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KarelXWB
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AerCap: planned narrowbody production rates are unrealistic

Wed Jan 20, 2016 11:32 am

AerCap CEO and a few others think single aisle production at 60 frames per month is unrealistic.

AerCap, the world’s biggest aircraft lessor, has doubts about Airbus plans to increase single-aisle production to 60 aircraft per month.

“I don’t think Airbus will go to 60,” AerCap CEO Aengus Kelly told Aviation Daily. “They will be flexible and will not put carriers into bankruptcy [by insisting on deliveries]. You can always pull back production.”

Kelly contends Airbus will eventually realize that 60 is too high. Other lessors have voiced concerns about the planned output, too.


Source
http://www.aviationweek.com/commercial- ... nrealistic
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moo
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RE: AerCap: High Single Aisle Output Is Unrealistic

Wed Jan 20, 2016 11:39 am

Of course, higher production rates don't do much for lessor profits, now do they...
 
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scbriml
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RE: AerCap: High Single Aisle Output Is Unrealistic

Wed Jan 20, 2016 11:45 am

Methinks the lady doth protest too much!

Quoting moo (Reply 1):
Of course, higher production rates don't do much for lessor profits, now do they...

Exactly. Also, remind me how many neo sales are to leasing companies?   
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Egerton
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RE: AerCap: High Single Aisle Output Is Unrealistic

Wed Jan 20, 2016 12:58 pm

Today, wise airlines will continuing to order more proven 'old tech' models rather than pay a premium price for un-proven 'new tech'. On 'new tech' narrow bodies, the A320neo line is better than the 737MAX line. On old tech, the A320ceo is at least on a par with the 737 NG.

Thus maybe Airbus is less likely to suffer than Boeing if the market slows? Some 737s are preferred only because of lack of availability of A320s. Maybe Boeing is the one who should reconsider not increasing the production rates of its narrow bodies?

If demand cannot be satisfied by the combined output of the big two, then others will step in which will be an own goal.

I cannot predict tomorrows oil or fuel price, still less can I predict those for 2025. But there does seem to be a huge glut of oil being dug out of the ground, and plenty more where that came from, namely the existing low cost producers. If you happen to go digging for oil in the Arctic, in deep water or in places without law and order then you will loose your shirt. But we customers will not cry for you. We win.

Cheap oil gives us lower ticket prices, so the rate of passenger growth will be higher than normal. 'Old tech' aeroplanes will be used in greater numbers and kept longer than generally has been the case. Hence the concern of AerCap, together with self interest. As has been said, lessors like a shortage of supply.
 
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KarelXWB
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RE: AerCap: High Single Aisle Output Is Unrealistic

Wed Jan 20, 2016 1:01 pm

Quoting Egerton (Reply 3):
Today, wise airlines will continuing to order more proven 'old tech' models rather than pay a premium price for un-proven 'new tech'.

However, production of the 'old tech' will cease around 2019/2020.
What we leave behind is not as important as how we've lived.
 
Egerton
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RE: AerCap: High Single Aisle Output Is Unrealistic

Wed Jan 20, 2016 2:39 pm

Quoting KarelXWB (Reply 4):
However, production of the 'old tech' will cease around 2019/2020.

Thanks, agreed. Airbus will manufacture whatever its customers require, and could easily keep ceo and neo coming down the line together as they are now. Ditto A330. This may discomfort neo engine suppliers, but given the choice of no sale to a ceo sale, what would you do? There are lead times involved of course. This cheap oil thing will upset a lot of apple carts.
 
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Polot
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RE: AerCap: High Single Aisle Output Is Unrealistic

Wed Jan 20, 2016 2:44 pm

Quoting Egerton (Reply 5):

Thanks, agreed. Airbus will manufacture whatever its customers require, and could easily keep ceo and neo coming down the line together as they are now. Ditto A330. This may discomfort neo engine suppliers, but given the choice of no sale to a ceo sale, what would you do?

Or Airbus will just drop the ceo, leaving the customer with no option while saving themselves money   Especially as they know Boeing won't keep producing the NG forever either.
 
Egerton
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RE: AerCap: High Single Aisle Output Is Unrealistic

Wed Jan 20, 2016 3:01 pm

Quoting polot (Reply 6):
Or Airbus will just drop the ceo, leaving the customer with no option while saving themselves money

Thanks. Was it Henry Ford who said "Any customer can have a car painted any colour he wants so long as it is black."?
In business it is usually best to listen to what the customer is telling you.

