Moderators: jsumali2, richierich, ua900, PanAm_DC10, hOMSaR

 
MartijnNL
Posts: 971
Joined: Sun Jan 01, 2017 11:44 am

Re: Airbus considering significant A320 rate reduction cut

Sat Apr 04, 2020 11:01 am

mxaxai wrote:
Airlines will be back up and running in a year or two (...)

How do you know? People here have also been stating since a whole year the MAX will fly again in a few months.
 
pugman211
Posts: 524
Joined: Thu Dec 20, 2012 1:55 pm

Re: Airbus considering significant A320 rate reduction cut

Sat Apr 04, 2020 12:24 pm

Maybe I'm viewing things from a glass half full perspective. I just think air travel will bounce back quite quickly, surely people will want to go on a holiday more, when the lock down ends.

Just my opinion however.
 
User avatar
Polot
Posts: 10523
Joined: Thu Jul 28, 2011 3:01 pm

Re: Airbus considering significant A320 rate reduction cut

Sat Apr 04, 2020 12:34 pm

pugman211 wrote:
Maybe I'm viewing things from a glass half full perspective. I just think air travel will bounce back quite quickly, surely people will want to go on a holiday more, when the lock down ends.

Just my opinion however.

With people feeling the crunch from being out of work, having reduced hours, etc, even if just temporary, they will be more inclined to push back expensive vacations to save money. Which has a domino effect- suddenly places reliant on tourist (and services used for getting them there such as airlines) will have less money coming in, meaning lay-off (more unemployed people) or pay cuts/reduced hours (less disposable income).
 
brindabella
Posts: 620
Joined: Fri Apr 30, 2010 10:38 am

Re: Airbus considering significant A320 rate reduction cut

Sat Apr 04, 2020 12:47 pm

Sokes wrote:
In the next couple of weeks means maybe in three weeks. I guess they want to see first if growth in Corona cases continues exponential (widespread immunity soon) or flattens (long term fear).
I don't think they should cut production. Which airline wouldn't prefer A320 over B737Max, assuming it returns to service soon?
Boeing's balance sheet was much worse when they continued to manufacture planes which weren't allowed to fly. Also for the supply chain it's crucial that at least one OEM continues manufacturing. There are a lot of old narrowbodies that need replacement.
Is there some oscillation between euphoria and fear in humans?



Love it.

Would be harder to be more misguided IMO

The major world economies are sliding below the horizon by the minute, and airlines worldwide are desperate for Government rescue.
Those that aren't rescued EG VA in Oz - are history.
Cactus.
Dogmeat.

Whatever you want to say.
And the survivors?

Those fortunate few will be 110% preoccupied with - SURVIVING.

Who do you think will be taking these frames?

China?

:razz:

I'll give you a "contrarian" thought:

If Airbus doesn't reduce production majorly - and fast.
Like now.
Like every day counts.

Then AB will end up looking exactly like Boeing.

Hundreds and hundreds of frames on the ground, and no-one to deliver them to.

no?


cheers
Billy
 
brindabella
Posts: 620
Joined: Fri Apr 30, 2010 10:38 am

Re: Airbus considering significant A320 rate reduction cut

Sat Apr 04, 2020 12:57 pm

Beedo46 wrote:
Can the Boeing/Airbus leaders not look out their windows and see all of the planes sitting on the tarmacs? I understand they have employees (and stockholders) to take care of, but why build a plane just to have it sit? They need to make a decision so that their supply chains know what to do.


Right now, you have to wonder about BA at 20/Month.

Can't help thinking that it is coupled to the 50Bn bailout for "the industry". :lol:

The magic place to be, right now, is a Lessor with a heap of
737-800s/A320ceos on their books.

:yes:

cheers
Billy
 
mxaxai
Posts: 1813
Joined: Sat Jun 18, 2016 7:29 am

Re: Airbus considering significant A320 rate reduction cut

Sat Apr 04, 2020 1:01 pm

MartijnNL wrote:
mxaxai wrote:
Airlines will be back up and running in a year or two (...)

How do you know? People here have also been stating since a whole year the MAX will fly again in a few months.

The MAX is a specific engineering problem that Boeing can solve (or not). Aviation as a whole is part of the economy, so unless you expect the economy to stay in its current, shut-down state for two years or more, airlines will return to normal operations fairly quickly. Smaller, perhaps, but particularly domestic travel will be the first to recover.
 
VV
Posts: 1705
Joined: Sat Feb 13, 2016 1:03 pm

Re: Airbus considering significant A320 rate reduction cut

Sat Apr 04, 2020 1:13 pm

It is strange there's nothing on the A220.
 
User avatar
lightsaber
Moderator
Posts: 19762
Joined: Wed Jan 19, 2005 10:55 pm

Re: Airbus considering significant A320 rate reduction cut

Sat Apr 04, 2020 2:39 pm

VV wrote:
It is strange there's nothing on the A220.

Considering neither Delta nor AirBaltic are accepting deliveries, we know that is coming.

It will be curious which airlines can accept deliveries of A320. I expect China to be kept to contract.

