SIA Cuts A350 Orders From 70 To 63 Airbus' Request

mffoda · Wed Jul 29, 2015 10:31 pm

I'm not sure what to make of this...

"SINGAPORE Airlines (SIA) has cut its order of Airbus 350s from 70 to 63 after a request by the plane manufacturer.

An Airbus spokesman told The Straits Times last night that the seven planes that have been released will be delivered to another airline.

She did not name the other carrier or elaborate on the terms of the deal with SIA, citing commercial confidentiality, but said that such agreements are occasionally struck with customers."

http://www.straitstimes.com/business...rs-from-70-to-63-at-airbus-request

ap305 · Wed Jul 29, 2015 10:33 pm

I would guess its a major customer if Leahy got SQ to drop orders

enilria · Wed Jul 29, 2015 10:34 pm

The probably "requested" SIA take the planes late and SIA "requested" they not come at all.

scbriml · Wed Jul 29, 2015 10:36 pm

Emirates, perhaps?

In reality, I'm not sure why SQ would need to actually cancel seven rather than just defer delivery of them. Odd.

AngMoh · Wed Jul 29, 2015 11:33 pm

Quoting scbriml (Reply 3):

In reality, I'm not sure why SQ would need to actually cancel seven rather than just defer delivery of them. Odd.

There were some (serious) aviation analysts (Leeham is one of them, I believe CAPA was the other) who listed SIA as one of the airlines who had over-ordered aircraft. This might be a good opportunity to correct that a bit. Their fleet size is around 110 WB aircraft and they had 105 on firm order (70x A350, 30x 787-10, 5x A380) and 20 options (20x A350). with recently having a lot of A333 and 77Ws delivered (I believe about 3-4 of them still to be delivered). Quite a few A350s were meant for growth. Unless they won't order anything else till 2022, which is unlikely considering the pace of aircraft development, it seems they have over ordered.

Or you can give a nice positive spin and these 7 turn into A350-900LRs when that version is ready to be announced

airbazar · Wed Jul 29, 2015 11:40 pm

Quoting ap305 (Reply 1):
I would guess its a major customer if Leahy got SQ to drop orders

A major customer wouldn't order only 7. There's something more to this story that we don't know.

ap305 · Wed Jul 29, 2015 11:43 pm

Quoting airbazar (Reply 5):
A major customer wouldn't order only 7. There's something more to this story that we don't know.

The 7 could be near term slots required to get the customer to commit.

81819 · Thu Jul 30, 2015 3:13 am

Quoting airbazar (Reply 5):
A major customer wouldn't order only 7. There's something more to this story that we don't know.

Boeing recently sold 787's to a new customer with deliveries starting in 2018.

I suspect an airline (QF) has cancelled 787's and ordered A350's!

Just a hunch!

PanAm_DC10 · Thu Jul 30, 2015 5:57 am

Quoting travelhound (Reply 7):
I suspect an airline (QF) has cancelled 787's and ordered A350's!

Just a hunch!

I'll second that hunch and say that these are early delivery slots for an impending order from QF

anstar · Thu Jul 30, 2015 6:12 am

Quoting PanAm_DC10 (Reply 8):
I'll second that hunch and say that these are early delivery slots for an impending order from QF

Would SIA really defer some deliveries for QF to benefit? I'm sure if they were asked, SIA would have wanted to know who the airline was that was benefitting?

seahawk · Thu Jul 30, 2015 6:19 am

Unless you have over ordered and are happy to get rid of those frames without having to compensate Airbus or find a taker yourself.

chiad · Thu Jul 30, 2015 6:20 am

Reuters report it too with some additional information.

http://www.reuters.com/article/2015/...s-airbus-sia-idUSL3N10A1G220150730

Still unclear though why Airbus would want this.

a320fan · Thu Jul 30, 2015 6:20 am

This is really weird. Why would Airbus ask a customer, a good one like SQ particularly, to cancel orders. There is certainly more to this.

a320fan · Thu Jul 30, 2015 6:22 am

Quoting travelhound (Reply 7):

Quoting airbazar (Reply 5):
A major customer wouldn't order only 7. There's something more to this story that we don't know.

