In addition to cancelled and deferred orders, the global downturn brings some other issues top of mind, that Airbus has been wrestling with, some without clear direction or success.
A320. Becomes even more pivotal and THE cash cow for the foreseeable future. Airbus has been adding volume, but without achieving any real economies for scale, This hasn't been a problem, because margins have been fattened for in demand models like the 321.
But now margins are going South. Every existing customer with the financial ability to take delivery wants a re-price. And a MAX RTS adds even more pressure.
A220. A model enjoying inflated prices riding on the coat tails of the A320 family, but still achieving optimistic zero margins as Airbus work through 'launch' and 'volume launch' deals. With lower A320 pricing, will Airbus prefer to sell an A319NEO (or even develop an A318NEO)? For how long can Airbus afford to carry the A220? Are there any 'get out of jail' clauses that permit Airbus to reverse equity interests in the project?
A330NEO. A model with an inflated list price and consistently degraded capabilities to protect A350 sales and pricing. A model still preferred by lessors and smaller operators compared to the 787 (management software is considered too complex). Is the A330 unleashed or canned? Are A330NEO freight versions offered? If the model is canned, what impact on military sales?
A350. Does the focus switch from bigger to smaller variants, even though equivalent / comparable A330NEO variants are more profitable and as capable?
While Airbus have squandered opportunities to achieve economies of scale, Boeing has done the opposite, squeezing the supply chain from every direction. How many suppliers will take the opportunity to exit the aviation market, requiring Boeing to bring yet more MAX and 787 work in-house?
Engine OEM rationalisation has been on the cards for a decade. Does anyone have the funding or appetite to make it happen? Never cheaper or politically more acceptable, but................. At least OEM's generate cash flow on WB engine maintenance contracts, even if engines are stored, providing customers can afford to pay. Could Safran buy GE commercial aero engines? Could PW buy / merge with RR commercial aero engines? Could RR buy PW commercial aero engines? Could Safran buy RR aero engines?
Finance. What will become of Boeing Capital, carrying undelivered military and civil aircraft? Will the commercial scene reset 20-30 years, with higher credit standards, and only OEM's writing green fields business? How impaired will relevant EXIM's be?
Lets start with the easy. The A319NEO is too heavy and the engines are run at such a low fraction of their 35k design thrust, it is not a competitive platform.
The A220 has a backlog. The ramp will slow.
Leasing companies liked the deals they received on the A330NEO. As I pisted posted before, either DL or AirAsia X could do significant damage to the type. We've been in a widebody glut for 18 months and for less profitable models, going forward will be brutal.
As to engine consolidation, UTC is huge, RR couldn't afford them and Pratt is very unlikely to spin off. UTC buying Raytheon for defense revenue is suddenly brilliant.
RR is in trouble. Deep trouble. They rely on power by the hour. They might be bought.
Airbus or Boeing lack the cash to buy GE or UTC.
I won't worry about finance. Central banks are printing money. All the finance companies, including Boeing capital, will be fine.
Boeing lost economy of scale on the MAX. Since the line is already shut down, it is just a debate on restart.
Aviation will recover, but going forward will be brutal.
All airlines will negotiate lower purchase pricing to some degree. Ok, unlikely DL on A330NEO and A220, but everything else is up for grabs.
A220 won't break even as early.
A320 profits will drop, but not go away.
A330NEO is in a bind. I expect AirAsiaX to talk to Boeing again.
A350 will have to reduce costs
A380 is basically done anyway, last parts in Toulouse, soon shut down Toulouse, and just cabin in Hamburg.
737 MAX production will restart at a slower rate breaking economy of scale.
747 is on the final production. Freight is ok, but too late for more.
767 tanker/freight sales are ironically pretty safe
787 will slow and the cash cow will be much less profitable.
777 will have to rely on freighters. The 777x probably be delayed.
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