[Edited 2016-01-20 07:03:04]
 
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Polot
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RE: AerCap: High Single Aisle Output Is Unrealistic

Wed Jan 20, 2016 3:16 pm

Quoting Egerton (Reply 7):
In business it is usually best to listen to what the customer is telling you.

To an extent yes, but you shouldn't listen too much. Contrary to the saying, the customer is not always right. Airbus knows the best way to make money producing planes; their airline customers do not.

At some point Airbus is going to say nope, we don't want to make and sell lower margin ceos anymore. We need the production space/slots for higher margin neos.
 
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KarelXWB
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RE: AerCap: High Single Aisle Output Is Unrealistic

Wed Jan 20, 2016 3:19 pm

Quoting Egerton (Reply 5):
but given the choice of no sale to a ceo sale

No sale is not really an option when the airline is in the need of new aircraft. When the CEO is dropped from the product catalog, NEO is the only option to go.

Quoting Egerton (Reply 7):
In business it is usually best to listen to what the customer is telling you.

Yes, except Boeing and Airbus have a duopoly position. Airlines can't go shopping elsewhere. So when both OEM's drop the current generation aircraft from the order book, new generation is the only way to go.

[Edited 2016-01-20 07:19:48]
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scbriml
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RE: AerCap: High Single Aisle Output Is Unrealistic

Wed Jan 20, 2016 3:22 pm

Quoting polot (Reply 8):
At some point Airbus is going to say nope, we don't want to make and sell lower margin ceos anymore. We need the production space/slots for higher margin neos.

Their engine manufacturers and suppliers will also want to switch completely to the new product as well.
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Egerton
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RE: AerCap: High Single Aisle Output Is Unrealistic

Wed Jan 20, 2016 8:56 pm

Quoting polot (Reply 8):
Quoting KarelXWB (Reply 9):
Quoting scbriml (Reply 10):

Gentlemen, thanks. I note what you each have written.

If two companies abuse their duopoly, the result will be a legal action to break up their firms into smaller units.

This goes way back to 1911, when Rockerfeller's Standard Oil monopoly was broken up in an anti-trust case into multiple smaller firms. In the UK for instance the Competition & Markets Authority does much the same thing. Ditto the EU, it has a Competition Commissioner with a big department.

In any case, Airbus are not so stupid as to abuse their half of the duopoly, I can't speak about the other half which has been surrendering market share for years.
 
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moo
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RE: AerCap: High Single Aisle Output Is Unrealistic

Wed Jan 20, 2016 9:39 pm

Quoting Egerton (Reply 11):

If two companies abuse their duopoly, the result will be a legal action to break up their firms into smaller units

Choosing to update a product has never been considered "abuse", nor could it ever be.
 
Bongodog1964
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RE: AerCap: High Single Aisle Output Is Unrealistic

Wed Jan 20, 2016 10:05 pm

It wasn't so long ago that 20 per month seemed unsustainable. Its a number of years now that doommongers have been predicting that lots of orders will never be delivered, but production still climbs. I wouldn't bet against 60 per month for both the 320 and 737
 
Egerton
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RE: AerCap: High Single Aisle Output Is Unrealistic

Wed Jan 20, 2016 10:19 pm

Quoting moo (Reply 12):
Choosing to update a product has never been considered "abuse", nor could it ever be.

What about "New Coke" back in the 1980s? There was a smart U-turn back to listening to their customers!
 
B777LRF
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RE: AerCap: High Single Aisle Output Is Unrealistic

Wed Jan 20, 2016 10:43 pm

Mmmm, and if turkey's could publish magazines I'll bet you a fiver a headline would come out around November time, trumpeting a new and horrible way to meet your premature end, if you so much as think about ingesting turkey in any shape or form.

High production rates gives the ultimate customer, the airlines, more choices and erodes the value of a leasing company's inventory. If i was hired to protect that market, would likely be found near some headline too, peddling a similar version of marketing bovine excrement.

Airbus have, what, a 4.5 year backlog on the neo line? If they don't up their rates, chances are high they'll send potential customers in the direction of a competitor, perhaps even Mirabel.
Signature. You just read one.
 
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scbriml
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RE: AerCap: High Single Aisle Output Is Unrealistic

Wed Jan 20, 2016 10:50 pm

Quoting Egerton (Reply 14):
What about "New Coke" back in the 1980s? There was a smart U-turn back to listening to their customers!

