To paraphrase Oscar Wilde: To lose one long-time single-aisle customer, Mr Calhoun, may be regarded as a misfortune, to lose two looks like carelessness.
In recent days, Boeing has done just that, seeing both Air France-KLM and Qantas defect to its arch-rival, further swelling Airbus’s already healthy narrowbody backlog.
Perhaps the charge of carelessness is a little unfair, particularly to level at Boeing chief executive David Calhoun who has only been in post since January 2020. But what is clear is that the Airbus single-aisle range – stretching from the A220-100 at one end to the A321XLR at the other – is simply out-competing the 737 Max family.
There can be no starker illustration of that than the fact that in both cases the carriers were prepared to take the unusual step of transitioning to new narrowbody types.
While Airbus considers the A220 and A320neo as separate aircraft families – they do not share a common type rating – the ability to offer a single-aisle range which essentially spans 150 seats, and addresses both the large regional jet sector and the long-range market previously served by the Boeing 757, gives the airframer significant leverage against the Max.
In the name of efficiency, airlines typically pick a single narrowbody type, and stick with it, and defection is relatively rare.
But aerospace analysts say Airbus’s wins make sense, reflecting a strategy that has seen the European company expand the breadth of its narrowbody product line in recent years.
That line spans two models of the A220 – with 108 to 133 seats – to the 244-passenger A321neo, the latest version of which will have a 4,700nm (8,700km) range.
Air France had already selected the A220, which may have helped tip the renewal decision at partner carrier KLM in Airbus’s favour.
Airbus is pushing hard for A220 sales because the programme, acquired by Airbus from Bombardier in 2018, is loss-making. The aircraft family had secured just over 400 orders under Bombardier, and Airbus subsequently demonstrated its marketing power by adding gross orders for more than 350 in the three years after it took over.
Total A220 orders stood at 650 at the end of November, with a backlog of 464. The airframer wants to build up production loading on the twinjet’s Montreal Mirabel and Mobile assembly lines as part of the strategy to achieve profitability towards the middle of the decade.
Analysts view the 737 Max as being strongly competitive, head-to-head, with the A320neo. But they point out that the Max competes less favourably at the upper and lower margins – where the A220 and A321XLR are situated.
Michel Merluzeau, aerospace analyst with consultancy AIR, says the defections of Air France-KLM and Qantas are a “big loss” for Boeing, noting that it may not regain those customers, at least on the narrowbody side, for at least 15 years.
The defeat at Transavia, currently an all-737 operator, is particularly notable but probably reflects considerations of single-type simplicity.
“It’s pretty simple,” adds Richard Aboulafia, consultant with Teal Group. “Airlines really like the A321neo, and Boeing does not have an alternative.
“That means [airlines] can either split their requirement between Airbus and Boeing, or go with all Airbus, and reap the cost benefits of a common fleet.”
Qantas is expecting to order 20 A321XLRs and 20 A220-300s – both powered by Pratt & Whitney geared turbofans – before the end of its fiscal year 2022, for deliveries beginning in fiscal 2024.
But the airline is also placing rights over 10 years to purchase another 94 Airbus jets to replace older Boeing 737-800s and 717s. Qantas and its affiliates operate about 70 737-800s and 20 717s, according to Cirium data.
There is evidence that fleet commonality played a key part in the Qantas decision, because the company’s budget subsidiary Jetstar is already an Airbus single-aisle operator, and the mainline carrier’s order is being structured to take advantage of pre-existing agreements to supply Jetstar aircraft.
Air France-KLM is placing firm orders for 100 A320neo-family jets and taking rights to acquire another 60. The airline group will use the jets to replace the fleets of its subsidiaries KLM, Transavia and Transavia France – all current 737 operators. KLM has 46 of the Boeing jets, Transavia has 37 and Transavia France has 50, according to Cirium.
“The [Air France-KLM] and Qantas orders clearly show that Boeing needs a new middle-market jet,” says Aboulafia. “I think everybody recognises that.”
Broadly, the industry considers “middle market” aircraft to be those with up to 5,000nm of range and capacity to carry 200-250 passengers.
That job has long been performed by Boeing 757s, which are nearing retirement, and Airbus has sought to capitalise on the mid-market vacancy by extending the range of its A321neo – initially with the A321LR and subsequently with the A321XLR, which the airframer intends to put into service in 2023.
Boeing has struggled to shape a mid-market successor to the 757 that optimally addresses the needs of customers. Although the airframer has developed the 737 Max 10, the largest version of the re-engined jet, in a bid to compete more directly with the A321neo, an all-new mid-market design remains elusive – the proposed NMA concept was among the projects stalled by troubles affecting the company, including the prolonged grounding of the 737 Max.
The crisis affecting the 737 Max has since been supplanted by the pandemic, and aerospace strategies are also having to adjust to the rise of decarbonisation technology. The US airframer remains uncommitted to a new mid-market aircraft.
“As long as Boeing shows no interest in developing one…they will lose market share,” claims Aboulafia.
The Air France-KLM and Qantas orders also highlight Boeing’s lack of aircraft capable of being directly competitive with the A220, says Merluzeau.
Boeing had hoped to bridge that competitive gulf by purchasing 80% of Embraer’s commercial aircraft division through a $4.2 billion deal in 2020.
That agreement would have delivered to Boeing the enormously-successful E-Jet programme, which competes favourably with the A220. The E-Jet family, in its latest re-engined iteration, uses the Pratt & Whitney PW1900G engine – a version of the same geared-fan powerplant fitted to the A220.
Boeing backed out of the deal, to Embraer’s shock, shortly before it was due to close, as other crises simmered at the US airframer.
Merluzeau says, in reference to Airbus’s success with its extended single-aisle range: “It clearly shows what we expected the…Embraer deal to provide Boeing.”