Aircraft ordering appears to have normalised, as Airbus and Boeing both close in on 400 net orders apiece with a full quarter left in the year.
For the year to the end of Aug-2010 Airbus had 250 net orders, and 301 gross orders (before cancellations). The manufacturer announced an order for 40 aircraft from the Lufthansa Group this week. This comes on top Cathay Pacific firming up a commitment for 30 A350 XWBs a week earlier and Malaysia Airlines ordering two A330-200Fs, pushing orders north of 340 aircraft for the year.
Boeing is also seeing rapid growth in its order book. At the end of last week, the manufacturer confirmed an order for 50 B373NGs with Russian Technologies. This week it also announced an order for six B777-300ERs from Cathay Pacific and another four B777s from an unidentified customer. These order push its net total for the year past 330 aircraft.
The majority of the ordering has been for narrowbodies: the ever-popular B737NG and A320 families. More than 85% of Boeing’s orders this year have been for B737NGs, while A320s have accounted for just under 60% of Airbus’ sales for the year to date.
The strength of narrowbody ordering been linked to the continued counter-cyclical expansion of LCC. However, very few LCCs are ordering directly from the manufacturers. So far this year, just Southwest Airlines, Norwegian Air Shuttle and Virgin Blue have placed orders.
Instead, leasing companies have rejoined the market, in a big way. CIT Leasing has ordered eight aircraft (all A330s from Airbus), while GECAS has ordered 100 (60 A320s and 40 B737NGs) and 51 (all A320s) by the new Air Lease Corporation. Royal Bank of Scotland’s leasing unit is also reportedly in negotiations to acquire more aircraft.
LCCs, particularly smaller airlines, are strong customers for the leasing companies, favouring leasing over owning aircraft.
There are still some signs of distress in the industry though, as evidenced by the number of order cancellations this year. Boeing has suffered 70 aircraft cancellations, while Airbus has been subject to 51. Widebody aircraft cancellations have been particularly rife at Boeing. The US manufacturer has suffered 27 B777 cancellations and 32 B787 cancellations (dropping the B787 order book by four aircraft), compared with just 11 B737NG cancellations.
Cancellations at Airbus have been a little more evenly spread. There have been 36 A320 family cancellations, balanced against eight A330 cancellations and seven A350 XWB cancellations.
Following the success of the Jul-2010 Farnborough Air Show, Airbus increased its gross order target to more than 400 aircraft. Boeing has not announced a firm order target for the year, but it too must be eying 400 orders, or more, this year. This would bring ordering back to 2004 levels, although production is still outstripping ordering.
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Selected Aviation Suppliers & Leasing daily share price movements (% change): 23-Sep-2010