I'm not sure why we're comparing a 50p soft drink with a £75m airliner, but even then it's not abuse of market position. In Coke's case, just a bad decision.
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trex8
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RE: AerCap: High Single Aisle Output Is Unrealistic

Wed Jan 20, 2016 11:02 pm

Quoting scbriml (Reply 16):
I'm not sure why we're comparing a 50p soft drink with a £75m airliner, but even then it's not abuse of market position. In Coke's case, just a bad decision.

I was just at Heathrow last week, the machines arent selling Coke at 50p. let alone the restaurants! Maybe per can in a case at Tescos!
 
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RE: AerCap: High Single Aisle Output Is Unrealistic

Thu Jan 21, 2016 12:59 am

Quoting Egerton (Reply 3):
'Old tech' aeroplanes will be used in greater numbers and kept longer than generally has been the case.

Have you looked at any US carrier over the last 20 years. Especially Delta Keeping aircraft way longer than Other airlines around the world. They have already been keeping them longer. The only interest AerCap has is keeping airlines joked on old frames they can continue to lease out for more than they or worth. Keping them making boatloads while the airlines fight to control cost.
 
PlanesNTrains
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RE: AerCap: High Single Aisle Output Is Unrealistic

Thu Jan 21, 2016 5:33 am

Quoting Egerton (Reply 3):
Thus maybe Airbus is less likely to suffer than Boeing if the market slows?

I agree. Right now there is a clear disparity between the neo and the MAX, favoring the neo. We've heard the rational explanations that neither manufacturer can meet all the demand. However, if they raise production and the market collapses. I would think that Airbus would be able to open slots and win some RFP's that in a better economy might have gone to Boeing by default.

Just my 2 cents.

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astuteman
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RE: AerCap: High Single Aisle Output Is Unrealistic

Thu Jan 21, 2016 6:23 am

Quoting B777LRF (Reply 15):
Airbus have, what, a 4.5 year backlog on the neo line?

The A320 backlog is about 5 700.
That's 11 1/2 years at today's rate. And about 8 years at the projected 63 per month ....

I don't see what choice they have..

By the way, catch this rebuttal of the Aercap view in Forbes, by, of all people, Richard Aboulafia

http://www.forbes.com/sites/richarda...-of-talk/#2715e4857a0b945f56a15820

Quote:
There are three excellent reasons for this:.......Crowd Out The CSeries.....Make Boeing Stumble....Maximize The Time Advantage

Rgds
 
PlanesNTrains
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RE: AerCap: High Single Aisle Output Is Unrealistic

Thu Jan 21, 2016 6:28 am

Quoting astuteman (Reply 20):
That's 11 1/2 years at today's rate

That's crazy. (It's just a statement, not picking any fights!)  
Quoting astuteman (Reply 20):

Quote:
There are three excellent reasons for this:.......Crowd Out The CSeries.....Make Boeing Stumble....Maximize The Time Advantage

Makes sense.

-Dave
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MAX’d out on MAX threads. If you are starting a thread, and it’s about the MAX - stop. There’s already a thread that covers it.
 
OMP777X
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RE: AerCap: High Single Aisle Output Is Unrealistic

Thu Jan 21, 2016 6:47 am

Quoting Egerton (Reply 14):
What about "New Coke" back in the 1980s? There was a smart U-turn back to listening to their customers!

I was a huge fan of Coke II, but they dropped the ball on that one and stopped making it. Now they're operating with one less customer these days. At least Crystal Clear Pepsi is making a comeback!

Either way, no matter how many NEO's they make each month, I'll just be glad to see more new airliners hitting the market. The CEO's are old news. The MAX will be great to see as well, regardless of its performance and capabilities.

Best,

OMP777X
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bjorn14
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RE: AerCap: High Single Aisle Output Is Unrealistic

Thu Jan 21, 2016 8:08 am

What puzzles me is that Airbus is only doing 6 frames a month at Mobile into the medium term. With the backlog they have I could get a C919 faster.  
"I want to know the voice of God the rest is just details" --A. Einstein
 
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KarelXWB
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RE: AerCap: High Single Aisle Output Is Unrealistic

Thu Jan 21, 2016 9:55 am

Quoting Egerton (Reply 14):
What about "New Coke" back in the 1980s? There was a smart U-turn back to listening to their customers!

