Airbus A350 Fails To Gain Ground In North America
Summary
- Delta Air Lines close to taking delivery of first Airbus A350.
- Delta, United and American have all deferred deliveries for the Airbus A350.
- Pressure on yield and low oil prices cause of deferrals, but Dreamliner deliveries are less affected.
Currently Delta Air Lines (DAL) is performing customer acceptance flights for their first Airbus (OTCPK:EADSF) A350-900, which is one of the last phases before the aircraft is officially handed over to Delta Air Lines. The handover is planned to happen somewhere this week and marks an important milestone for Airbus in its effort to expand in North America. In this article, I want to have a look at Airbus’s effort to expand in North America and how this has partly failed or at least disappointed.
Initial success in North America
Image courtesy of Airbus
The success of the Airbus A350 seemed firm as North American carriers ordered the aircraft. Success in North America would be a blow to Boeing (NYSE:BA), which is a US company with an extensive supply chain network in North America. However, if we dig deeper we see that many of the commitments for the Airbus A350 have changed since 2016.
In 2005, US Airways ordered 20 Airbus A350 aircraft. Two years later the airline added another 2 units to the A350 order book. Deliveries were scheduled for 2014, but the airline deferred deliveries to 2015 and later to 2017. In between, US Airways merged with American Airlines (AAL) but the new combined company also seemed to have little to no appetite for the A350. The airline converted all orders to the Airbus A350-900, but in June last year deliveries were delayed by another year and another deferral followed putting the first deliveries in late 2020. From the original schedule deliveries have been delayed by 6 years, the order is 12 years old by now and has experienced 4 deferrals. This raises some questions on the airline’s eagerness to add the Airbus A350 to its fleet.
In 2009, United Airlines (UAL) ordered 25 Airbus A350-900 aircraft for delivery in 2016. In 2010, United Airlines and Continental merged, which brought orders for the Boeing 787 and the Airbus A350 together. In 2013, United Airlines converted the order to orders for the bigger Airbus A350-1000 and added another 10 A350-1000s to the order book with deliveries planned for 2018. The aircraft were intended to replace the Boeing 747 fleet, but United Airlines is now getting its hands on discounted Boeing 777-300ER aircraft leaving the order for the Airbus A350 under review.
The third airline that left their Airbus A350 order for what it is, is Hawaiian Airlines which ordered 6 Airbus A350-800 aircraft in 2007 but later converted this order to orders for the Airbus A330neo as Airbus was no longer intending to bring the A350-800 into production.
Figure 1: Infographic Delta Air Lines order (Source: www.AeroAnalysis.net)
The 4th North American airline that also ordered the A350 is Delta Air Lines. In 2014, Delta Air Lines ordered 25 Airbus A350-900 aircraft and 25 Airbus A330-900neo. Boeing, which was also in the race for the wide body jet deal, was left in the cold since Delta considered Boeing’s proposed Boeing 777X a paper airplane and the delivery schedule of the Boeing 787 was not attractive enough.
Some of the deliveries were deferred last year and a second deferral followed this year:
The new delivery schedule now looks as follows:
Year | Deliveries |
2017-2018 | 11 |
2019-2020 | 4 |
>2021 | 10 |
Boeing 787 and reducing CapEx
Image courtesy of Airport Spotting Blog - Spotting news for aircraft enthusiasts
What we are seeing is that except for Hawaiian Airlines all 3 big US legacy airlines are the result of mergers, which brought together their order books. United Airlines and American Airlines have committed to the Airbus A350, but have deferred deliveries as well while deliveries for the Boeing 787 remained widely unchanged. Delta Air Lines also got the Boeing 787 in its order book from a merger, but unlike United and American the airline decided to cancel the order for the Boeing 787.
What is particularly disappointing for Airbus, but good news for Boeing is that out of the 88 orders from North American customers for the A350, none have been delivered two years after service entry. Meanwhile, Boeing has delivered 61 Dreamliners to US carriers with 31 unfilled orders.
Other North American carriers such as Air Canada (OTCQX:ACDVF) and AeroMexico also are loyal to Boeing with 43 Dreamliners in their fleet and 14 on order. More recently WestJet (OTC:WJAFF) ordered 10 Boeing 787 aircraft with options for another 10.
Reasons to defer the deliveries are to better align the fleet with demand and growth, which would improve the yield but also to preserve cash. Aircraft are cash intensive products to acquire and to operate, so having the right aircraft at the right time is important.
Conclusion
Since oil prices have fallen and there has been some overcapacity on the market North American airlines have deferred their wide body orders and up until now airlines have chosen to mostly defer the Airbus A350 instead of the Boeing 787. More than ten years after the first North American order for the Airbus A350, the European jet maker is close to delivering their first next generation wide body to an North American customer but is has been anything but a smooth ride for Airbus.
Given that United Airlines is reviewing their A350 order and American Airlines has deferred their order until late 2020, the A350 market penetration in North America is not as strong as Airbus would have wanted and so far, it seems that carriers have a slight preference for the Dreamliner which had an earlier service entry and gave the aircraft time to ‘grow’ in the fleet.
This also makes the delivery to Delta Air Lines an important one, since Delta has been the only airline to drop the Boeing 787 in favor of its Airbus counter part.
In the end, I think the Airbus A350 is a good engineering product but the appetite for the aircraft amongst North American carriers has weakened, since oil prices dropped which reduces the need for fuel efficient aircraft and there has been some overcapacity on the market, which pressures yield. Adding more expensive aircraft would do nothing good to that yield, so instead we see United Airlines ordering discounted Boeing 777 airframes and airlines postponing the service entry of a new aircraft type and aligning deliveries with forecasted demand.
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This article was written by
His reports have been cited by CNBC, the Puget Sound Business Journal, the Wichita Business Journal and National Public Radio. His expertise is also leveraged in Luchtvaartnieuws Magazine, the biggest aviation magazine in the Benelux.
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Comments (38)
I can neither agree nor disagree - I don't know that much about the A350.
Could you please elaborate?
Thanks
While, the A350 is a fine plane, it is not more advanced than the 787; many have made that assumption, based on the fact it is a "newer" plane, but that was not the case, this time.
----------------------...Yup, the American way to go.........In a better built plane !
Feeling "safe" is entirely subjective.
"It was a good landing because I could walk away"
"It was a great landing because the airplane could be used again"
---------------------Maybe so but as User 48428113 pointed out a few important thoughts. Personally, I'll fly BA. It's the American thing to do.
The primary reason should be the airline: their reputation, their record, their competence, and their service. Also the price.
Get me there intact, on time, in a clean comfortable cabin with a competent crew, at an affordable price.
Many passengers can't tell you the type of airplane they're on. Nor do they care. What's more, with jetways and the lack of windows at some gates, they cannot see the airplane before boarding it.