Boeing recently sold 787's to a new customer with deliveries starting in 2018.

I suspect an airline (QF) has cancelled 787's and ordered A350's!

Just a hunch!

We can only Dream!

Highly unlikely though imo. I think QF is very committed to the 787.

PanAm_DC10 · Thu Jul 30, 2015 6:24 am

Quoting anstar (Reply 9):
Would SIA really defer some deliveries for QF to benefit?

I'm not really sure and as I noted it's just a hunch by me. That hunch is that QF will go with the A350 and these freed up slots might benefit Airbus in securing an A350 order from QF. Either way it's interesting that SQ have reduced their order at the request of Airbus and it looks like they have secured a good new order having placed the frames and we'll hear about it shortly.

Regards

A342 · Thu Jul 30, 2015 6:31 am

"The carrier also brought forward the deliveries of some of the other A350-900s it has on order and can extend the leases on some A330-300s it has in service, to meet its fleet renewal and growth plans, SIA said."

Doesn't sound like near-term overcapacity to me...

DeltaB717 · Thu Jul 30, 2015 6:31 am

Quoting PanAm_DC10 (Reply 14):

If you're right, and your theory does seem plausible to me, we may well find out at QF's financial results announcement next week. I guess, to answer the question of whether SQ would really cancel part of its order to benefit QF, it depends what SQ was offered and what information they had about why Airbus wanted those slots.

ap305 · Thu Jul 30, 2015 6:52 am

I would guess it's EK wanting slots in perhaps two years. It could also be a case of Airbus having already sold these slots to an Airline like DL and adjusting with other customers on an ongoing basis.

tommy1808 · Thu Jul 30, 2015 7:00 am

Quoting ap305 (Reply 6):
The 7 could be near term slots required to get the customer to commit.

yup.. The part of the airlines prefered delivery schedule that Airbus can't met with a revised production ramp up.
There must be some very strategic order behind this.

Best regards
Thomas

AirPacific747 · Thu Jul 30, 2015 7:39 am

I've spoken to a guy at EK management and he mentioned that they will receive the A350... so EK is very likely.

77west · Thu Jul 30, 2015 7:54 am

Quoting AirPacific747 (Reply 19):
I've spoken to a guy at EK management and he mentioned that they will receive the A350... so EK is very likely.

"Some guy"? EK cancelled their entire order if you remember. And EK don't order single digits.

AirPacific747 · Thu Jul 30, 2015 7:57 am

Quoting 77west (Reply 20):
"Some guy"? EK cancelled their entire order if you remember. And EK don't order single digits.

Not "some guy". I know exactly who he is, his name and his title, but I'm not going to write it here.

KarelXWB · Thu Jul 30, 2015 7:57 am

Quoting 77west (Reply 20):
And EK don't order single digits.

No, but perhaps they want a few early production slots and those seven airframes are part of a larger order.

77west · Thu Jul 30, 2015 8:06 am

Quoting KarelXWB (Reply 22):
No, but perhaps they want a few early production slots and those seven airframes are part of a larger order.

Possible, but why cancel and then re-order so soon afterwards? I could buy that they may cancel and re-order at a later date for a more capable model, but these slots would not have been significantly different from their old order, not so?

scbriml · Thu Jul 30, 2015 8:09 am

Quoting 77west (Reply 20):
EK cancelled their entire order if you remember.

And said their plans had changed and that they would reconsider the A350 as part of their upcoming order for 'regional' planes.

Quoting 77west (Reply 20):
And EK don't order single digits.

Who said they were only going to order the seven frames cancelled by SQ? The availability of these seven frames might be part of a bigger picture. All will be revealed in the fullness of time.

dare100em · Thu Jul 30, 2015 8:12 am

Quoting 77west (Reply 23):
Quoting KarelXWB (Reply 22):
No, but perhaps they want a few early production slots and those seven airframes are part of a larger order.

Possible, but why cancel and then re-order so soon afterwards? I could buy that they may cancel and re-order at a later date for a more capable model, but these slots would not have been significantly different from their old order, not so?

