Green Africa Airways Orders A220s

Madhu Unnikrishnan

February 18th, 2020 at 9:00 AM EST

  • Green Africa Airways, an ambitious startup airline in Nigeria, placed another big plane order. In late 2018, it chose Boeing to supply it with 50 B737 MAXs, or as many as 100 including options. Last week, it signed a memorandum with Airbus for 50 A220-300s. It’s not clear whether the MAX order was cancelled, or if it plans to fly both aircraft types.

    Either way, Green Africa thinks there’s a big opportunity in Nigeria, despite a long list of airline failures there, some with powerful backers like Virgin’s Richard Branson. This airline’s main financial backer is an investment firm based in New York. It highlights an advisory board that includes former American CEO Tom Horton. 

Airbus in a Good Place With Narrowbodies

  • In its latest earnings report, Airbus discussed its move to increase its stake in the A220 program. It now owns 75% after Bombardier sold its shares; the other quarter is owned by Quebec’s provincial government. The A220 is selling fairly well, with 107 now flying with seven different airlines.

    When it comes to the A320 NEO product, “we are a victim of our success,” the company said. It’s referring to its difficulties producing all the A321 NEOs that airlines want, in particularly the cabin flex version of that plane (the “ACF”). Those production difficulties make it impossible for Airbus to take advantage of the current MAX crisis, though it’s talking to suppliers about increasing monthly NEO production after 2021.

    Its current order book of more than 6,000 narrowbodies represents more than eight years of production at current rates. Airbus says it will double the number of A321 ACF deliveries this year. And it hopes to catch up delayed deliveries within the next year or year and a half. Having so much demand for your products is a nice problem to have.

    Indeed, Airbus is excellently positioned in the narrowbody space with its NEOs, including its future XLR versions with intercontinental credentials. With widebodies though, Airbus is struggling to sell A350-1000s and A330 NEOs, to speak nothing of the A380 debacle. Separately, it faces big fines for alleged corruption and big headaches from U.S. tariffs on European aircraft.  
  • At an event hosted by Cowen, an investment bank, Boeing said the next big MAX milestone is performing the first certification flight, hopefully soon. Boeing actually has a short-term widebody problem too: The fact that Chinese airlines aren’t buying any B787s or B777s. Longer-term, it needs to address the middle of the market between narrowbodies and widebodies, as well as the eventual need for an all-new B737. That’s hard to cover with just one aircraft family. 
  • AerCap and Air Lease Corp., two major players in aircraft leasing, spoke about the distress their Chinese airline customers are currently experiencing. To help out until the virus scare passes, both companies say they’ll defer monthly lease payments in some cases. Air Lease also mentioned offers to buy planes from Chinese and other distressed Asian carriers who need quick cash.

    That could mean sale-leaseback deals if the carriers still want to keep the capacity. Or it could mean outright purchases, in which case Air Lease will move the planes to other jurisdictions short on supply due to the MAX grounding and NEO delays.  Europe, in particular, badly needs more planes for the upcoming peak summer.

    Air Lease also wanted to remind everyone that the vast majority of its MAX customers still need and want their planes, and that airlines even based in Asia continue to take widebody deliveries. Taiwan’s EVA Air just took one of its brand-new B787-10s.

    With the MAX, Air Lease sees “light at the end of the tunnel,” though it might take around two years for the 400-plus MAXs now parked to return to service.

Madhu Unnikrishnan

February 18th, 2020 at 9:00 AM EST