ANALYSIS: Is the A330neo window of opportunity closing?

San Diego
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Airbus has a rather large quandary in the small-widebody market. Although the -900 and -1000 variants of its A350 are selling well, the smallest version in the family, the -800 is not. In fact, its prospects appear to be going backwards as customers upgauge to bigger aircraft.

This up-sizing suits Airbus, to a point: healthy demand means the baseline -900 and stretch -1000 variants of the A350 are certain to repay with interest Toulouse’s investment in the programme over the next two decades. Airbus also has the A380 for those who want to make the ultimate upgauge.

However, it leaves the European airframer with a chasm between the A321neo and the A350-900 in the 190- to 300-seat space – much more so than rival Boeing, which has the 240-seat 787-8 and the 787-9, which also comes in at just under 300 seats.

Publicly, Airbus seems unfazed. At this month’s ISTAT Americas conference in San Diego, its senior vice-president of leasing markets, Andrew Shankland, insisted that the priority remains marketing the A350 as a family of three, and that the other option for filling that gap – a re-engined A330 – was being discussed more in the market than in Toulouse.

That discussion, however, is reaching an intensity that Airbus can no longer brush off, and it is likely that around the conference tables and design offices of Blagnac it is receiving a lot more attention that the manufacturer cares to admit. At ISTAT, two of the most influential players in the leasing market, Steve Udvar-Hazy and CIT, hinted strongly that Airbus would opt to launch an A330neo.

On the surface, giving its top-selling widebody a new lease of life would appear to be a relatively low-risk and low-cost option for Airbus. An A330neo – delivering substantial fuel savings over the incumbent models – would be potentially attractive to dozens of existing A330 customers, and others who are unlikely to be enticed by any variants of the A350.

The onus, of course, would be on the engine to deliver the bulk of these economies. And although the size of the market would probably mean a single-source powerplant, one of the three engine suppliers currently on the A330 would almost certainly come forward with an attractive solution. That company would also be likely to help fund the development in return for a solus contract.

But it would not be that straightforward. The A330, due partly to delays with both the A350 and 787, had its most successful year ever in 2013 in terms of deliveries and – while orders are tailing off – continues to be in demand. Some in Toulouse would be happy simply to let the programme run its course.

An even bigger dilemma for Airbus would be what to do with the A350-800. At ISTAT, Udvar-Hazy argued that it would not be “rational” for the manufacturer to launch an A330neo while pressing ahead with the A350-800, which is due to enter service in 2016 and for which there are just 46 orders (down from a peak of more than 180 in 2010).

Although it could potentially re-engineer the variant to provide closer to 300 seats, that would be an expensive undertaking, delay entry into service by several years and not really address the problem of how to serve the 200-plus seat segment.

A likelier option for Airbus would be to scrap the variant altogether, but this would be a humiliation given the company’s insistence that its three-variant new-generation widebody strategy makes sense, and after its even more radical repositioning of the whole A350 programme in 2006.

One luxury Airbus does not have is time. As CIT pointed out at ISTAT, delaying a decision beyond this summer would mean the manufacturer’s window of opportunity – with limited availability of the 787 – will start to close. Bet on Farnborough for an announcement – one way or the other.