They are reconsidering the A350 - especially in the form of the A350-900 - since some time vs. the 787-10 as their "regional" plane. There where much talk about perfomance issues of the 787-10 on hot days at DBX. Furthermore the first in service planes at Quatar them to be doing very good, so that the perfomrance advantage of the (lighter) 787-10 to the A350-900 may be very small.

The original order of A350 was not desired for this purpose and had a lot A350-1000 included. This order was mostly replaced when Boeing developed the 777X in a direction that was optimized for EK.

Ruscoe · Thu Jul 30, 2015 8:18 am

Quoting a320fan (Reply 13):
Highly unlikely though imo. I think QF is very committed to the 787.

Yes I think they still are, but that does not mean they can't have 350 as well.

How many 380's is Qantas not going to take? 7? Might explain it.

Ruscoe

MrHMSH · Thu Jul 30, 2015 8:18 am

Quoting 77west (Reply 20):
"Some guy"? EK cancelled their entire order if you remember. And EK don't order single digits.

No they don't, but getting 7 A350s early could make a big difference to an airline ordering it, because they'll get 7 of their order early, and SQ are one of the early A350 customers (their 1st has already been assembled, but not yet flown). 2 big names have been mentioned, QF and EK. I'm watching with great interest.

qf340500 · Thu Jul 30, 2015 8:22 am

Interesting times ahead! Indeed, I think if Airbus asks one of his loyal customers to cancel orders it must have been:
- a part of a order of a major strategic client for Airbus to accommodate with the cancelled frames;
- a good deal for SQ (lease on the A330 extended at good conditions, aren't they lease from Airbus?, bringing forward of later delivery slots, they still have A350 options, correct?);
- a rather substantial order of that client

I would be happy if either of EK or QF would be that airline. Might they order it "together"?

speedbored · Thu Jul 30, 2015 8:24 am

I wouldn't read too much into this story - slot juggling like this goes on all the time. Sometimes as a result of requests from the airline due to changes in their operating environment (economic, competitive, fuel price, etc. etc.) and sometimes as a result of requests from the OEM (production or supplier issues, over selling, freeing early slots for sales campaigns, etc.).

We probably would not have even heard about this if SIA had decided to just defer those 7 slots, rather than cancel them.

I suspect that they decided on cancellation rather than deferral as they have, perhaps, decided that their expansion plans might have been a little over-optimistic given the competitive pressure being applied by the ME3.

Or maybe they have revised their fleet mix a little due to the rumoured enhancements to another type in their fleet

KarelXWB · Thu Jul 30, 2015 8:24 am

Quoting qf340500 (Reply 28):
they still have A350 options, correct

Yes, Airbus says the 20 A350 options remain unaffected.

http://www.reuters.com/article/2015/...s-airbus-sia-idUSL3N10A1G220150730

[Edited 2015-07-30 01:41:15]

Arniepie · Thu Jul 30, 2015 8:26 am

I don't see the logic of them (SIA) yielding delivery slots to an outright competitor like Emirates or Qantas.
It would make far more sense for them to give up their orders to accommodate a fellow STARALLIANCE member or code-share partner.

South African, Egyptair, more SAS orders or even a large TURKISH order would be more likely candidates IMHO.

[Edited 2015-07-30 01:27:40]

KarelXWB · Thu Jul 30, 2015 8:28 am

Quoting speedbored (Reply 29):
I suspect that they decided on cancellation rather than deferral as they have, perhaps, decided that their expansion plans might have been a little over-optimistic given the competitive pressure being applied by the ME3.

The article states that Airbus asked SQ to cancel 7 production slots, not the other way around.

chiad · Thu Jul 30, 2015 8:28 am

Quoting AirPacific747 (Reply 19):
I've spoken to a guy at EK management and he mentioned that they will receive the A350... so EK is very likely.

This sounds very plausible IMHO.
I think the Dubai Airshow will reveal a major A350XWB order together with the A380NEO launch.
And RR could get between 800 and 1000 engines added to their backlog.

speedbored · Thu Jul 30, 2015 8:37 am

Quoting KarelXWB (Reply 32):
The article states that Airbus asked SQ to cancel 7 production slots, not the other way around.