If we really want to know something, why hasn't United Technogies furloughed? The current cuts in spending are... trivial.

https://www.msn.com/en-us/finance/compa ... r-BB11O755

We know GE furloughed half of production.

Lightsaber
IM messages to mods on warnings and bans will be ignored and nasty ones will result in a ban.
 
LJ
Posts: 5286
Joined: Wed Nov 17, 1999 8:28 pm

Re: Airbus considering significant A320 rate reduction cut

Sat Apr 04, 2020 2:46 pm

pugman211 wrote:
Maybe I'm viewing things from a glass half full perspective. I just think air travel will bounce back quite quickly, surely people will want to go on a holiday more, when the lock down ends.

Just my opinion however.


You assume that the travel restrictions will be relaxed at the same time as the lock downs will go away. I fear your assumption will not be correct. It will take time to get all restrictions away. When that happens, we're well into the Summer of 2020 and thus too late for many to go on holiday. It's not that everybody can go on holiday at the same time (and don't think employers will let their employees enjoy the regained freedom). Thus expect Summer 2020 to be lost for most of Europe and USA/Canada. This means European/Canadia/American airlines will miss put on their most profitable time of the year. Moreover, those airlines don't need their brand new aircraft. Therefore, why not defer till March 2021?
 
LJ
Posts: 5286
Joined: Wed Nov 17, 1999 8:28 pm

Re: Airbus considering significant A320 rate reduction cut

Sat Apr 04, 2020 2:50 pm

lightsaber wrote:
We know GE furloughed half of production.

Lightsaber


Though only for a few weeks (at least that's the current plan), it's probably cheaper to furlough and rehire, than to keep your employees (strategic employees excepted).
 
Theseus
Posts: 266
Joined: Thu Oct 01, 2009 8:35 pm

Re: Airbus considering significant A320 rate reduction cut

Sat Apr 04, 2020 6:38 pm

Without even trying to predict the future, it is not very hard to decide production cuts now.

Most suppliers must have their activity messed up.
Transportation of goods, hence the delivery of the parts that still gets produced is messed up too.
Airbus (and other OEMs) facilities are messed up.
And last but not least, most customers are not up to accepting deliveries.

Given these, I am not sure it is even necessary to look at the forecast to cut production for the next few weeks/months. And forecast changes any day anyway, even governments seem still confused. So, we should wait and see for a few months to see how the dust is going to settle on this and whether this is the beginning of a multi-year recession or whether things will improve in just a few months.
 
VV
Posts: 1705
Joined: Sat Feb 13, 2016 1:03 pm

Re: Airbus considering significant A320 rate reduction cut

Sat Apr 04, 2020 6:53 pm

lightsaber wrote:
VV wrote:
It is strange there's nothing on the A220.

Considering neither Delta nor AirBaltic are accepting deliveries, we know that is coming.
...


We guess something is coming, but there is not any formal communication from Airbus as yet, is there?
 
Elementalism
Posts: 601
Joined: Sat Jun 10, 2017 4:03 am

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 1:06 am

Isnt A220 production pretty low anyways? Like 10-15 frames a month?
 
JayinKitsap
Posts: 2167
Joined: Sat Nov 26, 2005 9:55 am

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 2:46 am

Elementalism wrote:
Isnt A220 production pretty low anyways? Like 10-15 frames a month?


Less than that, it was 46 or 47 delivered in 2019, the 100th delivery also occurred late in December. The projection for 2020 was for around 65.
 
User avatar
lightsaber
Moderator
Posts: 19762
Joined: Wed Jan 19, 2005 10:55 pm

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 3:03 am

VV wrote:
lightsaber wrote:
VV wrote:
It is strange there's nothing on the A220.


I'm not surprised that Airbus hasn't discussed the A220. The top expenses have priority first. I'm sure all non-essential spending has been cut. But first tackle that huge A320 program. Then the A330 & A350 (I'm not sure which is the priority, but both will see production cuts). A380 is pretty much on minimum expense autopilot as is. Quite a few of the assemblies are complete, so little to be saved there. Note: Of course Boeing and Embraer will cut too.

The A320 conservatively expends 1 billion euros every month. That broken fire hydrant of spending went from being Airbus' #1 profit center to an artery wound. Triage means deciding what to address first.

Lightsaber
IM messages to mods on warnings and bans will be ignored and nasty ones will result in a ban.
 
VV
Posts: 1705
Joined: Sat Feb 13, 2016 1:03 pm

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 7:51 am

Considering the fact the A320neo backlog is still more than 6,100 units, is there any possible cancellations in sight?

The production rate cut would only spread the delivery of the current backlog far-far away into the future.

Would not it be logical to think that about one thousand of these firm orders would be cancelled?
 
StTim
Posts: 3694
Joined: Thu Aug 08, 2013 7:39 am

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 8:43 am

VV wrote:
Considering the fact the A320neo backlog is still more than 6,100 units, is there any possible cancellations in sight?

The production rate cut would only spread the delivery of the current backlog far-far away into the future.

Would not it be logical to think that about one thousand of these firm orders would be cancelled?

