Airbus Challenges Boeing with This A330neo Order Win

Author's Avatar
Dec 20, 2014

Airbus (EADSY, Financial) and its American rival Boeing (BA, Financial) are fighting tooth and nail to bag greater number of orders as the final days of 2014 approach. While Airbus is the undisputed champion in the narrow-body jet market, Boeing (BA) dominates the wide-body commercial jets space. But the latest order from AirAsia X, a South-east Asian low cost carrier, gives Airbus a leg up in the wide-body race, suggesting that the plane maker is gradually gaining grounds in the wide-body market.

According to a report published in Wichita Business Journal, AirAsia X has placed an order for 55 A330neo aircraft, valued at around $15 billion. While this order win might not help Airbus to beat Boeing in terms of maximum orders bagged during the year, it’s definitely going to help the former gain market share and edge closer to its peer.

03May20171226321493832392.jpg
Source: Airbus

A brief look at the order
Airbus made the announcement on Monday that it has finalized a deal for 55 A330neos with the Asian budget airline. According to the agreement the deliveries of the A330 successor will begin in 2018. AirAsia X, a subsidiary of Malaysian AirAsia, focuses on long-haul travel. The parent airline has been an ardent buyer of Airbus and till date has ordered a total of 91 A330neo jets. The latest order makes it the biggest A330 customer globally. Both AirAsia X and Airbus are excited about the deal. Airbus CEO John Leahy commented that “this order from AirAsia X is a major endorsement of the A330neo as the most cost-efficient aircraft in its size category.” John strongly believes that the jet’s unparalleled fuel-efficiency will help the airline lower its operating costs significantly and widen profitability margins.

A quick look at the A330 successor
The A330neo is the re-engineered version of Airbus’ top selling wide-body in the last decade, the A330. The jet, introduced in the 1970s, was the company’s first plane that offered three engine options. Airbus brags about the fact that the A330 has one of the best dispatch reliability rates of 99.4%. Till date the European aero major has delivered more than 1,000 jets to over 100 customers worldwide. However, as airlines across the globe started pressurizing jet makers to build fuel-efficient jets, Airbus had to warm up to the idea of adding advanced engines to the plane.

Fuel charge accounts for about 33% of the total operating cost of airline operators, so the demand of planes with dated engines shall automatically drop when carriers have options such as the 787 Dreamliner, and the highly anticipated 777X from Boeing. The 787 Dreamliner is a built from scratch model that claims greater fuel economy owing to the use of composite material, and the 777X also stresses on increased fuel efficiency. Industry experts and analysts were quick to observe that the 787 and 777X are superior models and would easily overshadow the A330, unless Airbus goes for an upgrade. It, therefore, became crucial for the jet maker to consider upgrading the A330 to sustain its popularity, and contest the likes of Boeing effectively.

More than just an order win for Airbus
As the fight between Airbus and Boeing intensifies, every single order win counts. What makes the current A330neo order win significant is that it will boost Airbus’ wide-body backlog and help in gaining traction in the large jet space. Reengineering the A330 was a wise decision from the European behemoth, else the AirAsia X orders would have undoubtedly gone to either the 787 Dreamliner or the 777X. If Airbus manages to bag few similar orders, it could actually shake Boeing’s dominance in the wide-body commercial jet arena.