Actually, that is not what it says.

It says "SINGAPORE Airlines (SIA) has cut its order of Airbus 350s from 70 to 63 after a request by the plane manufacturer.".

That "request by the plane manufacturer" could just have been a request to reschedule some of their deliveries. I can't see any valid commercial reason why Airbus would ask for a cancellation when a simple reschedule would achieve the same result.

Quoting Arniepie (Reply 31):
I don't see the logic of them (SIA) yielding delivery slots to an outright competitor like Emirates or Qantas.

I would be very surprised if Airbus were able to tell SIA who the other airline is. Confidentiality is extremely tight before orders are announced.

77west · Thu Jul 30, 2015 8:41 am

Hey, Emirates could, well, pull an Emirates, and order both the A350 and the 787. 787-910 to cover shorter regional flying and replace 772773 non-ER and A359 to cover the slightly longer legged regional routes.

rheinwaldner · Thu Jul 30, 2015 8:45 am

And why SIA? Did Airbus also approach other A350 buyers? And they did not want to cancel?

If Airbus wants to get early slots, they would IMO first approach all orderers to defer some of their slots. Only second to cancel some of their slots...

speedbored · Thu Jul 30, 2015 8:50 am

Quoting rheinwaldner (Reply 36):
If Airbus wants to get early slots, they would IMO first approach all orderers to defer some of their slots.

John Leahy and his team are in contact with all of their customers on a very regular basis. I'm sure that they would have known exactly which airline(s) would have been most likely to be amenable to such a request, long before they asked.

Arniepie · Thu Jul 30, 2015 9:31 am

Quoting speedbored (Reply 34):
Quoting Arniepie (Reply 31):
I don't see the logic of them (SIA) yielding delivery slots to an outright competitor like Emirates or Qantas.

I would be very surprised if Airbus were able to tell SIA who the other airline is. Confidentiality is extremely tight before orders are announced.

I would be very surprised if SIA would agree upon doing something like that without knowing exactly why and who Airbus would accommodate, giving a potential competitor an advantage might not be what SIA wants to do.

Not saying that EK is not going to reorder the A350 @ the upcoming Dubai airshow but the 2 events shouldn't be automatically linked.

KarelXWB · Thu Jul 30, 2015 9:42 am

Quoting speedbored (Reply 34):
That "request by the plane manufacturer" could just have been a request to reschedule some of their deliveries. I can't see any valid commercial reason why Airbus would ask for a cancellation when a simple reschedule would achieve the same result.

Maybe, but I don't think I can agree with your overcapacity theory. SIA had 70 A350's, 30 78X and 5 A380's for a total of 105 airplanes on order. It's not like a cancellation of just 7 airplanes will suddenly resolve an overcapacity issue, if there is any.

[Edited 2015-07-30 02:48:15]

MEA-707 · Thu Jul 30, 2015 10:01 am

Quoting Arniepie (Reply 31):
It would make far more sense for them to give up their orders to accommodate a fellow STARALLIANCE member or code-share partner.

SQ never cared for or even liked their fellow Star Alliance members, I am sure they don't care much where these A350s will go, it will not make much difference for them if TAM (not a direct competitor) or EK or QF will fly them or another type on competing routes. 7 Airplanes CAN resolve an overcapacity issue, even on a scale of a fleet of about 110-130 it can make the difference between profit and loss. We will never know the exact reasons, perhaps a mix of Airbus hearing from SQ that they over ordered a little and other airlines willing to pick up these slots for more money or hearing from SQ they would be interested in more 380s or a new LR version of the 350 indeed but only if they could get rid of a few 350 orders without losing money.

qf789 · Thu Jul 30, 2015 10:05 am

I very much doubt QF will go A350 for the time being. Today QF pilots have backed the 787 in a new wage agreement.

http://www.smh.com.au/business/aviat...cept-pay-deal-20150730-ginhf3.html

http://www.ausbt.com.au/qantas-pilots-back-the-boeing-787-dreamliner

EPA001 · Thu Jul 30, 2015 10:31 am

Quoting ap305 (Reply 17):
I would guess it's EK wanting slots in perhaps two years.