Of course cancellations (airlines are going out of business) and deferrals are coming. The questions are how many and then who can take a near term delivery.
 
majano
Posts: 272
Joined: Sun Oct 14, 2018 10:45 am

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 8:46 am

VV wrote:
Considering the fact the A320neo backlog is still more than 6,100 units, is there any possible cancellations in sight?

The production rate cut would only spread the delivery of the current backlog far-far away into the future.

Would not it be logical to think that about one thousand of these firm orders would be cancelled?

Avolon just announced a delay in accepting delivery of a score of A320neo to 2027 if I am not mistaken. There will undoubtedly be plenty more deferrals and cancellations IMHO.
 
astuteman
Posts: 7134
Joined: Mon Jan 24, 2005 7:50 pm

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 9:45 am

majano wrote:
VV wrote:
Considering the fact the A320neo backlog is still more than 6,100 units, is there any possible cancellations in sight?

The production rate cut would only spread the delivery of the current backlog far-far away into the future.

Would not it be logical to think that about one thousand of these firm orders would be cancelled?

Avolon just announced a delay in accepting delivery of a score of A320neo to 2027 if I am not mistaken. There will undoubtedly be plenty more deferrals and cancellations IMHO.


But interestingly they didn't cancel any.
They treated their outstanding MAX orders completely differently, which must be a bit worrying for the MAX programme

https://www.ainonline.com/aviation-news ... -max-order

Rgds
 
VV
Posts: 1705
Joined: Sat Feb 13, 2016 1:03 pm

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 10:41 am

astuteman wrote:
majano wrote:
VV wrote:
Considering the fact the A320neo backlog is still more than 6,100 units, is there any possible cancellations in sight?

The production rate cut would only spread the delivery of the current backlog far-far away into the future.

Would not it be logical to think that about one thousand of these firm orders would be cancelled?

Avolon just announced a delay in accepting delivery of a score of A320neo to 2027 if I am not mistaken. There will undoubtedly be plenty more deferrals and cancellations IMHO.


But interestingly they didn't cancel any.
They treated their outstanding MAX orders completely differently, which must be a bit worrying for the MAX programme

https://www.ainonline.com/aviation-news ... -max-order

Rgds


I think cancellations and deferrals are "normal" in the current climate.
I am just wondering how many of the deferrals are in reality "deferred cancellations".

It looks like Boeing accepts cancellations easily and voluntarily when the orders are not as firm as it should be. I guess it is easier to manage, in their view, than deferrals to an undefined date or too far into the future.
 
User avatar
scbriml
Posts: 19044
Joined: Wed Jul 02, 2003 10:37 pm

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 11:12 am

VV wrote:
It looks like Boeing accepts cancellations easily and voluntarily when the orders are not as firm as it should be.


Like they have a choice? MAX cancellations are likely a no cost option by now.

What makes you think Avalon's MAX order wasn't "as firm as it should be"? That's what ASC 606 is for.
Time flies like an arrow. Fruit flies like a banana!
There are 10 types of people in the World - those that understand binary and those that don't.
 
astuteman
Posts: 7134
Joined: Mon Jan 24, 2005 7:50 pm

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 11:30 am

VV wrote:
astuteman wrote:
majano wrote:
Avolon just announced a delay in accepting delivery of a score of A320neo to 2027 if I am not mistaken. There will undoubtedly be plenty more deferrals and cancellations IMHO.


But interestingly they didn't cancel any.
They treated their outstanding MAX orders completely differently, which must be a bit worrying for the MAX programme

https://www.ainonline.com/aviation-news ... -max-order

Rgds


I think cancellations and deferrals are "normal" in the current climate.
I am just wondering how many of the deferrals are in reality "deferred cancellations".

It looks like Boeing accepts cancellations easily and voluntarily when the orders are not as firm as it should be. I guess it is easier to manage, in their view, than deferrals to an undefined date or too far into the future.


LOL. I think I'll bookmark this one.
"It looks like Boeing accepts cancellations easily"
I love what you are trying to imply.
Like Boeing have the remotest leg to stand on after the MAX has been grounded so long.
So how many 787 cancellations have you seen Boeing "accept easily"?

I'm pretty sure that they will have tried hard to secure compensation deals on the MAX that include the option to apply the compensation to future orders on any Boeing product.
And until CV happened, that was the best and most obvious strategy, and we saw some airlines take it up, with swaps for 787's.

But I'll bet my mortgage that most if not all airlines also reserved the right to cancel outright if the need arose.
Unfortunately for the MAX, because of CV, it now has, and will, for a lot of airlines.

I'd be astonished if most airlines aren't looking for any contractual reason to get out of airliner purchase commitments just now without penalty..

And yes, where the NEO delays have become long enough to allow airlines the same get-out, I think you'll see Airbus also "accepting cancellations easily".
But I think you'll find NEO customers don't have that ability to anything like the same extent as MAX customers.

Rgds
 
StTim
Posts: 3694
Joined: Thu Aug 08, 2013 7:39 am

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 11:45 am

Remember Boeing is the company that utilised a feature of a contract to force a frame on a company (put option) that wasn't really in it's plans.

