UPDATE 7:37 PM:BIDDING WAR: FAILRyanair is planning to place a massive order for 400 aircraft in the next 12-24 months for delivery between 2012 and 2017. Ryanair is known for its large orders, but what makes this revelation significant is not the size of the order, but rather which aircraft manufacturer the airline may order from. Once thought to be among the most loyal Boeing customers, Ryanair is opening the door to Airbus to offer the A320 and A321 to join its all 737-800 fleet.
Feb. 5 (Bloomberg) -- Airbus SAS Chief Commercial Officer John Leahy said the aircraft maker is not in discussions to sell Ryanair Holdings Plc hundreds of short-haul planes, quashing an attempt by the Dublin-based airline to provoke a bidding war between the European manufacturer and Boeing Co., the Financial Times reported.
Ryanair, which operates a fleet of 181 Boeing 737-800s, this week said it was in early talks with Airbus and Boeing to buy as many as 400 short-haul aircraft, the report said.
The Irish airline has always held closely to the low-cost tenet of flying one type of aircraft, but Deputy Chief Executive Officer Michael Cawley insists that, "We're large enough now to run two fleets. We see no cost handicaps that can't be overcome by running two fleets."
Coinciding with this revelation was Pratt & Whitney's announcement that it had completed its PW1000G Geared Turbofan demonstrator flight test program in Toulouse. The engine was flown under the wing of an Airbus A340-600 for more than 75 hours in its second and final flight test phase.
The test flight program ignited speculation that Airbus was considering flying a 30,000 lb variant of the PW1000G on A320 family aircraft for a significant mid-life performance improvement ahead of a full narrow-body replacement expected late in the next decade at the earliest.
One industry source associated with Pratt & Whitney's geared turbofan development says the engine-maker has laid the strategic and budgetary groundwork for developing a PW1000G for the A320 and/or 737 in anticipation of airline demand through the heart of the next decade.
Pratt & Whitney emphasizes that its focus remains on beginning detailed design work for the MRJ and CSeries aircraft engines for a PW1000G entry into service come 2013.
Airbus has always been sensitive about this speculation saying only that flying the PW1000G demonstrator allowed them to understand the technology challenges associated with the engine and that the airframer had no plans to re-engine the A320.
Boeing has been equally quiet about its 737 're-generation' plans, but the PW1000G is thought to be in its plans as well.
Further fueling the fire of speculation, as a condition of its collaboration with Airbus, Pratt & Whitney has agreed not to release the detailed test results until after Airbus has had the chance to review them in full, potentially providing them a head start on optimizing the A320 for this purpose.
P&W insists this is a courtesy to its flying host, though the protection of the results is more than eyebrow raising and could point to early development stages for re-engining plans, which Airbus said would take 24-30 months to execute on.
Which brings us back to Ryanair and their sudden openness to purchasing 400 Airbus or Boeing aircraft. Leading the speculation train forward, the removal of "cost handicaps" may originate from a double-digit improvement in fuel burn that could come from a PW1000G powered narrow-body. A true 737/A320 replacement wouldn't be available until 2020 at least and a mid-term solution might be the right ticket for growth.
Ryanair's proposed break with tradition is sure to put a spur to both Airbus and Boeing to squeeze every last drop of efficiency out of its venerable narrow-body offerings before it can offer all-new aircraft which airlines would love to get their hands on sometime before I turn forty.
on February 4, 2009 5:15 PM | Reply
This order must go to Airbus.
on February 4, 2009 6:40 PM | Reply
An A320 with a modified wing to accept the heavier GTF plus whatever it takes to accept the AP winglets could be a devastating mid life update. GTF fuel consumption savings plus an extra 5% performance gain from the winglets could be compelling.
Not sure who MOL would rape in Toulouse? Perhaps it could be the other way?
on February 4, 2009 7:04 PM | Reply
This order cannot go to Airbus because Airbus is not bidding according to this Financial Times Article.
John Leahy, Airbus’s chief commercial officer, said: “We are not in discussions with Ryanair about aircraft. That is on the record. We don’t have plans to enter a sales campaign with Ryanair, which would be very expensive and very time consuming.”
http://www.ft.com/cms/s/0/eb8fc516-f2ea-11dd-abe6-0000779fd2ac.html?referrer_id=yahoofinance&ft_ref=yahoo1&segid=03058
on February 4, 2009 7:04 PM | Reply
>> This order must go to Airbus.
No. German FT: http://www.ftd.de/unternehmen/industrie/:Streit-um-Rabatte-Airbus-l%E4sst-Ryanair-abblitzen/470233.html
Airbus said no to an offer of Ryanair - to large discounts. This order goes to Boeing.
on February 4, 2009 11:36 PM | Reply
Maybe this is Airbus' way of getting back at MOL for the things he said about them when they took delivery of the NGs. ie we are going to kick Airbus' ass etc. Forces Ryanair into paying more for their next round of NGs 'cause Boeing knows it's a one horse race.
