Insanely Huge

On several occasions I said Boeing’s 737NG backlog is “insanely huge” or “stupidly huge. Well, it seems that I won’t be able to find the right word to qualify the A320 backlog size.

A320 backlog

The A320 Classic has about 2,300 units in the backlog. If you add the recent 700 A320neo orders, the total is about 3,000 units. The interesting thing is that Airbus still needs to secure some more orders from different geographic regions and from various business models. If my feeling is right, then there would be around 900 total neo orders at the end of the year. At that point, the shareholders will have a gun pointed to their head, “Give more Capex or the orders will evaporate.”

I do not want to use unfriendly words like “stupidly” or “insanely” to qualify Airbus A320 backlog size, so let’s say that the A320 backlog is amazingly huge.

With more than 3,000 units to deliver, I do not know how far the A320 is sold out. May be there is no more delivery opportunities before 2019. As a comparison, with “only” 2,100 on backlog, Mr Jim Albaugh said that the 737NG is sold out until 2016.

Backlog Burn-Down

While Airbus is building its A320 backlog, Boeing’s intention is clearly to burn-down the backlog. Those facts underline the difference of psychology between Airbus’ and Boeing’s managers. One looks for security and stability whereas the latter wants productivity and agility.

We are witnessing the entry of a third major player into the narrowbody market. I have been in close contact with Canadian modesty and humility since about one year now. I have the feeling that the third major player keeps its Canadian Modesty. This is another and interesting psychological profile than the two I mentioned above. For example there has been no reaction when their latest product, which will become a true game changer in the narrowbody market, was qualified as “Dead and Buried” by Airbus.

I think Bombardier has amassed more than 130 CSeries orders by now. That’s more than the first two year of production. It must be quite difficult to get CSeries deliveries earlier than 2016.

Too Early Too Slowly

I still believe that the A320neo launch is way too premature. I do not understand why a simple re-engining takes more than five years to develop when the engines are ready. The bizarre timing of the announcement is only one point. The other interesting point is about the fact that the A320neo does not grow in size. In my humble opinion, the narrowbody aircraft average size must grow by about 5 to 10 seats. Why do I think so? Because I noticed that the average sold seats per aircraft in the US grew a little bit. If you want, you can make your observations by yourself (click here). I also read elsewhere that regional jets are getting bigger.

Therefore, I suspect the definition of the A320neo, especially the A321neo, is in reality still not frozen. In my opinion, when the shareholders will be afraid to make a U-turn then Airbus will propose some changes. This is a déjà vu. remember the case of the re-engined A330, the A350 mk1 and the A350XWB? 

Replacement Is Not An Option

The A320neo is presented as an “option”. In reality it is a replacement for the A320 Classic. You just can’t offer four engine types for exactly  the same airframe, especially when two of them burn 15% more fuel than the two other “options”. It just does not work. I also hope that airlines will be clever enough to ask for an engine interchangeability. After all, they will be buying exactly  the same airframe. The engine interchangeability will offer the flexibility to wait for the availability of the more efficient engine but not to wait the aircraft delivery when the capacity requires it.

So yes, I think airlines are right to ask for an engine interchangeability on the A320 especially the interchangeability from the inefficient old engine toward the new and better one.

Competitors Are Not Worried

In my very humble opinion, the A320neo orders don’t disturb much the competitors. The deliveries of those aircraft are as far as 2019. More orders will only mean even further deliveries. So, who really cares?

In my view, those far-far-away deliveries give extra time for the competitors to think and to define the right response. No one is really in hurry anymore because Airbus will have frozen it narrowbody strategy for the next ten years. However, I expect that the A320neo will change, just like the A350-1000XWB changes five years after its launch.

This is the A320 family orders and deliveries as of May 31st, 2011 (click here).


  1. Grant W said,

    June 24, 2011 at 13:05


    I agree, a little more modesty coming from Airbus would make news coming from them more palatable.