Historically Boeing has been firmer on making companies stick to contracts than Airbus that was seen as more flexible (due of course to the poor quality of their order book and thus the expectation of deferrals etc)
 
VV
Posts: 1705
Joined: Sat Feb 13, 2016 1:03 pm

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 12:04 pm

I think you guys misunderstood my statement about "accepting easily and voluntarily cancellations".

I think the Americans are indeed more attached to the terms of a contract and prefer to abrogate the contract instead of deferring the orders to unspecified date. If a contract becomes "conditional" it looks like they do not like it.

Basically I am saying that they prefer to stick firmly with a contract, but if it is not possible to keep an order firm then they prefer to cancel it.

I am not sure if it is a cultural thing or it is related to some kind of regulations.
It may also be related to they way they manage their skyline or the production schedule. They seem to be quite pragmatic in increasing and reducing production rate as function of the firm contracts.
Perhaps it is linked to the fact the labor relation in the US is much different than it is in Europe.

I recently read an interesting article about overbooking. I am pretty sure you all have read it too. I initially expected Airbus would be able to maintain the delivery stream at the current rate considering the overbooking.

To be honest, the news about the production cut surprised me a lot.

By the way, below is the article about the overbooking.
https://www.flightglobal.com/air-transp ... 25.article
 
User avatar
Revelation
Posts: 23962
Joined: Wed Feb 09, 2005 9:37 pm

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 2:18 pm

lightsaber wrote:
VV wrote:
lightsaber wrote:


I'm not surprised that Airbus hasn't discussed the A220. The top expenses have priority first. I'm sure all non-essential spending has been cut. But first tackle that huge A320 program. Then the A330 & A350 (I'm not sure which is the priority, but both will see production cuts). A380 is pretty much on minimum expense autopilot as is. Quite a few of the assemblies are complete, so little to be saved there. Note: Of course Boeing and Embraer will cut too.

The A320 conservatively expends 1 billion euros every month. That broken fire hydrant of spending went from being Airbus' #1 profit center to an artery wound. Triage means deciding what to address first.

Lightsaber

I'm surprised any production is allowed under the current circumstances. It's clear the airlines are for the most part shut down, so it's absurd to suggest that airliners are an essential item. The industry as a whole has no experience limiting contagion and even N95 masks allow 5% particle bypass (95 means 95% are blocked).
Wake up to find out that you are the eyes of the world
The heart has its beaches, its homeland and thoughts of its own
Wake now, discover that you are the song that the morning brings
The heart has its seasons, its evenings and songs of its own
 
VV
Posts: 1705
Joined: Sat Feb 13, 2016 1:03 pm

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 4:07 pm

In one of the comments above the overbooking policy was mentioned.
https://www.flightglobal.com/air-transp ... 25.article

The article says the following,
    "Chief executive Guillaume Faury says the single-aisle backlog, over 6,200 A320-family jets, includes a “significant level” of overbooking which is “providing a cushion for deliveries”."

We do not know what level of overbooking is in the A320 backlog, neither we know how many times the same production slot is sold on average. WE do not know either if the overbooking is for short-medium term delivery slots or if it concerns longer term deliveries.

THe news about a possible production rate cut is really surprising because that's what overbooking is for.

If somebody can give us a little bit more explanation then it would be welcome.

On a similar subject but for a different aircraft, I am wondering if the A220 also has the same level of overbooking. How would this overbooking on the A220 help to maintain a decent production level in Mirabel?
 
T4thH
Posts: 984
Joined: Thu Jun 06, 2019 11:17 pm

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 4:53 pm

VV wrote:
In one of the comments above the overbooking policy was mentioned.
https://www.flightglobal.com/air-transp ... 25.article

The article says the following,
    "Chief executive Guillaume Faury says the single-aisle backlog, over 6,200 A320-family jets, includes a “significant level” of overbooking which is “providing a cushion for deliveries”."

We do not know what level of overbooking is in the A320 backlog, neither we know how many times the same production slot is sold on average. WE do not know either if the overbooking is for short-medium term delivery slots or if it concerns longer term deliveries.

THe news about a possible production rate cut is really surprising because that's what overbooking is for.

If somebody can give us a little bit more explanation then it would be welcome.

On a similar subject but for a different aircraft, I am wondering if the A220 also has the same level of overbooking. How would this overbooking on the A220 help to maintain a decent production level in Mirabel?

Last year, it was still possible to get a production slot just around little more than one to less than 2 years in front.
Air Vanuatu A220 order firmed on 25-Feb-2019, first delivery could be expected end of JUN-2020 to Jul-2020.
Air Austral, firmed end of last year, was first scheduled for Nov-2020. Debut is now scheduled for Q1-2021.
You can see the same for others, like Czech.

So, when such early slots are available, it seems there is no overbooking. or only a small one.
 
fcogafa
Posts: 1264
Joined: Fri May 16, 2008 4:37 pm

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 5:00 pm

Does that mean that you should never trust order statistics again if there is an admitted 'significant level of overbooking'? Crazy
 
VV
Posts: 1705
Joined: Sat Feb 13, 2016 1:03 pm

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 5:19 pm

fcogafa wrote:
Does that mean that you should never trust order statistics again if there is an admitted 'significant level of overbooking'? Crazy


We do not know what he meant by "significant". Is that three "firm" orders for one slot or is it 1.5 on average?