A bit of a case of cutting of ones nose if that is the case though.
on February 4, 2009 11:37 PM | Reply
i'm sure the savvy john leahy of airbus
would not pass on another easyjet scenario
of a pure boeing airline like ryanair, buying airbus planes
specially on a downturning market
on February 5, 2009 6:06 AM | Reply
Funny how so many are quick to count this deal as done. I do not believe John Leahy to be a complete idiot and we do not know just how low (ridiculous?!) a discount Ryanair requested.
I believe the ball is entirely in Boeing's court right now. They could take the easy sale with a minimum profit. But will they? They could try to squeeze a few more dollars out of this one, knowing that Ryanair's hand has been somewhat forced and it would probably take alot for him to go back to Airbus for another go at this.
I don't believe they are going to make an "at all costs" deal and will try to get something sweeter for themselves. If so, will they go that one step too far and chase Ryanair back to Airbus.
8 years ago, I would have assumed the answer to be "yes". But Boeings sales teams have smartened up quite a bit.
I think it is going to be an interesting process, watching this deal develope. Especially if Ryanair is seriously interested in an A320 with a GTF (I am lead to understand that the current GTF cannot be installed on a 737 without a major modification to wing and/or landing gear. If I am ill informed on this score, it makes things that much more interesting).
Cheers,
jOhn
on February 6, 2009 5:53 AM | Reply
There are a number of good reasons why Ryanair would like the A320GTF. Would it give about 10% better fuel consumption with the new winglets?
And lets not forget that Airbus could loose quite a few A320s from the logbook due to cancelations (the skybus order along was for 65).
Perhaps an equally important question is.what on earth would Ryanair do with all those planes? They have another 150+ 737s on order and the European aviation market is saturated.
on February 6, 2009 5:56 AM | Reply
And also, with the C Series struggling to get a solid launch orderbook, perhaps looking at the A320 is what P&W should do.
on February 6, 2009 2:52 PM | Reply
The A320 isn't exactly having an order drought, so JL can give loud mouth MOL the finger if he wants to. But JL is a salesman and a very good one at that, so I don't see him turning down a really good 400 plane order, his probably gonna play hard ball a little and if FR does order Airbus, it'd be prices that both parties would be a little bit happy with and surely not a "rape".
on February 6, 2009 9:17 PM | Reply
A new generation of engine is an absolute must for any narrow body product, Boeing or Airbus, to be successful in today's competitive commercial marketplace. Carriers like Ryanair only care about operating costs. There is not much reduction in operating costs that can be produced from further development expenditures in aero or composite structures. But money spent on engine technology development will pay off handsomely, especially if Pratt's prediction of 10% to 20% gains with the GTF pan out.
Boeing spent several billion on aero work and composites for the 787, just to get gains of about 5%. For less than 1 billion, Pratt could potentially deliver up to 20% improvement with the GTF.
The only question mark is will the GTF, with its transmission, be as durable as conventional turbofan engines are now? Modern turbofan engines now routinely spend thousands of trouble-free hours on the wing. The Pratt GTF will need to meet or exceed that lofty benchmark. Designing and manufacturing a lightweight, quiet, efficient, high-power, high-speed, 20,000 hour MTBR transmission is no easy task.
on February 7, 2009 5:44 AM | Reply
Everybody is thrilled by the new GTF from P&W but you should not forget that CFM and IAE are also working on upgrades to their engines which will bring similar improvements on fuel burn without using a gearbox.
From my prospective there are several factors which will decide whether Airbus will go ahead with a midlife upgrade of the A320:
1. A significant launch order
2. The degree of modification required on the aircraft and the resulting cost
3. The progress on programs like the A350XWB, A400M and A380
4. The EIS date of the A320 successor
Especially 3. will play a vital role as the Airbus organisation is heavily stressed in bringing the A350 program into shape and to avoid a nightmare like the B787.
Furthermore it is always a trade-off in investing money into an old program or focusing all efforts to a new aircraft.
on February 7, 2009 5:45 PM | Reply
"Especially 3. will play a vital role as the Airbus organization is heavily stressed in bringing the A350 program into shape and to avoid a nightmare like the B787."
I believe the A380 had the nightmare first didn't they? You obviously mean a second A380 nightmare. I might add that Airbus is not out of the woods yet. They still haven't arrived at the production rate they originally planned.
on February 11, 2009 3:55 AM | Reply
Airbus and Boeing cannot be to sure, when CFMI, RR and PWA have numbers to prove the new engine efficiencies and weight, Embraer can do the numbers and design a 140-190 seat family with great economy. They have engineering power available first of all. A metal airplane of 777 materilal selection with new engines and advanced wing will beat Boeing and Airbus current products. When Boeing and Airbus have engineers available they sure will design the new narrowbody like a composite 757 with its long range and massive engines and have shorter aircrafts to offer down to 140 seats, but Embraer could beat them to it and have a cheaper/lighter aircraft with shorter range.