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Who hurts with another B787 delay?

9-Apr-2008
  • Boeing widely tipped to delay initial deliveries of the B787 to ANA until Sep-09;
  • B787-3 type may be deferred or cancelled;
  • Asian carriers the biggest customers for B787s, by region;
  • ANA and Qantas/Jetstar worst affected, with moderate impacts for Chinese carriers, Air India and Singapore Airlines;
  • Net impact on the wider airline industry could be positive, with less capacity entering as global demand for air travel softens.

Boeing is now widely expected to delay initial deliveries of the B787 to launch customer, All Nippon Airways (ANA), until Sep-09 and possibly defer or even drop the B787-3 type. (There are 43 orders for the B787-3, including ANA, 30, and Japan Airlines, 13).

ANA was originally scheduled to receive its first B787 next month, though deliveries have since been deferred twice until around Apr-09.

For the airlines that have ordered the B787 – and Asian carriers are the biggest customers, by region – a further delay could mean 18 months of varying degrees of frustration, particularly if fuel prices remain at record high levels.

B787 customers by region: as at 31-Mar-08


* ILFC has 74 aircraft on order, which could be placed outside North America
Source: Centre for Asia Pacific Aviation

Possible impacts on key B787 customers

Airline

Model

Total

Possible Impact*

Notes

Air China

787-8

15

Moderate

Hampers network expansion plans

All Nippon Airways

 

787-3

30

Significant

 

Disruption to fleet simplification and expansion as Tokyo’s airports expand in 2010

787-8

20

China Eastern Airlines

787-8

15

Moderate

Impact on int’l expansion

China Southern Airlines

787-8

10

Moderate

See Air China

Hainan Airlines

787-8

8

Moderate

See Air China

Japan Airlines

787-3

13

Mild

Possibly relieved with deferred investment

787-8

22

Korean Air

787-8

10

Mild-Moderate

Impacts expansion/replacement plans

Shanghai Airlines

787-8

9

Moderate

See Air China

Air New Zealand

787-9

8

Mild

Network expansion could be impacted early next decade

Air Pacific

787-9

8

Mild

Impacts fleet renewal next decade

Qantas (Jetstar)

787-8

15

Significant

Delays European expansion plans

787-9

50

Air India

787-8

27

Moderate

Delays int’l expansion, loss of market share

Jet Airways

787-8

10

Mild

Possible impact on expansion next decade

Singapore Airlines

787-9

20

Mild-Moderate

Impacts expansion/replacement next decade

*This is the view of the Centre for Asia Pacific Aviation, not the airlines themselves.
Source: Centre for Asia Pacific Aviation

Verdict: Industry impact

The overall net impact on the airline industry could however be positive.

The number of B787s delivered next year could reportedly be reduced from Boeing’s current commitment of 109 to between ten and 45. Up to 100 fewer B787s in the skies next year could have an overall positive impact on airline industry earnings, holding down capacity expansion and keeping load factors high at a time when global demand for air travel is softening.

Further delays will provide B787 customers, like the A380 before it, with windfall compensation benefits at a time when they could otherwise be incurring start-up losses on new international routes. Meanwhile, airlines that have not ordered the aircraft benefit by the deferred competitive impacts (in-flight product and efficiency) of the B787.

However, widebody aircraft leasing markets will remain tight, maintaining cost pressures on carriers and impacting the launch and expansion plans of others. The nascent low-cost long-haul sector could feel the impact the most.


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