That's a different story as people would buy Pepsi instead. They had an alternative. In a duopoly like Boeing and Airbus, there's no alternative.
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scbriml
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RE: AerCap: High Single Aisle Output Is Unrealistic

Thu Jan 21, 2016 2:42 pm

Quoting KarelXWB (Reply 24):
That's a different story as people would buy Pepsi instead. They had an alternative. In a duopoly like Boeing and Airbus, there's no alternative.

To be fair, the Coke/Pepsi duopoly is probably as globally dominant as the Airbus/Boeing one.
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RE: AerCap: High Single Aisle Output Is Unrealistic

Thu Jan 21, 2016 7:39 pm

Airbus FALs and Plants are also today in preparation for 60+ a month. Airbus UK in Broughton is in the process of building new automated drilling machines in the current A320 factory which will have the capacity of more than 60 a month.
Hamburg is adding a third assembley line in an ex A380 building, again with the intention of enduring 60+ aircraft are assembled a month.
I'm sure we'll see rate rises in both Tainjin and Mobile within the next 12 months or so. Unsure about Toulouse as their A320 output isn't as large as Hamburg's as they have exclusive final assembley build of the A330 & A350, as well as a large slice of A380.
 
r2rho
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RE: AerCap: High Single Aisle Output Is Unrealistic

Fri Jan 22, 2016 2:35 pm

Quoting astuteman (Reply 20):
The A320 backlog is about 5 700.
That's 11 1/2 years at today's rate. And about 8 years at the projected 63 per month ....

The backlog is so huge and so long, that, even if hypotehtically there were massive cancellations at some point, bringing the backlog to say 4 years, A&B would still have time to react and ramp down within those 4 years.
 
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RE: AerCap: High Single Aisle Output Is Unrealistic

Fri Jan 22, 2016 3:01 pm

Yet the NEO's backlog is amazing. It is getting the engines going. Pratt is having EIS issues, but will do well before MAX EIS.

Some is Airbus and Boeingtrying to kill off the C-series. They could succeed. NEO+MAX+C-series+MC-21+C919 will be too much. Let us see how the market develops. I have my favorites.

Quoting Egerton (Reply 3):
Today, wise airlines will continuing to order more proven 'old tech' models rather than pay a premium price for un-proven 'new tech'.

I heard that when the 737NG came out. Then watched demand shift to the newer aircraft.

You do realize the new engines have predictive maintenance. Currently it is 90% 'reactive' maintenance. Maintenance That hat customers never know about is cheaper than maintenance they do.

You do realize CFM is having trouble selling their last slots? CFM would live to keep the engines in volume production. So would Pratt with the V2500. The market has demanded a fast switch.

Thanks to the healthy backlog, Airbus could ramp production faster, but only if customers settled for older engines, in particular the CFM-56 (CFM's scale would allow them to keep more production going than Pratt/IAE).

Quoting Richards2K14 (Reply 26):
Airbus FALs and Plants are also today in preparation for 60+ a month. A

The whole vendor chain, excluding CFM, is ready. CFM *must* ramp on both volume platforms with new materials and new manufacturing processes.

Quoting bjorn14 (Reply 23):
What puzzles me is that Airbus is only doing 6 frames a month at Mobile into the medium term. With the backlog they have I could get a C919 faster.

Exactly when are you betting on C919 EIS?   I have no confidence on certain subsystems.

Lightsaber
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Egerton
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RE: AerCap: High Single Aisle Output Is Unrealistic

Fri Jan 22, 2016 3:13 pm

Quoting lightsaber (Reply 28):
Thanks to the healthy backlog, Airbus could ramp production faster, but only if customers settled for older engines, in particular the CFM-56 (CFM's scale would allow them to keep more production going than Pratt/IAE).

Thanks. In view of recent events I should have suggested:

Quoting Egerton (Reply 3):
Today, wise airlines will continuing to order more proven 'old tech' models rather than pay a premium price for un-proven 'new tech'. which may be subject to long delivery delays?
 
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RE: AerCap: High Single Aisle Output Is Unrealistic

Fri Jan 22, 2016 3:37 pm

Quoting PlanesNTrains (Reply 21):
That's crazy. (It's just a statement, not picking any fights!)

Unprecedented is another word that comes to mind.

Unlike Aercap, I don't think 60 will be enough.