There's no quantitative information.

Your question is legitimate, but the biggest question is why there is a production rate cut if there is a "significant" overbooking?
 
StTim
Posts: 3694
Joined: Thu Aug 08, 2013 7:39 am

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 5:23 pm

VV wrote:
fcogafa wrote:
Does that mean that you should never trust order statistics again if there is an admitted 'significant level of overbooking'? Crazy


We do not know what he meant by "significant". Is that three "firm" orders for one slot or is it 1.5 on average?

There's no quantitative information.

Your question is legitimate, but the biggest question is why there is a production rate cut if there is a "significant" overbooking?



Because what was firm and a great over booking situation is probably in the near term anything but. The is a generational incident. The impact on the world is far greater than 911 and I cannot recall anything other than wars that has had such a significant, and immediate, impact.
 
VV
Posts: 1705
Joined: Sat Feb 13, 2016 1:03 pm

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 5:35 pm

StTim wrote:
VV wrote:
...
Your question is legitimate, but the biggest question is why there is a production rate cut if there is a "significant" overbooking?


Because what was firm and a great over booking situation is probably in the near term anything but. The is a generational incident. The impact on the world is far greater than 911 and I cannot recall anything other than wars that has had such a significant, and immediate, impact.


That brings up two questions.
  • It means those overbooked orders are pushed farther to the right and thus become shakier
  • The same question asked already by foogafa, "Does that mean that you should never trust order statistics again if there is an admitted 'significant level of overbooking'?"
 
astuteman
Posts: 7134
Joined: Mon Jan 24, 2005 7:50 pm

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 5:50 pm

VV wrote:
StTim wrote:
VV wrote:
...
Your question is legitimate, but the biggest question is why there is a production rate cut if there is a "significant" overbooking?


Because what was firm and a great over booking situation is probably in the near term anything but. The is a generational incident. The impact on the world is far greater than 911 and I cannot recall anything other than wars that has had such a significant, and immediate, impact.


That brings up two questions.
  • It means those overbooked orders are pushed farther to the right and thus become shakier
  • The same question asked already by foogafa, "Does that mean that you should never trust order statistics again if there is an admitted 'significant level of overbooking'?"


I'm not sure why we're having this conversation.
Overbooking has been a fact for both major OEM's, certainly in the narrowbody world, since before the 2008 GFC, when the conversation was had about the flexibility it offered in periods of high demand when some customer airlines wanted to defer some slots, for whatever reason.

The irony of it is that, until the CV crisis, the demand for the NEO has been so high that the overbooking has manifested itself in an inability by Airbus to satisfy its entire order book, particularly with respect to the A321.
Normal business. Always has been

I get that you love to fly kites to further you own blog etc.
So long as most other posters realise this...
 
VV
Posts: 1705
Joined: Sat Feb 13, 2016 1:03 pm

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 6:23 pm

astuteman wrote:
...
Overbooking has been a fact for both major OEM's, certainly in the narrowbody world, since before the 2008 GFC, when the conversation was had about the flexibility it offered in periods of high demand when some customer airlines wanted to defer some slots, for whatever reason.
...


Wait what??? We know that, but never was it mentioned as "significant" and this time it is said by an Airbus executive.

astuteman wrote:
...
I get that you love to fly kites to further you own blog etc.
So long as most other posters realise this...


Wait what??? What does this conversation have to do with that?
 
User avatar
Revelation
Posts: 23962
Joined: Wed Feb 09, 2005 9:37 pm

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 6:33 pm

fcogafa wrote:
Does that mean that you should never trust order statistics again if there is an admitted 'significant level of overbooking'? Crazy

I think there are industry standards for orders, with deposit schedules, etc. Given these things are on the vendor's web sites, one would hope some sort of minimal standard was in place.

The vendor really has no reason to not accept orders even if they realize the airline probably won't ever take the full order. They have a legal commitment and a schedule of payments and when the payments stop they can chase after the customer and if necessary drop the order.

Boeing famously was the first vendor JetBlue spoke with, and JetBlue felt they weren't being taken seriously so off they went to Airbus and the rest is history. I think neither vendor is that picky about whose orders they take these days.

The king of dubious orders IMO was the A380, and in particular the 20 frame "order" by Amedeo which disappeared without a trace the minute Airbus decided to shut down A380 production. I'd love to know the terms and conditions attached to that one. Maybe John Leahy will get around to writing his tell all book some day?
Wake up to find out that you are the eyes of the world
The heart has its beaches, its homeland and thoughts of its own
Wake now, discover that you are the song that the morning brings
The heart has its seasons, its evenings and songs of its own
 
User avatar
Taxi645
Posts: 343
Joined: Wed Feb 22, 2017 7:29 pm

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 6:36 pm

Probably a bit of a naive question but here goes anyway. What would (legally) prevent EU countries to launch state owned shell airliners and buy several hundreds of A320's on the cheap? To sell them on later.

