European aircraft major Airbus (EADSY, Financial) witnessed another success in its experience of launching fresh and upgraded aircraft models. The much talked about A320neo, the upgraded version of the very successful A320 with New Engine Option (neo), completed its first and successful maiden flight that took off from Toulouse, France on Thursday and lasted for almost two and a half hours. Analysts and industry experts believe this to be a significant step towards the successful launch and entering service of the jet. Let’s take a quick look at the aircraft, and why it matters so much to the French aerospace company.
A look at the jet
The A320neo is a single-aisle aircraft which the company considers to be “the benchmark for traditional airlines and low-cost carriers alike”. Powered by Pratt & Whitney’s PurePower PW1100G-JM engine or CFM International’s LEAP-1A engine, as opted for, the aircraft offers increase fuel-efficiency, lower noise levels, and lower emissions.
A320, which had its maiden flight in 1987, proved to be a very popular choice among the major global airlines and till date more than 11,000 classic versions have been sold. However, on the back of increasing fuel prices, the airlines started demanding for models that offered greater fuel efficiency. It was then that Airbus announced the new engine option that would make the jet 20% more fuel efficient and help airlines reduce cost per seat. John Leahy, Airbus CEO, believes such kind of fuel efficiency, particularly because fuel accounts for 40% of operating cost, makes the A320neo “a game changer”.
The narrow-body Airbus A320neo. Picture taken from Airbus website
Why the A320neo matters to Airbus
Launched in 2010, the A320neo series, which includes A319neo, A320neo and A321neo, has already gained much traction among airline operators and has received more than 3,200 orders from 60 plus airlines. The company aims to sell as many as 15,000 A320neo aircraft over the span of coming two decades and is greatly banking of replacing old fleet with new planes.
The single-aisle A320 had been competing with Boeing (BA, Financial) 737 for decades, and now the A320neo will compete against Boeing 737 Max, the upgraded version of the 737 and A320neo’s equivalent from the American airplane maker. With the successful completion of the maiden flight, the A320neo has moved one step ahead of the 737 Max in terms of being delivered. While Boeing’s offering is slated to enter service in 2017, Airbus will start delivering the aircraft from late 2015, giving the latter an almost one and half year head start in the segment.
This head start is going to prove to be very vital for the European company. Airbus predicts that in the coming 20 years the global aircraft market will be worth $4.6 trillion, and single-aisle planes are going to account for 70% of all new jets and the demand for the segment is going to hit 22,000 units mark, making it a $2.1 trillion opportunity. With the intention to benefit from the market situation, Airbus has thinking of increasing the production of the aircraft from 46 a month in 2016 to 50 a month. With the A320eno, Airbus expects to capitalize on the trillion dollar opportunity.
Parting thoughts
As the global economy improves, the market for commercial aircraft, particularly that for narrow-body single-aisle models, is expected to witness strong growth. With more and more passengers taking to the sky, the demand for fuel-efficient aircraft is going to rise. Airbus looks well poised to extract the maximum of this enormous prospect with its A320neo aircraft.