Rgds
 
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RE: AerCap: High Single Aisle Output Is Unrealistic

Fri Jan 22, 2016 3:53 pm

Quoting astuteman (Reply 30):
Unlike Aercap, I don't think 60 will be enough.

Me neither. It's going to be difficult to keep those new entrants out of the market if the backlog remains so long (assuming the new entrants get their acts together, of course).

10+ years of backlog gives Airbus plenty of time to ramp up and ramp back down again if things start to slow back down in future. Even the few years shorter backlog that Boeing has at the moment gives them plenty of wiggle room as well, and the longer backlog at Airbus is going to help Boeing.

I can certainly see one or two more rate increases to be announced over the next few years before things finally settle down.
 
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RE: AerCap: High Single Aisle Output Is Unrealistic

Fri Jan 22, 2016 5:18 pm

Quoting astuteman (Reply 30):
Unlike Aercap, I don't think 60 will be enough.

Agreed. But I do believe the sum is too much. Airbus will be one of the winners.

Rather than be negative, I'll just say the other 4 will have to prove themselves. The PW1100G is, per LH, 1% or 2% better than promise on fuel burn. See the LH EIS thread. This means all promised missions will be performed for the NEO.  LH Receives First A320neo, Becomes Launch Operator (by KarelXWB Jan 20 2016 in Civil Aviation)

Lightsaber

[Edited 2016-01-22 09:20:07]
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PlanesNTrains
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RE: AerCap: High Single Aisle Output Is Unrealistic

Fri Jan 22, 2016 9:05 pm

Quoting astuteman (Reply 30):

Quoting PlanesNTrains (Reply 21):
That's crazy. (It's just a statement, not picking any fights!)

Unprecedented is another word that comes to mind.

A much better word.

Quoting lightsaber (Reply 32):
Agreed. But I do believe the sum is too much. Airbus will be one of the winners.

I agree. I think Boeing has a lot to lose over the next 10 years in NB market share. If demand remains high they'll do ok, but if it drops, and Airbus keeps it's production high, Boeing will suffer. Not as bad as the CSeries or the other new entrants on the horizon, but certainly quite a bit.

I think five years from now you could see some real price pressure on the MAX. It'll be interesting to see if they go for market share or profit.

-Dave
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RE: AerCap: High Single Aisle Output Is Unrealistic

Fri Jan 22, 2016 9:27 pm

Quoting moo (Reply 1):
Of course, higher production rates don't do much for lessor profits, now do they...
Quoting scbriml (Reply 2):
Exactly. Also, remind me how many neo sales are to leasing companies?

The key question, if more and more airlines lease versus purchase one would expect their voice / influence to rise.
 
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KarelXWB
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Narrowbody Order Bubble Keeps Building

Tue May 24, 2016 12:50 pm

AirInsight published a good read on the narrowbody backlog of both Boeing and Airbus. It concludes:

Quote:
Our view is that despite traffic growth, we see production of A320s and 737s exceeding market ability to deploy the aircraft.

Article:
http://airinsight.com/2016/05/19/bubble-keeps-building/

----------

Even John Leahy admits some A320s on order will probably never be delivered. What happens if or when the bubble burst? Some airlines might go bankrupt due to high cancellation fees, while Airbus and Boeing will be stuck with their high production rates.
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RL757PVD
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RE: Narrowbody Order Bubble Keeps Building

Tue May 24, 2016 1:30 pm

and what's going to pop it? ... a severe lack of pilots!

Airlines aren't concerned because they can simply reduce flying and raise fares, but flight training is a fraction of what it used to be, its still not a lucrative career prospect when you compare pay to cost of training....so 5-10 years from now, we are in for a rude awakening.
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Amiga500
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RE: Narrowbody Order Bubble Keeps Building

Tue May 24, 2016 1:35 pm

To be honest, i thought it was a pretty bad article. Poor statistical presentation, in both methods used and pertinent information.


Given aircraft life is somewhere around 20-25 years, why do the charts only go back 15 years? If we cannot correlate delivery rates in 1990-1995 to retirement rates in 2010-2015 then what do we know about the market trends? [i.e. if delivery rate in 1990 was 100 aircraft/year from Airbus & Boeing, but in 1995 it was 200 aircraft/year and 2000 it was 300 aircraft/year - that will mean we can expect to see rises in retirement rates over the next 5 year period.


