Orders for Airbus Aircraft Slow to a Drip

Low oil prices and large backlogs are to blame

By: Theo Nichols

Airbus received orders for four commercial aircraft in the month of July (three A330-200s and one A350-1000) bringing 2017 net orders up to 205 aircraft. Airbus delivered 47 aircraft in the month of July bringing its total deliveries year-to-date up to 353. In comparison, for the first half of 2017 Boeing totalled 381 orders and 352 deliveries.

The market for new commercial aircraft has slowed considerably as low oil prices encourage airlines to hold on to current generation aircraft longer.

However, both Airbus and Boeing have large backlogs as rapidly growing airlines in Asia and the Middle East have placed massive aircraft orders in the last decade. There is a concern that the huge orders placed by airlines such as Emirates are not sustainable as political turmoil puts a crimp on growth and profitability.

For quickly growing low cost carriers in Asia, like IndiGo and LionAir, which have placed eye-popping orders for hundreds of aircraft from Airbus and Boeing the concern is that these airlines are at risk of financial failure due to the cut-throat nature of the Asian LCC market. It will also be difficult for these airlines to match growth with the influx of new aircraft, especially with the current state of airport infrastructure in Asia.

Along with the current downturn in aircraft sales, Airbus is struggling to fulfill its large order backlog as production delays, mainly attributed to supply chain weakness, continue to hamper the A350 and A320neo programs. Pratt and Whitney has yet to fix a multitude of issues relating to its new geared turbofan engine the PW1100G, which is one of two power sources for the A320neo.

There is some good news for Airbus as issues with seat supplier Zodiac Aerospace on the A350 seem to be largely in the past as the first A350-1000 is on track to be delivered to Qatar Airways by the end of 2017, after a lengthy delay.

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