Airbus announces descent in 2016 orders prevision. Change of cycle?

27 abril, 2016 por · Deja tu comentario
Archivado en: Actualidad 

Recently, Airbus has stated its expectations for 2016 orders, up to no more than 700 aircraft. This figure is far below 2011-2015 numbers (1608, 914, 1619, 1456 and 1080), and was seen in the low peak of 2009-2010 (310 and 644 orders respectively). One has to go as far as 2004 to see a lower figure (370).

The number of deliveries is expected to reach a new record in 2016, as the backlog is huge (about 6000 more orders tan deliveries accumulated), but it is significant that the book to bill ratio (orders/deliveries) is again below unity for year 2016.

In our last article, we reviewed the behaviour of the stock market prices of Airbus and Boeing against (among others), oil prices. We reached to the conclusion that in the long term, big aircraft manufacturers stock prices do only respond to changes in the global GDP and macroeconomic trends, being the USD/EUR ratio and oil price drivers only for short term price changes.

This time, we are going to compare oil prices with the chart of Airbus and Boeing orders:

 

OilProceVSOrders

Oil Prices vs Boeing and Airbus orders

 

No wonder Airbus expectations are far below the figures of recent years. But why?

Think about your domestic economy about transportation needs. You only buy a new car if: a) you need to increase your number of cars (more family members, for example), b) you find that technology has evolved and a new car burns less fuel tan your current car, so a change is profitable, or c) your current car is completely obsolete.

The chart of aircraft orders grows up in the macro tendency because of a) and c) reasons: according to IATA the global air traffic is growing at 5% precent YoY rates, and especially in the case of Airbus, airplanes delivered from 1980s decade are retiring and being replaced by new aircraft.

As it can be seen in years 2003-2007 and 2010-2015, the quick increase in oil prices leads airlines to replace their aircraft sooner, by newer aircraft that burn less fuel. Numbers say that is a profitable change. But if oil prices go down, financial figures say the opposite: airlines can extend the life of their aircraft because a replacement for a newer, greener aircraft is not worthy.

It is no secret that new investments of Airbus and Boeing in the last ten years have been in the way of greener, less fuel consumption aircraft. All NEO (new engine options), sharklets, MAX initiatives have been done in that same way. A350 and 787 are in fact new developments intensive in the use of CFRP to reduce weight and then, fuel burn.

If low oil prices tendency continues, Airbus and Boeing may have to renew their strategies to advance in the market. Could be cabin interiors (to enhance passenger experience), could be supersonic initiatives, could be completely new aircraft concepts, etc.

This may end to the policy of no new designs on the horizon, which can lead to the re-activation of engineering firms in Europe, and the supply chain in general. And it is indeed good news, because what Airbus and Boeing really need to block the increasing challenge of Comac, Embraer, Bombardier, etc., is to make a technological step ahead.

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