Airbus outlines expected market impact of A320NEO

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Airbus's long-awaited re-engined narrowbody programme, the A320 New Engine Option, or NEO, will mean there is "virtually no business case left" for Bombardier's CSeries, according to the European airframer's chief salesman John Leahy.

Airbus has yet to secure a customer for the A320NEO, but Leahy lists CSeries launch customer Lufthansa among several airlines and lessors that he says are "very interested" in the aircraft. In addition to Lufthansa, Airbus is in discussions with AirAsia, Qatar Airways, International Lease Finance, GECAS and Indigo.

"The job for the Canadians has become much harder" since the unveiling of the A320NEO, says Leahy. "It has the same number of seats, we have a wider fuselage, the fuel burn is similar and we offer 1,200 miles [1,930km] more range". He adds that it is "no surprise to the industry that CSeries sales dried up" at the beginning of this year, which he claims is due to customers "watching and waiting" to see whether Airbus would announce a re-engined narrowbody option.

a320 neo, airbus
 © Airbus

Bombardier is unfazed by Leahy's comments, pointing out that it had fully expected the move. "This is no surprise to Bombardier. From the beginning of the CSeries we had factored in a competitive response such as this," says the Canadian company. "There is a considerable first-mover advantage for the CSeries with the entry-into-service date considerably sooner than any competing re-engined product." Service entry for the CSeries is 2013, while the A320NEO is scheduled to enter service in spring 2016.

The A320NEO "changes nothing", adds Bombardier, which has secured 90 firm orders, 90 options and three customers for the CSeries. "There is a compelling case for the CSeries, which remains the only optimised aircraft in the 100-plus seat range. We will take that message to airlines and operators around the world. We are in discussions, we will continue with those discussions and some will result in further orders."

The absence of a customer for the A320NEO does not concern Leahy, who says that Airbus does not need a launch customer because the A320NEO is "not a typical" launch programme. "It's not important how many we sell as NEO, it's how many A320s we sell," he notes, adding that whether customers order existing A320-family aircraft or the NEO version is "immaterial".

Airbus sees a market potential for 4,000 A320NEO-family aircraft over the next 15 years.

It does not expect customers with existing orders for A320-family aircraft to switch to the A320NEO. "Virtually nothing in our backlog will convert to the NEO," says Leahy, adding that he expects "a large portion" of new A320 orders for deliveries in 2016 and 2017 to be for the NEO version.

Development costs for the Airbus A320NEO will be "slightly more than €1 billion [$1.3 billion]" and the aircraft's list price will be $6 million more than existing models.

Leahy says the additional $6 million list price includes $3.5 million for modifications to the airframe and around $900,000 for the addition of "sharklet" wing tips.

Airbus may look at offering its new engine option on the A318 in the future, but has decided to focus on the A319, A320 and A321 for now because these models represent its main market.

"At a later date we may or may not choose to look at that [A318], but that market is relatively small for us right now and we are concentrating on our core market for the time being," says Leahy.

The A320 will be the first model to offer a NEO version when it enters service in spring 2016, with the A321NEO set to follow six months later. The A319NEO will be the last model to be made available under the new programme, and this will be available six months after the A321NEO.

Airbus has not set a cut-off date for when existing A320-family models will no longer be available. "I would envision that you could always order an A320 with the existing engine if there is enough demand," says Leahy.

However, he points out that "at some point in time" it will make more sense for customers to order the NEO because of the fuel savings the new engines offer versus the International Aero Engines V2500s or the CFM56s. These fuel savings will compensate for the extra weight added by the NEO engines, says Airbus.