A320neo lures customers, awakens Boeing.

Malaysian low-cost carrier AirAsia has modified its fleet plans to accommodate possible acquisition of the Airbus A320neo, thus joining a number of potential owners or operators showing interest in the re-engined aircraft.

1st Mar 2011


Malaysian low-cost carrier AirAsia has modified its fleet plans to accommodate possible acquisition of the Airbus A320neo, thus joining a number of potential owners or operators showing interest in the re-engined aircraft.

 

Airbus formally offered the latest A320-family model in December and positive industry reaction is stimulating arch-rival Boeing to comment on its own single-aisle product development ideas.

 

In mid-January, Virgin America placed the first airline order for A320neo variants, committing to 30 aircraft about a week after Indian low-cost carrier (LCC) IndiGo had agreed to take up to 150. Both airlines included the re-engined model in larger A320 deals, without clarifying they preferred the Pratt & Whitney PW1100G geared turbofan (GTF) engine, or the alternative CFM International Leap-X powerplant.

 

Having deferred delivery of ten A320s from 2012 to 2015, Air Asia says that the move provides "flexibility to switch" to the more fuel-efficient A320neo, which is expected to enter service in 2016. An A320 purchase agreement initiated in March 2005 covered orders for 175 machines, of which some 23 deliveries have previously been deferred in two batches because of "infrastructural constraints" at destination airports. The airline has said it incurs no financial penalty in relation to the latest delivery revision.

 

According to Teal Group analyst Richard Aboulafia, Airbus’s decision to launch the A320neo was the best move the manufacturer could make, given that Boeing has taken its time deciding on further development or replacement of the 737.

 

Aboulafia told February's US Pacific Northwest Aerospace Alliance conference that there could be "a defection from the 737 to the A320neo or to the planned Bombardier C Series" by the end of this year. Speaking ahead of new remarks from Boeing officials about possible 737 decisions, Aboulafia said Airbus and Boeing will see single-aisle aircraft deliveries falling around 2015 as owners delay deliveries and begin to await newer aircraft.

 

Boeing expects to continue developing incremental 737 improvements, according to recently reported internal company comments made by Commercial Airplanes division Chief Executive Officer Jim Albaugh. Considerations include an updated flight deck, and the manufacturer confirms there will be upgrades whatever decision it makes about a possible replacement.

 

Airbus Chief Operating Officer (Customers) John Leahy predicted in early 2010 that if a re-engined A320 were offered, Boeing would immediately counter with a clean-sheet design for launch in 2020.

 

That prophecy appeared to many observers to have been fulfilled in February, when Boeing group CEO Jim McNerney said the US manufacturer was doing "a new airplane", without elaborating. Days later, other Boeing officials, speaking at the unveiling of the 747-8 Intercontinental, were characterising that  development also as "all new" and "brand new" – despite its appearance to the layman as having very much in common with earlier models.

 

Leasing companies are also among those expressing early interest in the re-engined A320. Airbus confirms that it has been holding preliminary discussions with Air Lease Corporation, the new vehicle for veteran leasing executive Steven Udvar-Hazy, who launched International Lease Finance Corporation (ILFC) in 1973. The two parties spoke at the handover of Air Lease's first A320 to Air New Zealand in February.

 

Airbus has discounted an analyst’s report suggesting 1,000 orders could be received by June, while Udvar-Hazy has previously been reported as having doubts about the re-engine plan. "We did take a little time to have discussions with [Air Lease] about the neo, but you have to remember they have just placed an order for 51 [other] aircraft, but I am sure they will be looking at it," says Leahy.

 

Hazy has emphasised the virtues of the current model – "a wonderful performer... a cost-effective airplane … a real workhorse" – but to comment in detail on his interest in the A320neo. Nevertheless, he has referred to considerations that must be accommodated alongside the claimed lower fuel burn, including "maintenance costs, capital costs, [and] spare parts. There are a lot of other costs associated with introducing a different version, so [we] are not 100 percent aligned on this issue."

 

For its part, ILFC is also considering the A320neo as it prepares to place its first new aircraft order since mid-2007. CEO Henri Courpron, a former Airbus official, says the lessor has just ten single-aisle deliveries outstanding, out of about 100 aircraft on order. ILFC wants to replenish its narrowbody stocks since all remaining machines have been placed. An early client for CFM International Leap-X-powered A320neos could be GE Commercial Aviation Services, a leasing affiliate of engine manufacturer General Electric, which is a partner in the CFM joint venture with Snecma.

 

Leahy is characteristically optimistic about the A320neo, but has responded with caution to remarks by a Morgan Stanley analyst who suggested Airbus could sell as many as 1,000 aircraft by the time of the Paris Air Show in June. Calling the figure "overly optimistic", the Airbus official says he expects to sell "several hundred" A320neos by that time.

 

Asian Aviation at a glance