Idea being saving jobs at Airbus and suppliers, maximizing market share post corona and providing (former) national carriers with cheap planes eventually.
Innovation is seeing opportunity before obstacle.
 
VV
Posts: 1705
Joined: Sat Feb 13, 2016 1:03 pm

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 6:38 pm

Revelation wrote:
fcogafa wrote:
Does that mean that you should never trust order statistics again if there is an admitted 'significant level of overbooking'? Crazy

I think there are industry standards for orders, with deposit schedules, etc. Given these things are on the vendor's web sites, one would hope some sort of minimal standard was in place.
...


This time it is different.

Airbus CEO said to a journalist that the overbooking is "significant".

This is not something said by average dudes like you and me. This was said by Airbus' CEO.

Unfortunately the person did not specify what "significant" means.
 
User avatar
aemoreira1981
Posts: 3538
Joined: Mon Jan 09, 2017 12:17 am

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 6:51 pm

I have to wonder if this might finally kill the A319neo. There are some orders for them, but remarketing will not be there. By contrast, the A320neo and A321neo will have customers, and the A321ceo also has a freighter conversion program.

The other thing is what this may mean for the A220. I see airlines trying to make more money with smaller planes over longer distances, meaning the A321neo family is going to be more in demand for routes that previously used to be wide-body routes in the 3000-3700 nmi range.
 
User avatar
lightsaber
Moderator
Posts: 19762
Joined: Wed Jan 19, 2005 10:55 pm

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 6:56 pm

astuteman wrote:
I'd be astonished if most airlines aren't looking for any contractual reason to get out of airliner purchase commitments just now without penalty..

And yes, where the NEO delays have become long enough to allow airlines the same get-out, I think you'll see Airbus also "accepting cancellations easily".
But I think you'll find NEO customers don't have that ability to anything like the same extent as MAX customers.

Rgds

I think you are 100% correct that all airlines are trying to find any reason possible to get out of contracts. I think AAB is about to be outdone on carpet inspections.

Revelation wrote:
lightsaber wrote:
VV wrote:


I'm not surprised that Airbus hasn't discussed the A220. The top expenses have priority first. I'm sure all non-essential spending has been cut. But first tackle that huge A320 program. Then the A330 & A350 (I'm not sure which is the priority, but both will see production cuts). A380 is pretty much on minimum expense autopilot as is. Quite a few of the assemblies are complete, so little to be saved there. Note: Of course Boeing and Embraer will cut too.

The A320 conservatively expends 1 billion euros every month. That broken fire hydrant of spending went from being Airbus' #1 profit center to an artery wound. Triage means deciding what to address first.

Lightsaber

I'm surprised any production is allowed under the current circumstances. It's clear the airlines are for the most part shut down, so it's absurd to suggest that airliners are an essential item. The industry as a whole has no experience limiting contagion and even N95 masks allow 5% particle bypass (95 means 95% are blocked).

I'm surprised Aerospace can manufacture. My employer has accepted money in the past from the government that gives the government first dibs on our industrial PPE. Well, the government excercised that option. tens of millions of gloves, gone to the hospitals. The surgical masks used for certain operations (handling space solar panels) are gone. Respirator stockpile for bonding operations, repurposed.

We must keep within OSHA and CalOSHA guidance for PPE, we accept the priority is not aerospace.

The production, in particular as vendor parts run out, will pause.

Lightsaber
IM messages to mods on warnings and bans will be ignored and nasty ones will result in a ban.
 
User avatar
lightsaber
Moderator
Posts: 19762
Joined: Wed Jan 19, 2005 10:55 pm

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 7:00 pm

aemoreira1981 wrote:
I have to wonder if this might finally kill the A319neo. There are some orders for them, but remarketing will not be there. By contrast, the A320neo and A321neo will have customers, and the A321ceo also has a freighter conversion program.

The other thing is what this may mean for the A220. I see airlines trying to make more money with smaller planes over longer distances, meaning the A321neo family is going to be more in demand for routes that previously used to be wide-body routes in the 3000-3700 nmi range.

Did you mean what this means for the A330? Upgauging from the A220 is going to be less likely. But the down gauging from A330 to say A321NEO is more likely. I think A220 production will be hit.

We are talking cutting production of the most in demand airliner. By implication, everything else does worse.

Lightsaber
IM messages to mods on warnings and bans will be ignored and nasty ones will result in a ban.
 
astuteman
Posts: 7134
Joined: Mon Jan 24, 2005 7:50 pm

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 7:18 pm

Revelation wrote:
fcogafa wrote:
Does that mean that you should never trust order statistics again if there is an admitted 'significant level of overbooking'? Crazy

I think there are industry standards for orders, with deposit schedules, etc. Given these things are on the vendor's web sites, one would hope some sort of minimal standard was in place.

The vendor really has no reason to not accept orders even if they realize the airline probably won't ever take the full order. They have a legal commitment and a schedule of payments and when the payments stop they can chase after the customer and if necessary drop the order.