On chart 2, if I'm reading it right, the retirements/delivery is remarkably stable. This refutes all evidence of a delivery bubble.


On the 3rd chart, you cannot present aircraft rate in thousands against growth rate in percent. Non-sensical. Present percentage aircraft fleet growth year on year to be comparable.
For instance, assuming the numbers are right, the Airbus fleet has risen from 1000 to 4000 aircraft since 2000. Sounds like the Titanic at full steam onto the Iceberg... till you realise its just a continuous 10% year on year growth.
The 737? A 5% year on year growth.

Chart 4 would reinforce my first point - average growth rates (and frequencies) between 1994-2000 look similar to that of average 2000-2008 (excusing the 2002 blip) - which means retirement rates should be picking up.


As for 737 deliveries - surely this will depend on order blocks. i.e. if Ryanair ordered a load of 737s, they'd be expecting a block delivery of them. Which would lead to the seeming disparity vis-a-vis the rest of the world over just 4 months. What would be more legible from the table is that the trend would be for an annual delivery rate of 438 aircraft, down from 466 (2014) and 474 (2015).



---------------------------------------------------------------------------------------------------------------------------------------------------------

The order bubble does keep building. But there is evidence the delivery bubble does not. Neither Airbus or Boeing are betting the house on the order bubble being sustainable - hence why the backlogs are so long - furthermore build rates can be brought down again without anything-like-terminal consequences for either company.


Some of their suppliers on the other hand, they'd be much more exposed to a delivery burst. But, I don't believe that will happen - you may see some slight corrections to output rates, but not major IMO.
 
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KarelXWB
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Re: AerCap: High Single Aisle Output Is Unrealistic

Thu Aug 03, 2017 9:58 pm

Gonna bump this thread.

Lessor ALC joins AerCap and shares similar feelings about the planned production rates:

"I would strong encourage the OEMs to carefully review the production rates closely and realistically," says ALC chair Udvar-Hazy


https://twitter.com/e_russell/status/893211657647906820

Woah. The Godfather of leasing just said: “It would be a shame if something happened to your single-aisle production rates."


https://twitter.com/jonostrower/status/ ... 5967676416

Somebody is ringing the alarm bells. Rate 60 is unrealistic. It probably means that many aircraft in backlog will never be delivered, i.e. there is a bubble.
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Re: AerCap: planned narrowbody production rates are unrealistic

Thu Aug 03, 2017 10:14 pm

Boeing is also going to do 57/month in 2019?
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ikolkyo
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Re: AerCap: planned narrowbody production rates are unrealistic

Thu Aug 03, 2017 10:17 pm

Can't blame them, do people really think airlines like Air Asia, Indigo and Lion Air are going to all those aircraft on order?
 
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Re: AerCap: planned narrowbody production rates are unrealistic

Thu Aug 03, 2017 10:30 pm

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flee
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Re: AerCap: planned narrowbody production rates are unrealistic

Fri Aug 04, 2017 1:37 am

ikolkyo wrote:
Can't blame them, do people really think airlines like Air Asia, Indigo and Lion Air are going to all those aircraft on order?

I note that Airasia's leasing arm, Asian Aviation Capital, are "trading" in aircraft too - several of Airasia's aircraft were sold last year. So, it does not mean that a 500 order book will translate into a 500 aircraft fleet. They do retire and scrap aircraft from time to time - new aircraft ordered are not just for expansion, they are also for replacement for old and worn aircraft.

Currently, Airasia are leasing more aircraft from third party lessors (e.g. ex-Frontier A320s are inducted in India) - additional aircraft are being added that are not in their current order book. This is due to non availability of new build production slots from Airbus and they needed the aircraft for expansion right now.

With new affiliates scheduled to come online in Japan, Vietnam, Cambodia and China in the next few years, I think Airasia is most likely to need all those aircraft on order, maybe more.
 
Rdh3e
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Re: AerCap: planned narrowbody production rates are unrealistic

Fri Aug 04, 2017 1:36 pm

flee wrote:

Those are fair points for a single carrier, but then there are the second order impacts. Say they are able to fulfill the order and expand by some factor, what happens to the order book of the competitors they are trouncing?

There will need to be sufficient organic growth in the travel market (at equivalent yields) in order for these orders to become reality. Count me as a skeptic.
 
