From the 17th of June until the 23rd of June, the 2019 Paris Airshow will be hosted, consisting of four trading days and three days open to the general public. The trading days are highly interesting as it gives an idea of what orders or plans jet makers such as Boeing (BA) and Airbus (OTCPK:EADSF) have in the pipeline. For that reason, I have been covering the trade days of the air show for the past years. The Paris Air Show is one out of three (the Dubai Airshow and Farnborough International Airshow) that I cover exclusively for readers on Seeking Alpha. Each day you will get an overview of the orders and thoughts on the trading day.
Now before the show starts, we had a look at two things. The first subject we covered related to the show is a check on how many tentative agreements were actually firmed during the previous edition of the show. Somehow this report had extremely low readership, which is rather disappointing as we went through announcements for over 1350+ aircraft to do proper research and present our findings. Nevertheless, the information there is valuable and should be considered when you will be bombarded with order news starting on the 17th of June. We also have written a report on what aircraft program and company news to expect, so we looked at what launches we do or do not expect.
This report will focus on which orders could be placed during the air show. It’s in no way a guarantee that all or any of these announcements will happen but going into the air show it is always nice to have an idea which orders could be placed.
Airbus A321XLR orders
With new aircraft launches usually come new orders. During the Paris Airshow, we’d like to see Airbus going a step further than just pitching the Airbus A321XLR and actually launch the aircraft. There’s a long list of customers for whom, this aircraft could be interesting. Some of the US airlines that Boeing wants to build its Boeing 797 business case on could be interested in the Airbus A321XLR. Delta Air Lines (NYSE:DAL) hasn’t shown much interest in long range variants of the Airbus A321, but United Airlines (UAL) and American Airlines (AAL) certainly are interested and these two carriers operate a fleet of almost 90 Boeing 757-200 aircraft.
The Airbus A321XLR actually does what the Airbus A321LR tried to do. Therefore, any customer of the LR variant will almost certainly be a potential customer for the A321XLR variant. That includes customers such as TAP Air Portugal, Qatar Airways, Saudia, JetBlue (JBLU), Jetstar Airways, Norwegian, Aer Lingus, Air Transat, Turkish Airlines but also airlines operating transatlantic MAX flights (prior to the global grounding) such as Air Canada and Icelandair. For an airline such as Azul, which currently flies an A320neo and t set to receive its base A321neo in the future, the XLR might make sense for flights from Brazil to the US.
Interesting to see would be whether the Indian airline IndiGo is interested in the XLR. For years, we have heard about Indian airlines wanting to order wide body aircraft to do long-haul routes. Maybe with the launch of the XLR, Indian carriers will be a step closer to long haul routes to Europe.
It’s safe to say that there are a lot of opportunities here for Airbus.
Air France-KLM (Roughly 250 aircraft)
A fleet decision from Air France-KLM has been long due. We outlined the possibilities for the regional and large single aisle jets in a separate report, which you can read here. There are chances for Boeing, Embraer and Airbus. Roughly 130 Boeing 737 MAX aircraft are needed for KLM and Transavia, while Airbus could be looking into a combination of the A220 and A320neo family for its mainline fleet with MRJ aircraft for its regional fleet. Alternatively, going with an Embraer E-Jets E2 fleet for the regional arm of Air France and as a replacement for the Airbus A318 in combination with the A320neo also is a possibility. Either way, there are juicy orders to be won here… or lost.
Finnair (20+ aircraft)
Another European carrier that’s looking to place an order is Finnair. The airline currently operates a single aisle fleet of 38 aircraft composed of eight A319s, 11 A320s and 19 A321. By 2022 the aging fleet should have been largely replaced, so Finnair is rather late with its order which likely will be going Airbus’ way with orders for the A320neo and A321neo. It remains to be seen whether the airline will see a replacement of the A319 of equal size. If that is the case the A220-300 or Airbus A319neo are suiting replacements.
Thai Airways International (25 aircraft)
Thai Airways has been seeking government approval to renew its fleet since late last year. The airline is in need for replacement of nine Boeing 747-400 aircraft with an average age of 20.2 years, while its Boeing 777-200 fleet of 12 aircraft averages 17.4 years and there are five Boeing 777-300 aircraft with a minimum age of 18 years. Thai Airways International has a bit of an odd wide body fleet operating the Airbus A330, Airbus A350, Airbus A380, Boeing 787, Boeing 777 and Boeing 747. That’s 6 aircraft families and 10 subtypes on a fleet of 82 aircraft.
The airline is said to be looking at the Airbus A350 and Boeing 777X. The Boeing 777X could be the long-term replacement to the Airbus A380, Boeing 747-400 and Boeing 777-300ER going from 3 types to 1. The Boeing 777-200 and Boeing 777-200ER fleet could be replaced by the Boeing 787-9 while the Boeing 777-300 could be replaced by the Boeing 787-10. Alternatively, the Boeing 777-200(ER)/300 could be replaced by the Airbus A350-900 and Airbus A350-1000.
