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Airbus Juggles Order Book to Meet Record Demand for A320neo Jet

April 08, 2013

Airbus Juggles Order Book to Meet Record Demand for A320neo Jet

Models of Airbus SAS A320neo, left, and A350 aircraft stand on display at the European Aeronautic, Defence & Space Co. (EADS) booth at the Singapore Airshow in Singapore on Feb. 14, 2012. Photographer: Munshi Ahmed/Bloomberg

Airbus SAS will probably seek some flexibility from its largest customers on delivery of the A320neo single-aisle jet to help accommodate new buyers, as the company tries to work through a record order book for the plane.

“For a very large order, we could go back to existing customers and see if they could move some of their positions,” sales chief John Leahy said. “If someone wants 100 planes, I’ll go to customers who already have the planes in their backlog and see if I can get them to move their positions.”

The European planemaker has booked orders for about 2,200 A320neos since it began offering the plane in late 2011, giving it 65 percent of the market for single-aisle planes with new engines. Boeing Co. (BA:US) has won about 1,200 orders for its 737 Max. Airbus is also studying an eventual move beyond an output of 42 planes a month once the ramp-up is complete to cope with the large order book, provided suppliers can cope, Leahy said.

Leahy spoke from Mobile, Alabama, where Airbus broke ground yesterday on its first assembly line in the U.S. At this stage, Airbus has only a handful of slots for 2019, he said.

Airbus aims to begin handing over the first A320neos from late 2015, while Boeing’s Max deliveries begin in 2017. The 2,200 orders includes commitments from Deutsche Lufthansa AG (LHA) and from Turkish Airlines (THYAO) that will be firmed up shortly. The facility in Mobile will hand over its first planes from 2016.

No Overbooking

While Airbus and other manufacturers often overbook delivery slots, knowing that some customers will inevitably drop out or move back, this isn’t occurring on the A320neo.

“On ramp-up of a new program you don’t overbook because everyone wants to fly,” Leahy said.

Several A320neo customers have ordered the plane in large numbers, which may provide Airbus with room for flexibility. AirAsia BHD (AIRA) in 2011 ordered 200 A320neos valued at $18 billion at list price, and then followed with another order in December 2012 for 100 more aircraft, 64 of them A320neos.

With U.S. airlines having the oldest fleets in the world, Leahy said he expects substantial orders from that region for growth and replacement. Having an assembly line for A320neos in that market will help win orders, said Leahy, who plans to visit several potential customers in the U.S. this week,

“With a final assembly line here that lets us become a U.S. manufacturer of aircraft with U.S. jobs,” he said.

To contact the reporter on this story: Andrea Rothman in Toulouse at aerothman@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


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