Did Boeing’s Albaugh hint at a Delta A320neo order?

Delta Air Lines Boeing 737-700 N304DQ

I went back and listened to the Boeing Investor Day recordings last night and an item that I missed on the first path jumped out at me at second glance. Today’s mixed Delta Air Lines A320/737NG narrowbody fleet is a creation of the Delta/Northwest merger, but Boeing Commercial Airplanes CEO Albaugh hints that the carrier may be a point of traction for the A320neo.

A lot of people ask the question, well, is the re-engined A320 getting traction with your customers? And if you look at the airplane or the airline market out there, most people either have Boeing products or Airbus products. The people that have mixed fleets are the ones who have come together through acquisitions and mergers or the Chinese, where they bought both types of airplanes. And there’s a very high cost of switching. And there’s also a cost for complexity and I really don’t think that we’re going to see too many customers really think about switching to a different type of airplane any time soon.

A May 9 note from Leeham Co, suggests that not only is this is prime Airbus territory, but that Boeing may not even get into competition:

Airbus’ John Leahy has publicly stated that he believes if Boeing “loses” a solid 737 customer, specifically naming Delta Air Lines, Boeing would be “forced” to re-engine. Buckingham reports in the May 3 BCC research note that Boeing may no-bid Delta, largely due to the inability to offer production slots (Boeing’s 737 line is sold out to 2016/17); there is, therefore, nothing for Boeing to “lose.”

Yet, Albaugh’s comment underscores a possible emerging strategic advantage with the A320neo even if Boeing chooses not to compete for the Delta order. Airbus may be able to gain traction in mixed fleets, but can Boeing? The A320neo’s 95% part commonality does not unlock the current Airbus customer base allowing it to look elsewhere, though Airbus has positioned itself for modest marketshare growth to re-fleet one of the world’s largest carriers and the Chinese market.

The Next Generation 737 has been an extraordinary sales success for Boeing, though the company’s incremental update to the narrowbody created an aircraft that has a 75% non-commonality with the 737 Classics. This level of change opened the door for British Airways, easyJet and US Airways to look to Airbus for its narrowbody fleets. 
In a war of attrition, victories may be measured in inches.

6 Responses to Did Boeing’s Albaugh hint at a Delta A320neo order?

  1. keesje May 25, 2011 at 4:28 pm #

    Delta has a large 757 fleet. For a good part it is very old and doesn’t need transatlantic range.

    For the next decade Boeing doesn’t seem to have something that matches the A321 in seat capacity, payload range, fuel efficiency and cargo capability.

    A Delta A321 NEO order would only surprise people that think Anderson lied when he explicitly said he has no preference for either Boeing or Airbus a few years ago.

  2. StarBlue May 25, 2011 at 5:36 pm #

    Keesje,

    The 737-900 did not compete wit the 757-200 or the Airbus A321. However it is not longer available as it has been replaced with the 737-900ER. Check out the average specs on your favorite fanbois site and you will see they are within a few seats and within a couple hundred nm in range. So I don’t know what you are referring to when it comes to “For the next decade Boeing doesn’t seem to have something that matches the A321 in seat capacity, payload range, fuel efficiency and cargo capability.”

    Delta’s Anderson does not need to lie, he has a mixed fleet and two bulls that want to dominate. NWA was a big supporter of Airbus, but they used Boeing for its widebody fleet. He probably doesn’t have a preference, if he does it is the one that will give him the planes the cheapest and have the lowest operational cost over the lifetime of that airplane.

    Boeing has a huge backlog of 737NGs, the real question is how long will that backlog remain. Aircraft models that have an newer variant announced or one that is percieved to be announced seem to dry up rather quickly.(i.e. A300/A310, 757, DC10) If that backlog remains, Boeing can skip doing a “737neo” and proceed directly to the “737RS/797″. I would hope Boeing would did on the Delta request, Delta is famous for ordering large numbers then turning around and defer them to a later date. (737-800, 787)

    The numbers to watch at Paris are the number of 737 orders. Boeing gets a few, 797… Boeing gets none or even some cancels or looses a major 737 customer to Airbus, 737neo.

  3. V V May 25, 2011 at 7:08 pm #

    The reality is that the market for narrowbody aircraft is quite vast. Airlines do change aircraft supplier. The proof is that Airbus is now at the situation where it is today. Perhaps some airlines will change aircraft supplier from Airbus or Boeing to Bombardier. Anything is possible.

    I am quite convinved that Boeing does not need to hurry in the narrowbody sector. It may want to reduce its huge backlog first before proposing any new (or enhanced 737) aircraft. They still have more than 2,000 737NG to deliver.
    http://wp.me/piMZI-1DG

    We must remember that the 737NG entered into service in 1998 or ten years after the entry into service of the first A320. Was it a disaster for the 737 program? I do not think so. Timing is much less crucial for the introduction of narrowbody aircraft than it is for a long-range-widebody aircraft.

    My point is that all this excitement around the narrowbody sector is a little bit overblown. The real battle is in the widebody sector, where Boeing has laid down a robust product strategy. Maybe, just maybe, they want to take full advantage of the situation.

  4. N830MH May 26, 2011 at 12:32 am #

    Could be considering to replacement 737NG? Can DL will have orders A321NEO/A319NEO. Anything is good for DL replacement older aircraft. I wasn’t sure if DL will have a consider to orders some B797 aircraft by replaced 737NG. It is time to retired the older DC-9-50. It will phase out of older DC-9 Classic. What about DL will continued to acquiring more MD90.

  5. Frequent Traveller May 26, 2011 at 4:28 am #

    Delta is high up on Leahy’s list of strategic targets. When it comes to seducing Dick into a high-profiled relooking of [Delta + NWA], there is no end to the lures up Leahy’s sleeves : specially if eg an OPA for one of the leading parcel forwarders is in the mire @ the Atlanta HQs, JL could go to the extent of a combined launching offer for H21QR + F21QR (with or without NEO ?), plus for some of the sister variants, whereof why not H22QR for 757 replacement, Le Bourget oblige !?

  6. Frequent Traveller May 26, 2011 at 5:46 am #

    I mean, when you have to cope every day in and day out with issues of the nature as are reported in the within UK Govenment Report, times some 520 aircraft, times six to eight ground rotations per each aircraft per 24h, if in Richard Anderson’s shoes you’d better think twice before extending the severe ergonomy shortfalls that bulkloaded SMR Feeders inflict upon Handlers, agreed ?!

    http://www.hse.gov.uk/research/rrpdf/rr674.pdf