Well, to make such an unusual request to a very loyal Airbus customer requires a major customer prospect imho.

Quoting KarelXWB (Reply 22):
No, but perhaps they want a few early production slots and those seven airframes are part of a larger order.

That sounds plausible.

Quoting qf340500 (Reply 28):

Interesting times ahead! Indeed, I think if Airbus asks one of his loyal customers to cancel orders it must have been:
- a part of a order of a major strategic client for Airbus to accommodate with the cancelled frames;
- a good deal for SQ (lease on the A330 extended at good conditions, aren't they lease from Airbus?, bringing forward of later delivery slots, they still have A350 options, correct?);
- a rather substantial order of that client

.

Quoting qf340500 (Reply 28):
I would be happy if either of EK or QF would be that airline. Might they order it "together"?

That would be great! But let's wait and see what will happen at the upcoming Dubai Air Show.

speedbored · Thu Jul 30, 2015 11:28 am

Quoting KarelXWB (Reply 39):
It's not like a cancellation of just 7 airplanes will suddenly resolve an overcapacity issue, if there is any.

Not sure I ever mentioned overcapacity but, regardless, airlines plan their fleets with far greater accuracy than 7 frames these days. Long gone are the days when they were happy having spare frames sitting around doing nothing. We've seen order adjustments of as little as 1 or 2 frames before now.

Quoting Arniepie (Reply 38):
I would be very surprised if SIA would agree upon doing something like that without knowing exactly why and who Airbus would accommodate, giving a potential competitor an advantage might not be what SIA wants to do.

Well it happens pretty regularly. Airbus (and Boeing and other manufacturers) will almost always be restricted under client confidentiality agreements from revealing this sort of information to a competitor during a sales campaign.

As I've said in a previous post, they keep in regular contact with their customers so they will usually know which, if any, airlines might be happy to make changes. The airline making the change agrees because it is in their interests to do so, either because their situation has changed and they want to anyway, or because they are offered other incentives.

SIA747Megatop · Thu Jul 30, 2015 11:30 am

My guess (or wish rather) is that they're making way for a ULH version of the A350 to put on those nonstop flights to the U.S.

Quoting MEA-707 (Reply 40):
SQ never cared for or even liked their fellow Star Alliance members

SIA has expanded codeshare agreements with TK, BR, OZ and launched a JV with NZ in the last couple of years.

mffoda · Thu Jul 30, 2015 11:36 am

Quoting chiad (Reply 11):

Reuters report it too with some additional information.

http://www.reuters.com/article/2015/...s-airbus-sia-idUSL3N10A1G220150730

Still unclear though why Airbus would want this.

Here's an interesting line from that update...

"Operating profit at the flagship full-service carrier increased to S$108 million from S$45 million, largely due to lower fuel costs and revenues from the sale of the seven production slots."

KarelXWB · Thu Jul 30, 2015 11:40 am

What does that mean, SQ sold seven production slots to another airline?

mffoda · Thu Jul 30, 2015 11:48 am

Quoting KarelXWB (Reply 46):
What does that mean, SQ sold seven production slots to another airline?

That's the mystery everyone is looking to solve... But, perhaps the last sentence of the article provides a clue?

"Looking ahead, SIA said that passenger and air cargo yields would remain under pressure in the July-September quarter due to a competitive environment and over-capacity."

http://www.reuters.com/article/2015/...s-airbus-sia-idUSL3N10A1G220150730

HALtheAI · Thu Jul 30, 2015 11:52 am

I don't think it's EK. Why cancel your original order, which would've had quite a few early delivery slots, just to re-order a few years later and pay another airline to get ahold of some timely production slots?

I believe TK is more likely. Has TK ordered any next-gen widebodies? A quick Wikipedia check says they don't have any 787s, A350s, or 777Xs on order.

KarelXWB · Thu Jul 30, 2015 11:58 am

Quoting HALtheAI (Reply 48):
Has TK ordered any next-gen widebodies?

No, not yet.

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