Either way, the airline could be going from six aircraft families to three aircraft families. The only problem is that we have been hearing about fleet renewal and simplification for years and during those years not a lot has happened. It’s an undoubted consequence of being a loss-making airline in which the government holds a majority stake.
The airline could opt for a combination of the Airbus A350-900 and Airbus A350-1000, which can replace
Korean Air (30+ aircraft)
Korean Air has been looking to streamline its wide body fleet consisting of 29 Airbus A330s, 10 Boeing 787s, 55 Boeing 777s and 23 Boeing 747s. Possible candidates include the Boeing 787, Airbus A350 and Boeing 777X. Last year it was reported that Korean Air would likely order more Boeing 787s. At this point, I’d think Boeing has an edge since Korean Air tends to refrain from ordering Rolls Royce powered jets and the Airbus A330neo and Airbus A350 both are exclusively powered by Rolls Royce turbofans.
Air Asia X
Last year Air Asia tentatively agreed on ordering 34 Airbus A330neo aircraft, thereby bringing its order total to 100 A330neo aircraft once firmed. The deal, however, has not been firmed since and the airline has been in talks with Airbus to convert part of its wide body order to orders for the Airbus A321XLR.
Qatar Airways intends to order more aircraft during the Paris Airshow. Currently the airline has 207 aircraft on order including 60 Boeing 777X jets, 30 787s, 38 Airbus A350s and 50 Airbus A321neo aircraft. We don’t see any imminent need for Qatar to order any aircraft, but the airline intends to order more aircraft for its leasing business and it is known that Qatar Airways CEO Akbar Al Baker is fond of ordering aircraft at high profile stages such as air shows, never failing to get a political message through if needed.
Cebu Pacific (16 aircraft)
According to a report by Reuters Cebu Pacific is close to a decision for a next generation wide body replacement of its eight Airbus A330ceo fleet. A choice for the Airbus A330neo would make most sense given that Cebu Pacific already operates the A330ceo and has an all-Airbus fleet. Whether a decision will be announced during the show remains to be seen. Original plans had a Request For Proposal scheduled for mid-2019, which would be around now. If a decision already has been made, that could likely only indicate that only one party responded to the RFP.
Virgin Atlantic (6-10 aircraft)
According to Reuters Virgin Atlantic is in discussions with Airbus to acquire 6-10 Airbus A330neo jets. The airline currently operates 12 Airbus A330ceo aircraft and 17 Boeing 787-9s, so it’s not immediately clear why Virgin Atlantic doesn’t opt for more Dreamliners and eliminates one aircraft type from its fleet, but I could imagine that for shorter flights, with lower acquisition costs and flight deck commonality between the Airbus A350 and Airbus A330neo, the choice for the Airbus A330neo makes sense.
Spirit Airlines (100 aircraft)
Spirit Airlines (SAVE) is running a hard game between the Boeing 737 MAX 7, Airbus A320neo family, Airbus A220 and Embraer E-jets E2 since late last year. Recently, Embraer has been dropped from the competition to win an order that could top 100 jets. Spirit is an ultra-low-cost carrier airline so having a uniform fleet would make most sense. So, the airline, which currently has 135 Airbus A320 family aircraft in its fleet could as well stick to the Airbus A320neo family for a follow up order, but sees where it can drive costs down. The Airbus A220-300 would certainly also be an interesting aircraft it the price is right. It does seem Airbus has to decide whether it is going to sell the A319neo where it can or favor pitching the A220-300.
According to a report from Reuters, Saudia is close to an order with Airbus and possibly Boeing for the A320neo, Airbus A350 and/or Boeing 787. The selection of the Airbus A350 would be a blow to Boeing as the carrier already has the Boeing 787 in the fleet and Boeing is hoping to book a repeat order.
As the report outlines there are many opportunities, however some rumors such as potential orders from IndiGo (for international services), Thai International Airways and Korean Airways have been there for years. Additionally, we have SriLankan which is looking to covert its order for the Airbus A350 to A330neo orders, but with the Easter attacks in Sri Lanka it remains to be seen whether the airline will be given any attention from the government soon.
Either way there are opportunities for the A220, A321XLR, Airbus A350 and Boeing 787. What would be interesting is any order for the Boeing 737 MAX or the Boeing 777X. The MAX has its obvious problems at the moment while the Boeing 777X is not an extremely fast seller. Philippine Airlines is in negotiations with Boeing, but the CEO of the airline admitted that there is no plan yet. Either way, it looks like it can become an interesting air show and both jet makers can really use some order inflow as their order tallies have been negative for the year.