15th July 1916, amid a highly successful 2016 Farnborough International Air-show, that saw multi-billion dollar orders and commitments across the company, including defence platforms, commercial airplanes and services agreements.

20160712 Farnborough Boeing 737MAX Customers 144 IMG_0999

The customers for the Boeing 737MAX aircraft

Since starting out as a builder of wood and fabric floatplanes in a Seattle boathouse, Boeing has become the world’s largest aerospace company and leading manufacturer of commercial jetliners and defence, space and security systems.

“The innovative spirit of our founder Bill Boeing – who 100 years ago today dedicated this company to building something better – is alive in the generations of our people who continue to deliver products and services that matter and positively change lives around the world,” said Boeing Chairman, President and CEO Dennis Muilenburg. “As we embark on our second century, our commitment to excellence is stronger than ever, our potential for achievement is as great as it was for our founders, and our goals must be even more bold, visionary and inspiring.”

Speaking earlier at the show he added; “As the birthplace of British aviation, there are few better backdrops to celebrate the accomplishments and wonders of the aerospace industry and mark our centennial than the Farnborough Air show. Throughout the show, we demonstrated and discussed our innovative and cost effective products and services and the tremendous value they provide our commercial and defence customers”.

Also at the show was the Boeing Centennial Experience Pavilion, a 500 square meter (5,000+ sq. ft.) immersive showcase of innovation leadership past, present and future. It welcomed nearly 4,000 visitors over the first four days of the show.

Boeing Farnbourgh orders

Looking at the numbers, during the week of the show, Boeing announced orders and commitments for a total of 182 commercial airplanes, valued at $26.8 billion (around €24.22 billion) at list prices. Boeing booked 321 net orders in 2016, as updated up to 14th July on the Boeing Orders & Deliveries website. Customers also announced commercial services agreements valued at multiple billion dollars over the life of the contracts, including the largest commercial services order in Boeing history. Full details of the commercial customer orders can be found in the following table:-

In a comment, Mr. Muilenburg added; “On the commercial side of the business, we were pleased at the confidence our customers displayed in our portfolio of airplanes and services with significant orders and other announcements.”

20160712 Farnborough Boeing 787-10 Orders 148 IMG_1003

The customers for the Boeing 787-10 Dreamliner

In addition to the commercial aircraft orders, and as noted elsewhere, the UK Ministry of Defence announced a $2.3 billion (around €2.08 billion) deal to secure 50 Apache AH-64E helicopters and confirmed the purchase of nine P-8A Poseidon maritime patrol aircraft for the Royal Air Force (RAF). Boeing and the British Government also announced a long-term partnering initiative to advance growth and prosperity, including 2,000 new Boeing jobs to be created in the UK, the intent to build a new £100 million (around €119.64 million) P-8A Poseidon facility at RAF Lossiemouth, increased Boeing capital investment in the UK and additional bidding opportunities on Boeing programs for UK suppliers.

Boeing also revealed its new Current Market Outlook at the show, forecasting a demand for 39,620 new airplanes valued at $5.9 trillion in the next 20 years.

Airbus v Boeing

Embraer and Boeing to collaborate on worldwide sales, support of KC-390 Medium Airlifter

On 11th July, Embraer and Boeing signed a teaming agreement to jointly market and support the KC-390, Embraer’s multi-mission mobility and aerial refuelling aircraft. Under the agreement, the companies will together pursue new business opportunities, both for the aircraft itself and for aircraft support and sustainment. Embraer will provide the aircraft while Boeing will be responsible for in-service support.

The agreement expands an existing collaboration between the two companies; in 2012, the two companies first announced their intention to jointly market the aircraft. “The expansion of our relationship makes the best medium-sized airlift product available to customers, bolstered by the best support available,” said Jackson Schneider, President and CEO of Embraer Defence & Security. “Boeing has outstanding experience in the military mobility market and the KC-390 is the most effective aircraft in its category.”

“The teaming agreement between Boeing and Embraer brings together two strong companies and underscores our commitment to branch out beyond the traditional OEM role into services for non-Boeing aircraft,” said Ed Dolanski, president of Boeing Global Services and Support. “Our advantage is Boeing’s global reach, which provides greater flexibility, enabling us to quickly respond to customers, as well as take advantage of synergies that help lower costs – savings we can pass on to the customer.”

KC-390 Medium Airlifter

The Embraer KC-390 in the static display at Farnborough

The Embraer KC-390 is a tactical transport aircraft designed to set new standards in its category, while presenting the lowest life-cycle cost of the market. It can perform a variety of missions such as cargo and troop transport, troop and cargo air delivery, aerial refuelling, search and rescue and forest fire fighting. It is a project of the Brazilian Air Force (FAB) that, in 2009, hired Embraer to perform the aircraft development. The first prototype has performed its first flight in February 2015 and two prototypes are currently in flight test campaign, averaging two flights a day and proving high aircraft readiness. The aircraft is currently on an eight nation tour, and expects to receive certification by the end of 2017. Deliveries are expected to begin during the first half of 2018.

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