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MoKa777
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Re: AerCap: planned narrowbody production rates are unrealistic

Fri Aug 04, 2017 2:03 pm

KarelXWB wrote:
AerCap CEO and a few others think single aisle production at 60 frames per month is unrealistic.

AerCap, the world’s biggest aircraft lessor, has doubts about Airbus plans to increase single-aisle production to 60 aircraft per month.

“I don’t think Airbus will go to 60,” AerCap CEO Aengus Kelly told Aviation Daily. “They will be flexible and will not put carriers into bankruptcy [by insisting on deliveries]. You can always pull back production.”

Kelly contends Airbus will eventually realize that 60 is too high. Other lessors have voiced concerns about the planned output, too.


Source
http://www.aviationweek.com/commercial- ... nrealistic


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Polot
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Re: AerCap: planned narrowbody production rates are unrealistic

Fri Aug 04, 2017 2:09 pm

Rdh3e wrote:
flee wrote:

Those are fair points for a single carrier, but then there are the second order impacts. Say they are able to fulfill the order and expand by some factor, what happens to the order book of the competitors they are trouncing?

There will need to be sufficient organic growth in the travel market (at equivalent yields) in order for these orders to become reality. Count me as a skeptic.

:checkmark: It is actually the exact same argument people make in regards to the A380/EK (If EK didn't have so many A380s other airlines would have more so the orderbook would be about the same). Its just the narrowbody market is a lot larger so it will never get into a situation where Boeing/Airbus are dependent on one carrier, but they may be too optimistic about how many they can place. Of course because the narrowbody market is larger Boeing/Airbus are also more willing to take risks with large orders from currently small carriers.
 
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william
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Re: AerCap: planned narrowbody production rates are unrealistic

Fri Aug 04, 2017 2:20 pm

ikolkyo wrote:
Can't blame them, do people really think airlines like Air Asia, Indigo and Lion Air are going to all those aircraft on order?


So true.
 
mjoelnir
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Re: AerCap: planned narrowbody production rates are unrealistic

Fri Aug 04, 2017 2:39 pm

It is easy to say rate 63, the actual aim of Airbus, is to high. The backlog of A320 family aircraft neo and ceo are around 5580 frames. Rate would 63 would mean about 750 frames a year. That is over 7 years backlog at that rate. There is no way Airbus should run a lower rate of production. If the backlog stops growing or failurs of airlines would reduce the backlog, Airbus can slow production again. With a backlog of 5580 orders even loosing something like a 1000 orders through cancellation in the near future, would move Airbus to about the position were Boeing is today with 737 unfilled orders.
Even at the lower backlog of the 737 at Boeing a sudden loss of quite a few orders through cancellation would not spell immediate disaster. at the projected rate of 57 frames a month.
 
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flee
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Re: AerCap: planned narrowbody production rates are unrealistic

Fri Aug 04, 2017 2:51 pm

Rdh3e wrote:
flee wrote:

Those are fair points for a single carrier, but then there are the second order impacts. Say they are able to fulfill the order and expand by some factor, what happens to the order book of the competitors they are trouncing?

There will need to be sufficient organic growth in the travel market (at equivalent yields) in order for these orders to become reality. Count me as a skeptic.

I think many people might be sceptical - just as they were when fledgeling LCCs and the ME3 first opened for business.

We are not looking at only 1 or 2 years ahead - we are thinking in terms of the next 5 or 10 years. There are still many markets that are to be developed - even if 2,000 orders are cancelled overnight, it will only reduce outstanding orders by about 2-3 years and there is still 4-5 years of production (at rate 60) to fulfill. I am sure companies like Boeing and Airbus will be able to adjust production, given 5 years' notice!
 
Rdh3e
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Joined: Wed Mar 30, 2011 2:09 pm

Re: AerCap: planned narrowbody production rates are unrealistic

Fri Aug 04, 2017 3:36 pm

flee wrote:
We are not looking at only 1 or 2 years ahead - we are thinking in terms of the next 5 or 10 years. There are still many markets that are to be developed - even if 2,000 orders are cancelled overnight, it will only reduce outstanding orders by about 2-3 years and there is still 4-5 years of production (at rate 60) to fulfill. I am sure companies like Boeing and Airbus will be able to adjust production, given 5 years' notice!

But the airlines with later slots may not want their deliveries advanced by 2 years. That is the problem. It would force them to lower the rate.

I don't care either way, but just stating the length of the backlog really isn't a meaningful way to assess the damage of large cancellations.

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