Airbus Orders Expected to Be 35% Lower in 2016
When Airbus reported 2015 results in February, the company said it planned to deliver more than 650 new commercial jets this year and to take more than that many net new orders to add to its backlog. At a meeting in France last week, Airbus executives reportedly said they expect new orders to top 700 in 2016, about 35% below the number of new orders the company added last year.
Airbus wrote 1,080 new commercial jet orders in 2015, down from 1,456 in 2014. Orders so far in 2016 have been disappointing at best. At the end of the first quarter Airbus had taken a total of just 32 new orders, against deliveries of 125 new planes. Adjusted for cancellations, net new orders in the first quarter totaled exactly 10.
That total does not include an expected order for 118 new planes from Iran Air in a deal worth $27 billion. The order, when it is finalized, is expected to include 45 A320 narrow-body jets and 73 wide-bodies (A330, A350 and A380).
Iran’s transport minister said in January that the country needs 400 medium-range and long-range planes and 100 short-haul jets over the next few years. Boeing Co. (NYSE: BA) last week began discussions with Iranian officials regarding sales of the company’s planes.
Airbus also is competing with Boeing for an order to replace the 116 MD-88s in Delta Air Lines Co.’s (NYSE: DAL) fleet. But neither of these two giants is an odds-on favorite to win the sale. Canada’s Bombardier is reported to have the inside track on an order for 75 of its new CS300 jets and an option on another 50. At a list price of $82 million per copy, the deal would be worth about $6.15 billion to Bombardier.
Boeing snatched orders for 65 of its 737-700s away from Bombardier’s CS300 when it reportedly sold the 737s that have a list price of $80.6 million for around $22 million each to United Airlines. Boeing was willing to do whatever it took to keep Bombardier away from United, but it can’t do the same thing forever.
Bloomberg News reported last Friday that Airbus is set to win an order for 30 its A321 narrow-bodies from Delta, but those planes are larger than the old MD-88s and the new CS300s and may not be included as replacements for the 25-year old planes.
Airbus could write orders for as many as 150 new planes before the month of April is over, so the company’s march toward its goal of more than 700 new orders would look a bit more achievable. The Farnborough International Airshow takes place in mid-July, and Airbus probably needs to make as splash of some size there if it wants to get back on track.