China’s Big 3 airlines, Air China, China Eastern, and China Southern, have committed to 292 new Airbus A320neo family aircraft, further solidifying the European planemaker’s lead in Asia’s largest market.
Beijing-based Air China, and its Shenzhen Airlines subsidiary, ordered 96 A320neo family aircraft, in one of the three deals unveiled on July 2 in China. Shanghai-based China Eastern ordered 100 A320neo family planes. And Guangzhou-based China Southern 96 A320neo family jets. Deliveries begin in 2023 for Air China, and a year later for its competitors, and run though 2027 for all three airlines.
The deals are a big win for Airbus, which has been picking up marketshare from Boeing since the 737 Max grounding in 2019. The market was roughly split between models from both airframers prior to the grounding, and a U.S.-Sino trade dispute that began during the Trump administration that continues to this day. Since these dual issues, Airbus — despite facing its own challenges — has moved to ramp up production of A320neo narrowbody jets and capture share while its competitor is down.
“There is … very much a move that Airbus believes it is capturing a dominant share,” Air Lease Corp. CEO John Pleuger told The Air Current on the Chinese market in 2021. “This is the time. This is the time to go for it. And that’s actually a very natural market decision to take.”
Airbus could produce 65 A320neo family aircraft a month by next summer, and 75 a month in 2025. The main issue that could hold the airframer back is its supply chain, which leasing companies and airlines have said is already showing signs of stress and resulting in delayed deliveries of new aircraft. Airbus has a final assembly line in Tianjin that serves the Chinese market.
Boeing, for its part, continues to await the restart of 737 Max flights in China. The country has officially moved to lift the grounding order that was put in place in March 2019, but revenue passenger flights have yet to begin. Boeing has numerous Maxes bound for Chinese airlines that are in storage.
“These new orders demonstrate the strong confidence in Airbus from our customers,” Airbus Chief Commercial Officer and Head of International Christian Scherer said in a statement. “It is also a solid endorsement from our airline customers in China of the performance, quality, fuel efficiency and sustainability of the world’s leading family of single aisle aircraft.”
Air China, China Eastern, and China Southern all say the new aircraft will be used for a mix of growth and fleet replacement. China Eastern said it plans to replace roughly 68 older A320 jets with its order for 96 new planes.
The three orders are worth more than $37 billion at list prices.
Lufthansa Brings Back A380s
Next year, Lufthansa will bring back the Airbus A380, which it “permanently decommissioned” during the pandemic. The move comes amid resurgent travel demand.
Lufthansa cited the “steep rise in customer demand and the delayed delivery of ordered aircraft” for its decision to reactivate up to eight A380s remaining in its fleet, the airline said June 27. It parked its 14 A380s in 2020 amid the precipitous decline in air travel, and has since sold six. The remaining superjumbo jets, which seat 509 passengers, will return to revenue service in summer 2023.
In May, Lufthansa Group CEO Carsten Spohr described travel demand as “enormous.” At the time, the airline planned to fly all that it could this summer within the constraints of “delayed aircraft [and] operational bottlenecks.” It also raised its full-year capacity guidance by 5 points to 75 percent of 2019 levels. Lufthansa has since cancelled more than 3,000 flights in both July and August due to airport and other staffing issues in Germany.
Spohr spoke repeatedly last year about “modernizing” Lufthansa. This included retiring nearly all of the airline’s four-engine aircraft, including the A380s, as well as Airbus A340s and Boeing 747-400s. Only Lufthansa’s 747-8s were to remain. The group pivoted to acquiring more new, efficient, twin-engine Airbus A350s and Boeing 787s, both ordering additional aircraft and acquiring new models from lessors.
Since then, however, both Airbus and Boeing have faced supply chain issues that have delayed new deliveries. Boeing is especially challenged having not delivered a new 787 since mid-2021, and it delayed the entry-into-service of its new Boeing 777X until 2025 — nearly five years late. Lufthansa has orders for 27 777-9s. These issues have forced airlines around the world to find alternative aircraft to fly their schedules, including extending aircraft leases and bringing planes back from storage.
Lufthansa’s decision to bring back the A380s suggests that the delays it faces from both Airbus and Boeing, coupled with strong travel demand, outweighed its desire to quickly modernize its fleet.
But the return of the A380 is unique. Even before the pandemic, demand for the large passenger jet was waning. Many airlines saw it as too much airplane for the market, which increasingly favored smaller, more nimble models. Airbus announced in early 2019 that it would end production of the jet two years later with the final model delivered to Emirates in December 2021. The pandemic, which hastened many airlines’ shift to those more nimble aircraft, sped the exit or at least long-term storage of many A380s, including at Air France, British Airways, Lufthansa, Qantas Airways, Qatar Airways, and Singapore Airlines.
British Airways and Singapore Airlines were the first to resume A380 flights in November, followed by Qatar in December, and Qantas in January, according to Cirium schedules. But even with Lufthansa joining this global cohort, the future of the A380 looks dim the longer it is out of production and as its numbers dwindle.
Lufthansa has not said when or where it will fly the A380 when the aircraft returns next summer. It previously flew it primarily from its Frankfurt hub, but also from Munich, to destinations including Hong Kong, Los Angeles, New York JFK, and Shanghai Pudong, Cirium schedules show.
Fleet Briefs
- More than two years after the pandemic began, nearly a fifth of the world’s commercial aircraft fleet remains parked, according to Visual Approach Analytics. But the percentage is far less for narrowbody aircraft: closer to just 7 percent.
- Azerbaijan’s Silk Way West Airlines has joined the growing list of airlines with commitments for Airbus’ new A350 freighter. The cargo carrier signed a purchase agreement for two A350Fs last week, bringing the airframer’s total commitments for the aircraft to 31.
- IAG has firmed 14 Airbus A320neo options. The aircraft, from a 2013 deal, will be split between 11 A320neos and three A321neos that arrive in 2024 and 2025. The option exercise comes a month after IAG firmed a 2019 memorandum of understanding with Boeing for 50 737 Maxes plus another 100 options.
- Aer Lingus and Icelandair have both signed new leases for narrowbodies. The former will take two Airbus A320neos from CDB Aviation in July. The planes will replace older A320ceos in its fleet, and were originally built for Russia’s Smartavia but never delivered due to Western sanctions following the country’s invasion of Ukraine. Icelandair, for its part, has leased two Boeing 737-8s from BOC Aviation that are due in the fall of 2023. The aircraft will increase its Max fleet to 20 aircraft.
- China’s airlines aren’t the only ones in Asia looking at new aircraft. In the past week, Bloomberg has reported several pending fleet deals in Asia: for one, Japan Airlines is in talks with Airbus and Boeing over an order for up to 50 narrowbodies, likely A320neo or 737 Max family jets, to replace its existing 737 fleet. (JAL was rare among large airlines in that it never ordered any Maxes or Neos prior to the pandemic). In India, Air India was polling pilots on a potential order for around 20 A350 aircraft, while rebooted Jet Airways is close to a deal for up to 50 A320neo and A220 jets; both deals could be a loss for Boeing, which currently provides Air India with its widebodies and Jet with its narrowbodies.
- The leasing world is about to get a major new player. Saudi Arabia, as part of its efforts to diversify away from oil dependence, will allocate a massive $100 billion to aviation investments from now through 2030, led by the launch of a new aircraft leasing company called AviLease. It will be led by former top executives from the Carlyle Group, GECAS, ORIX Aviation, and Aergo Capital. With that sort of money and that sort of management pedigree, expect AviLease to be a major player in the aircraft market before long.