Air France-KLM, Qantas Order 300 Airbuses in Double Blow to Boeing

Airbus has picked up 302 new aircraft commitments from Air France-KLM and Qantas Airways in the past 24 hours. The deals flip the long-time Boeing narrowbody customers to Airbus narrowbodies in what is the latest blow to the struggling U.S. airframer.

Air France-KLM, on Thursday, unveiled orders for 100 A320neos and A321neos for its KLM and Transavia subsidiaries with deliveries from the second half of 2023. The deal includes purchase rights for another 60 narrowbodies. In addition, the group has signed a letter of intent for up to eight of Airbus' recently launched A350 freighters for Air France.

And down under, Qantas on Thursday unveiled an agreement in principal for up to 134 A220 and A320neo family jets with an initial firm commitment for 40 aircraft — split equally between A220-300s and A321XLRs — to be finalized by the end of the airline's 2022 fiscal year next June. Deliveries of the jets would begin in its 2024 fiscal year and continue for a decade.

The new Airbus narrowbodies will replace Boeing 737s at both Air France-KLM and Qantas. KLM and Transavia operated 136 737s at the end of September, and Qantas 75 737-800s. The latter will also use the Airbus jets to replace the 20 Boeing 717-200s in its fleet.

While neither airline commented directly on why it selected Airbus over Boeing, which was in the running for both deals with the 737 Max, some reasons are clear. For one, both Air France-KLM and Qantas already have sizable Airbus orderbooks, the former for the A220 and the latter for the A320neo family at its budget subsidiary, Jetstar. In addition, Boeing continues to face challenges getting jets out the door to customers. These problems include supply chain snags slowing the ramp up of 737 Max production, and quality issues that have temporarily halted 787 deliveries.

Qantas CEO Alan Joyce, however, said the Airbus deal had the "added advantage of providing ongoing flexibility within the order, meaning we can continue to choose between the entire A320neo and A220 families depending on our changing needs in the years ahead." Qantas also considered Embraer's E-Jet-E2 family in the narrowbody campaign that it launched in October.

Joyce's comment hits at two widely criticized strategic decisions Boeing has made in the past two years: Cancelling its new mid-market airplane, or NMA, that would have competed with the A321XLR in January. And terminating its deal to acquire the majority of Embraer's commercial airplane business — including the A220 competitor E2 program — in 2020. Without either offering, Boeing was hamstrung by the limits of the 737 Max family.

Tensions between Air France-KLM and Boeing over the 787 delays factored into the group's decision, Reuters reported. In October, group Chief Financial Officer Steven Zaat said that roughly €500 million ($566 million) in 2021 capital expenditures had to be pushed to 2022 due to the delivery issues.

Air France-KLM had nine outstanding orders for 787-10s at the end of November, according to Boeing's orders and deliveries data.

Boeing has also faced criticism from major customer Ryanair. Michael O'Leary, group CEO of the Irish discounter, said in November that the airline was not "overly impressed by the management locally in Seattle," on top of disagreements over pricing for additional 737 Maxes.

"They need to get their shit together," O'Leary said of Boeing, adding that their orderbook was going "nowhere."

In one positive note for Boeing, Reuters reported that International Airlines Group is leaning towards firming up some or all of the memorandum of understanding for 200 737 Maxes it signed at the Paris Airshow in 2019.