    One question: With the ever growing “orders” for the A320, what’s to keep Airbus from just ramping up yearly production instead of having to push the orders further out in the timeline? That way their customers won’t have to worry about not having slots available in the near future.

    At any rate, I think Boeing is fine taking an additional 6 months to determine which direction to go with the 737. That’s not much time, when the lifetime of an airframe is 30 years. My guess is they’re trying to figure out the logistics and economics of a new plane that is competitive not just in 2020, but in 2030 as well.

  2. Vero Venia said,

    June 24, 2011 at 13:30

    Grant W,
    You asked the question, ” what’s to keep Airbus from just ramping up yearly production instead of having to push the orders further out in the timeline?” It is a legitimate question.
    I suppose it is not very easy to increase production rate. First, there is a maximum capacity you can achieve without spending some investment. Second, you have the suppliers which will need to increase their production capacity too. They may have to face the same investment issues. Third, increasing production output also means taking more industrial risks. What if the market suddenly slows down? You can end up with production means that are oversized for the reduced output. Perhaps there are other important aspects to consider that I am not aware of. Just think about a possible obsolescence of the product or of the production facilities.
    So, I believe Boeing does not need to hurry with the decision for the 737. They can continue to deliver them without taking too much industrial risk. They still can make huge profit from the 737 even by delaying the announcement of a new 737 until 2014. You can see the chart in this entry to understand the rationale:

  3. Aurora said,

    June 24, 2011 at 14:50

    Vero Venia, is it exactly the same airframe? The wingtip fences will be replaced with winglets and the new engines will be (as far as I know) heavier. I suspect the wing will need strengthening. What this means for weight I don’t know, but I’ve yet to read that these changes will be “weight neutral”.

  4. Vero Venia said,

    June 24, 2011 at 18:03

    Yes they have exactly the same airframe. I am talking about the airframe that will be delivered when the modifications will have been incorporated. According to Airbus, starting at that time, exactly the same airframe will be offered with four engine options. That is why it is called “new engine option”
    In my humble opinion it is “New Engines” and that’s all. The first modified airframe, including the sharklets, will be delivered with the old and inefficient engines. If I were an airline and if I had to take delivery of those airframes, I would ask firmly for an engine interchangeability to protect the value of the airframe.

  5. Vaidya Sethuraman said,

    June 24, 2011 at 20:35

    Interesting piece ; the order back log is ginormous for A ;In my opinion, they are looking for milking the cash from 320 -given that 330 will run out in my opinion in five years and 350 may not necessarily generate the kind of dependable cash like 320 (as B defends its turf).That could be the reason , they would prefer a huge back log for about 7-8 years at the rate of say 400-450 planes a year.
    The big question is-if Boeing calls Leahy’s (read Airbus’) bluff and build a new plane with 20% better economics -what happens to this back log and how well is Airbus poised to invest in a new plane?not sure.Remember, 350-1000 will still be in project phase till end of the decade ,consuming cash.
    A does not many options , except attacking 300-ER on the flank with 350-1000 ,hoping ,it will replace the 330 ,which will fade away thanks to 787-9 and 10.380 will sell but not a rate which will matter .
    Hence their best foot forward for A is Neo and it is making hay while Boeing is making up its mind and BBD is coming on the scene.
    On the point of engine interchangeability -I am not sure, A could do that -the PW fan is different from Leap X ; the 787 was designed for this purpose but if I am not mistaken, even that is not that straight.
    In terms of strategy ,I believe, the reason Boeing is aiming at a new plane is to attack the cash machine of Airbus-320 , though the RE is a viable option ,which keeps the status quo in the narrow body market. The new narrow body and 787-9/10 is the attack , while the 777 Advanced will be the defense in the upper end of the twin engined wide body ; 747-8 puts a cap on the premiums that Airbus could have charged absent the intercontinental.
    let us see how it turns out.

