Hello All,
Airbus announced several A330neo orders at the Farnborough Air Show, followed by Cathay Pacific’s announcement. It is not surprising because the aircraft has much earlier slot availabilities than the A350, 777X, or 787. This blog thought it relevant to compare the A330neo customers with those of the Dreamliner.
A materially different customer base
The below table shows the breakdown of A330neo and 787 customers (including aircraft in passenger service and on order) by category:
Customer CategoryA330neo Count787 CountA330neo Share (%)787 Share (%)Full Service Airlines17817045089Lessors4946142Low Cost or Leisure Airlines10787305Unidentified Orders226764Total3561904100100
The A330neo has more nominal lessor and low-cost and leisure airline customers than the Dreamliner (49 vs.46 and 107 vs. 87). The share of those two groups combined is 44% vs. 7% for the 787. A significant share of lessor deliveries go to low-cost and leisure customers.
This is not surprising because the A330neo has a lower capital cost than the Dreamliner, and those operators usually do not need the latter’s payload range. The A330neo nine-abreast configuration provides good per-seat economics for low-cost carriers but is too tight economy class comfort for most legacy carriers.
The A330neo is far less popular with full-service carriers. The only two major passenger airlines that operate 100 or more twin-aisle aircraft are Cathay Pacific and Delta. Those customers make up 50% of the A330neo tally, compared with 89% for the Dreamliner. The prospect for more A330neo orders among those carriers is limited since all of them with 50 or more twin-aisle aircraft in service have ordered the A330neo or 787.
Unidentified orders don’t represent a large share of the tally for both programs.
Conclusion: betting on low-cost and leisure growth
Because of its higher exposure to low-cost and leisure airlines, the A330neo prospects will depend on how well those airlines perform. It is a business model that has historically struggled to be sustainable over the full economic cycle.
Airbus will likely accumulate opportunistic A330neo orders while the other three major twin-aisle programs struggle to ramp up production. Don’t expect many 787, A350, or 777X for several years, i.e. until production slots within 2-3 years open up again.
The A330neo prospects will also depend on how quickly the Dreamliner production recovers and Boeing is able to amortize the program’s deferred production costs. Per a previous post, this blog expects A330neo to materially drop once the Dreamliner program amortizes them. Given Boeing’s production woes, it won’t likely happen until the early 2030s.
Boeing’s struggles with the Dreamliner show that Airbus’ A330neo development was a sensible idea: it keeps pricing lower for airline customers and allows the European OEM to capitalize on circumstances with minimal financial risk. Depending on how things turn out, the A330neo program might ultimately reach its goal of 500 deliveries. It will likely be a close call whether Airbus achieves that goal.