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Fewer aircraft orders but loads of engine orders.
(The latest figures we have are to the end of March 2016.)

 

In many respects it was a rather odd First Quarter. There were fewer aircraft orders than in Q1 of 2015, but more engine orders. The large commercial jet aircraft backlog is down on the level at the start of the year, but the firm engine order book is larger. Delivery numbers have fallen which was unexpected - there have been fewer deliveries of new aircraft and engines than in the First Quarter of last year.

The industry was not really expecting a slump in aircraft orders together with a slump in aircraft delivery numbers. It was clear from the low January and February aircraft order intakes that the First Quarter of this year might not have a very high numbers, though it was equally clear that the engine order intake would be high, especially after some 500 single-aisle engines were ordered in February alone for previously ordered aircraft. There was the odd situation in February with orders for four single-aisle aircraft and orders for 508 single-aisle engines. There were no widebody aircraft or engine orders during the month.

Things changed in March with orders for 68 single-aisle aircraft taking the First Quarter single-aisle intake to 135 aircraft. There were also orders for 15 widebodies during the month, taking the First Quarter widebody total to 36. There was no repeat of the February engine order intake and in March there were orders for 154 single-aisle aircraft engines and 44 widebody engines. This took the First Quarter engine intake to 784 single-aisle engines and 134 widebody engines.

On their own, these numbers mean very little but the Q1 aircraft order intake was actually the lowest for a single quarter since Q3 of 2009. That would have been something of a surprise to the industry. The big difference between aircraft and engine orders was that the Q1 engine order intake was the largest for a First Quarter since 2012. That would also have been something of a surprise because more often than not one tends to think of engine orders as being multiples of aircraft orders and, of course, it doesn't work that way. Of the 784 single-aisle engines ordered in Q1, 520 were for previously ordered aircraft and of the 134 widebody engines ordered in the quarter, 68 were for previously ordered aircraft.

The engine manufacturers, in particular the single-aisle engine manufacturers which in turn means CFM and P&W, are in a rather unique position. Their order books represent years of work in hand but there are still a large number of aircraft on firm backlog order without engine selections. As of the end of March these aircraft will need just over 4,200 single-aisle engines and just under 500 widebody engines. All those single-aisle engines are needed for A320 Family aircraft so, even if Airbus had a terrible single-aisle order intake this year, CFM and P&W would still pick up orders for the aircraft without engine selections. And then if Airbus and Boeing both had terrible widebody order intakes this year, the widebody engine manufacturers would still be able to pick up engine orders, though to a lesser extent than the single-aisle engine manufacturers.

Airbus has not exactly had a very good start to 2016. The European manufacturer had orders for 12 single-aisle aircraft in the First Quarter, but the net figure is -1. Airbus also sold 20 widebodies in Q1 but the net figure is 11. It was a terrible First Quarter in terms of orders for the company. That did not much matter to CFM and P&W. They took orders for 538 engines for A320 Family aircraft during the quarter, most being for previously ordered aircraft.

There is another point though which is that the order intake has very definitely slowed. Monthly order intake figures do not really illustrate this but quarterly figures do. Each of the last five quarters has had a lower order intake than the corresponding quarter the year before. For example, the intake in Q1 last year was 217 aircraft lower than Q1 2014. The Q2 intake last year was 165 aircraft lower than Q2 2014. The Q3 intake last year was 482 aircraft lower than Q3 2014 and the Q4 figure last year was 507 aircraft lower than the Fourth Quarter of 2014 which was a record quarter. This year the First Quarter figure was 66 aircraft lower than Q1 of last year.

The number of aircraft being ordered in the First Quarter of each year has also been slowing, down from 651 in Q1 2013 to 454 the following year and 237 last year. The intake figure of 171 this year is even lower. What is very interesting is that this slowing is also evident when one looks at the quarterly order intake of the two most popular single-aisle aircraft programs, the 737 MAX and the A320neo Family. Their combined First Quarter order intakes have been slowing each year and the Q1 figure of 27 this year is the lowest for a single quarter since Q1 of 2011, when there were no orders. The first A320neo was ordered in December 2010 and then nothing seemed to be happening until June 2011 when the first volume orders for the program were announced, at the Paris Air Show.

Part of the reason for the slowing of the order intake could be that production slots for most programs are already taken for years to come and airlines know that if they place orders today they won't see the new aircraft for several years. Another cyclical downturn might have started or lower fuel prices might mean that fewer airlines are in a rush to get more fuel-efficient aircraft. The big problem here is that the large commercial jet backlog has soared in recent years but production has not really risen to meet it. For example, between the start of 2014 and the end of last year the backlog increased by over 2,000 aircraft, or over 18%. This year, production will be up by around four percent on 2014 levels.

What the relatively low First Quarter aircraft order intake did have an effect on was the backlog. The sums involved are very simple; orders for 171 aircraft, 40 cancellations and 301 deliveries. In effect, for every aircraft ordered, two came off the books. With engines, it was the other way around; orders for 918, 90 cancellations and 594 installs. For every four engines ordered, three came off the books.

In the aircraft segment, at the end of March both the single-aisle and the widebody backlogs were lower than at the start of this year. There are considerably more single-aisles on firm order backlog than was the case 12 months ago, but there are also 140 fewer widebody aircraft on backlog.

Airbus and Boeing both have smaller backlogs than at the start of this year. Airbus has a larger single-aisle backlog than Boeing but the current figure is 104 less than at the start of 2016. Boeing's single-aisle figure is currently 12 aircraft lower than at the start of the year.

Boeing still has the largest widebody backlog but the figure at the end of March was 43 aircraft lower than at the start of this year. The current Airbus widebody backlog is 11 aircraft lower. Larger widebody delivery numbers than Airbus over the past year have eroded Boeing's widebody backlog to the extent that the current figure is 111 less than a year ago. Airbus' current widebody backlog is 29 aircraft less than a year ago.

In a nutshell, both manufacturers currently have smaller single-aisle and smaller widebody backlogs than at the start of this year; both have larger single-aisle backlogs than a year ago and both have smaller widebody backlogs than a year ago. COMAC, Bombardier and Irkut have had no change.

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Philip Abbott,
Editor & Publisher.