Boeing famously was the first vendor JetBlue spoke with, and JetBlue felt they weren't being taken seriously so off they went to Airbus and the rest is history. I think neither vendor is that picky about whose orders they take these days.

The king of dubious orders IMO was the A380, and in particular the 20 frame "order" by Amedeo which disappeared without a trace the minute Airbus decided to shut down A380 production. I'd love to know the terms and conditions attached to that one. Maybe John Leahy will get around to writing his tell all book some day?


For the sake of clarity, I think "overbooking" refers to the practice of taking more orders for a given year than the OEM actually has the capacity to deliver, rather than the acceptance of dubious orders that inflate the backlog.
The two are not necessarily inclusive.

Rgds
 
MIflyer12
Posts: 7794
Joined: Mon Feb 18, 2013 11:58 pm

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 7:26 pm

Taxi645 wrote:
Probably a bit of a naive question but here goes anyway. What would (legally) prevent EU countries to launch state owned shell airliners and buy several hundreds of A320's on the cheap? To sell them on later.

Idea being saving jobs at Airbus and suppliers, maximizing market share post corona and providing (former) national carriers with cheap planes eventually.


I expect that would be fought at the WTO on intent. If the idea is to subsidize Airbus jobs, and to subsidize carriers with cheap aircraft, IMHO that's worth a few years of litigation at the WTO - likely in the form of a Boeing complaint pursued by the U.S. govt. The WTO has ruled that some forms of aid to Airbus were prohibited. The WTO has ruled that some forms of carrier subsidy have been prohibited.

Reuters: Timeline: Highlights of the 16-year Airbus, Boeing trade war, https://www.reuters.com/article/us-wto- ... SKBN20901R

https://www.nytimes.com/2003/04/24/busi ... bsidy.html

https://www.wsj.com/articles/two-eu-air ... 1412159786

That sixteen year Reuters timeline shows that these things don't necessarily proceed quickly.

I'm not arguing that aid CAN'T be structured to fall within WTO rules.
 
strfyr51
Posts: 4905
Joined: Tue Apr 10, 2012 5:04 pm

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 7:43 pm

Beedo46 wrote:
Can the Boeing/Airbus leaders not look out their windows and see all of the planes sitting on the tarmacs? I understand they have employees (and stockholders) to take care of, but why build a plane just to have it sit? They need to make a decision so that their supply chains know what to do.


Boeing does not build un-bespoke airliners. If they're building one? somebody is on the hook for it! If they cancel the order? they're out of the 30% down they paid for the airplane and Boeing will again sell the airplane with a discount of at least 10-15% if Not the entire 30%.
 
User avatar
FiscAutTecGarte
Posts: 110
Joined: Tue Dec 24, 2019 6:40 pm

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 7:44 pm

Strato2 wrote:
VV wrote:
Embraer has been very prudent with its E2 production ramp-up. Perhaps the Brazilians were right (or lucky) to be so.


They don't have orders. That's why they are "prudent".


tru dat. it's been a dearth of orders for E2...
learning never stops...

FischAutoTechGarten is the full handle and it reflects my interest. It's abbreviated to fit A.net short usernames.
 
StTim
Posts: 3694
Joined: Thu Aug 08, 2013 7:39 am

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 7:46 pm

FiscAutTecGarte wrote:
Strato2 wrote:
VV wrote:
Embraer has been very prudent with its E2 production ramp-up. Perhaps the Brazilians were right (or lucky) to be so.


They don't have orders. That's why they are "prudent".


tru dat. it's been a dearth of orders for E2...


That is hardly likely to change this year.
 
VV
Posts: 1705
Joined: Sat Feb 13, 2016 1:03 pm

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 7:48 pm

FiscAutTecGarte wrote:
Strato2 wrote:
VV wrote:
Embraer has been very prudent with its E2 production ramp-up. Perhaps the Brazilians were right (or lucky) to be so.


They don't have orders. That's why they are "prudent".


tru dat. it's been a dearth of orders for E2...


It is true they do not have many E2 orders, but I think they still have some E1 to deliver. So it is not a disaster because the company's budget must have been built based on the small number of E2 deliveries.

It is much more difficult to manage when you are off from your planned budget by a lot.

I think this off-budget situation is the challenge for Boeing, Airbus.
The plan and the reality is so far away.
 
VV
Posts: 1705
Joined: Sat Feb 13, 2016 1:03 pm

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 7:50 pm

aemoreira1981 wrote:
I have to wonder if this might finally kill the A319neo.
...


Why?

After all the A220-300 is another production line without any commonality with the A320neo or A321neo.
If the production rate goes down perhaps they can better accommodate the A319neo.
 
majano
Posts: 272
Joined: Sun Oct 14, 2018 10:45 am

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 7:51 pm

astuteman wrote:
majano wrote:
VV wrote:
Considering the fact the A320neo backlog is still more than 6,100 units, is there any possible cancellations in sight?

The production rate cut would only spread the delivery of the current backlog far-far away into the future.

Would not it be logical to think that about one thousand of these firm orders would be cancelled?