  6. Vero Venia said,

    June 24, 2011 at 20:54


    You said, “On the point of engine interchangeability -I am not sure, A could do that -the PW fan is different from Leap X ; the 787 was designed for this purpose but if I am not mistaken, even that is not that straight.
    That’s the whole point. Buyers who care about the values of their airframe and who will have to take deliveries in 2013 onward but with the inefficient old engines must absolutely protect the value of their investment. This is especially true for lessors. If they can’t change their inefficient old engine with the new one, the airframe will lose its market value.
    You are so right when you said that interchangeability is not easy. That is why I have always asked my self about what would happen to the deliveries that are scheduled in 2013, 2014 and 2015. If the interchangeability is not available, I suspect that A320 customers will defer the deliveries, leaving 2013, 2014 and 2015 with very few deliveries. It is interchangeability or no delivery.

  7. keesje said,

    June 26, 2011 at 12:35

    The NEO would be leaped as soon as it surfaced, it was only going to reach parity, lessors found it a bad idea, as did banks. Boeing was going to sell a pile of 737 anyhow.

    After Paris we are removing the egg from our faces while AF, AA and no doubt some others are negotiating additional orders. Some of the contract signed are long term xxx to be delivered between 2015 and 2022.

    The A320 end lines in Tjanjin, Hamburg and Toulouse are rescheduling while Airbus is negotiating withthe supply chain.

    CFM and PW also will have to beaf up production. Boeing is forced to take decisions earlier then they want to, risking having to rush technology, risking being overtaken by more mature competition a few years later.

    Painting the huge Airbus backlog as an issue is odd IMO. Is a low risk program bridging the period towards an A320 successor in a lucrative way. I think Boeing will follow Airbus in reengining, the alternative route (a brand new design) carries several risk IMO;
    – what will fill the assembly lines in the 2016-2021 period
    – innovative technology proved risky. Proven technology marginal beneficial
    – engine, what engine will be available only to Boeing..

  8. Vero Venia said,

    June 26, 2011 at 13:23


    I do not know much about the reasons behind neo’s launch.

    In my humble opinion, increasing the output of “semi-obsolete” product is a little bit risky especially when there are new entrants with better products and also when your biggest competitor does not express anything at all concerning their next move.
    Very honestly, there are so many questions in my head about the A320neo. I am deeply puzzled by the move. I have the feeling there is something irrational behind the launch of the A320neo. Even then, I still can’t guess what that irrationality is.

    I think the other aircraft manufacturers are as perplexed as I am.

    It is even more perplexing when you examine carefully the state of the A320 Classic backlog as of 31 May 2011 (click here).
    You can find out that lessors have unfilled orders of about 650 A320 Classic. For example
    – Aviation Capital Group: 58 unfilled orders
    – AWAS: 74 unfilled orders
    – RBS: 51 unfilled orders
    – Aircraft Purchase Fleet: 41 unfilled orders
    – DAE Capital: 34 unfilled orders
    What do they really think about neo? Those lessors are the ones who will be impacted severely by the introduction of neo. How can they expect to make money when the market value of the aircraft they are taking in the coming years will be lower than the book value?

    There are airlines with strange orders
    – Mandala: 25 unfilled orders, operations ceased in Jan 2011
    – Wizz Air: 103 unfilled orders, 34 in operations.
    – IndiGo: 64 unfilled orders, ordered 180 more A320neo
    – Airasia: 86 unfilled orders, orders 200 more A320neo
    – Kingfisher & Kingfisher Red: 67 unfilled orders
    And so on

    You really need to download the spreadsheet from this URL (click here), and do your own analysis. If you do it, probably you will get as confused as I am now.

  9. rsal said,

    June 27, 2011 at 07:50

    The 747-8 Intercontinental is more than 10% lighter per seat than the Airbus A380 and consumes 11% less fuel per passenger,” Boeing says that in a statement.

    Hence why A380 catch more orders than Dash – 8 till now.

  10. Vero Venia said,

    June 27, 2011 at 10:05

    till now.

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