A number of analysts have noted that the real goal for Airbus this next year is to sell production slots that are open for current A320 aircraft up to and including EIS for the A320NEO aircraft.  Both Boeing and Airbus need to find ways to preserve value on existing aircraft lines until their new generation aircraft enter into service as well.

It’s a delicate line they each walk.  You want to satisfy airlines with new aircraft but some of those who buy aircraft are lessors and you don’t want to anger them by depreciating their assets they already hold.  And a market glut of aircraft can result in depreciating demand for your new generation aircraft because the capital costs for current generation aircraft can become low enough to make sense for airlines to buy and use.

A good example of that last part is Delta buying more and more MD-90 aircraft.  The capital costs are low compared to current Boeing aircraft and the airliner provides close to current Boeing efficiencies. 

Both manufacturers know that their order books are soft.  Both know that some who have ordered both current and next generation aircraft aren’t necessarily going to be around to take delivery on those aircraft 5 years from now.  One great example is Lion Airways order from Boeing.   The dirty secret about that order is that Lion isn’t an airline with significant risk both in operations and financially. 

Airbus need to work hard getting their current production sold until their aircraft are in place but without depreciating values and without massive discounts to encourage orders.  It’s a tall order and a difficult challenge for both manufacturers.

Filed under: Aircraft Development by ajax