Avolon just announced a delay in accepting delivery of a score of A320neo to 2027 if I am not mistaken. There will undoubtedly be plenty more deferrals and cancellations IMHO.


But interestingly they didn't cancel any.
They treated their outstanding MAX orders completely differently, which must be a bit worrying for the MAX programme

https://www.ainonline.com/aviation-news ... -max-order

Rgds

The MAX programme has both an internal problem (design, adequacy of training etc.) as well as the external "black swan" Covid - 19 issue. The two problems, quite significant on their own, will now become intertwined as Covid-19 was mentioned by Bloomberg a few days ago as causing an additional 3 months delay to MAX recertification. The MAX programme managers have plenty of reasons to worry, but they have had them for the past 18 months.
Last edited by majano on Sun Apr 05, 2020 7:55 pm, edited 1 time in total.
 
VV
Posts: 1705
Joined: Sat Feb 13, 2016 1:03 pm

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 7:55 pm

astuteman wrote:
...
For the sake of clarity, I think "overbooking" refers to the practice of taking more orders for a given year than the OEM actually has the capacity to deliver, rather than the acceptance of dubious orders that inflate the backlog.
...


How can all the orders allocated to the same production slot not-dubious? One is good for sure, but the other(s)?
Please explain this in simple terms to me.
 
User avatar
Revelation
Posts: 23962
Joined: Wed Feb 09, 2005 9:37 pm

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 7:59 pm

VV wrote:
Revelation wrote:
fcogafa wrote:
Does that mean that you should never trust order statistics again if there is an admitted 'significant level of overbooking'? Crazy

I think there are industry standards for orders, with deposit schedules, etc. Given these things are on the vendor's web sites, one would hope some sort of minimal standard was in place.
...

This time it is different.

Airbus CEO said to a journalist that the overbooking is "significant".

This is not something said by average dudes like you and me. This was said by Airbus' CEO.

Unfortunately the person did not specify what "significant" means.

I'm not sure what the significance of the statement is, given they really should not reject orders if the customer is able to meet terms and conditions, and they really should overcommit given that it's inevitable that some customers cancel and the penalty for being overcommitted is already a part of the contracts and is far less than letting a production slot go unfilled.

astuteman wrote:
For the sake of clarity, I think "overbooking" refers to the practice of taking more orders for a given year than the OEM actually has the capacity to deliver, rather than the acceptance of dubious orders that inflate the backlog.
The two are not necessarily inclusive.

Rgds

Thanks for the important clarification.
Wake up to find out that you are the eyes of the world
The heart has its beaches, its homeland and thoughts of its own
Wake now, discover that you are the song that the morning brings
The heart has its seasons, its evenings and songs of its own
 
User avatar
aemoreira1981
Posts: 3538
Joined: Mon Jan 09, 2017 12:17 am

Re: Airbus considering significant A320 rate reduction cut

Sun Apr 05, 2020 8:58 pm

lightsaber wrote:
aemoreira1981 wrote:
I have to wonder if this might finally kill the A319neo. There are some orders for them, but remarketing will not be there. By contrast, the A320neo and A321neo will have customers, and the A321ceo also has a freighter conversion program.

The other thing is what this may mean for the A220. I see airlines trying to make more money with smaller planes over longer distances, meaning the A321neo family is going to be more in demand for routes that previously used to be wide-body routes in the 3000-3700 nmi range.

Did you mean what this means for the A330? Upgauging from the A220 is going to be less likely. But the down gauging from A330 to say A321NEO is more likely. I think A220 production will be hit.

We are talking cutting production of the most in demand airliner. By implication, everything else does worse.

Lightsaber


I did mean A330. I meant to say something about the A220 insofar as killing off the A319neo for good.

VV wrote:
aemoreira1981 wrote:
I have to wonder if this might finally kill the A319neo.
...


Why?

After all the A220-300 is another production line without any commonality with the A320neo or A321neo.
If the production rate goes down perhaps they can better accommodate the A319neo.


You still have to finance those deliveries, and I don't see much of a secondhand market for the A19N, perhaps as bad as the A318, where some didn't even make it to their first heavy check before being scrapped.

Popular Searches On Airliners.net

Top Photos of Last:   24 Hours  •  48 Hours  •  7 Days  •  30 Days  •  180 Days  •  365 Days  •  All Time

Military Aircraft Every type from fighters to helicopters from air forces around the globe

Classic Airliners Props and jets from the good old days

Flight Decks Views from inside the cockpit

Aircraft Cabins Passenger cabin shots showing seat arrangements as well as cargo aircraft interior

Cargo Aircraft Pictures of great freighter aircraft

Government Aircraft Aircraft flying government officials

Helicopters Our large helicopter section. Both military and civil versions

Blimps / Airships Everything from the Goodyear blimp to the Zeppelin

Night Photos Beautiful shots taken while the sun is below the horizon

Accidents Accident, incident and crash related photos

Air to Air Photos taken by airborne photographers of airborne aircraft

Special Paint Schemes Aircraft painted in beautiful and original liveries

Airport Overviews Airport overviews from the air or ground

Tails and Winglets Tail and Winglet closeups with beautiful airline logos