Airbus recently welcomed United CEO, Scott Kirby, to its headquarters in an attempt to lure its business from Boeing. This could change aircraft orders for all airlines.
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Airbus Seizes The Moment
Following Alaska Airlines flight 1282 to Portland International Airport in which a door plug was improperly secured and came free during flight, the Federal Aviation Administration initially grounded all Boeing 737 Max 9 aircraft. Before approving a return to service, Max 9s had to undergo an inspection process and it was found that more aircraft had similar issues including some operated by United Airlines. The FAA grounding added further scrutiny of Max production lines. Both Boeing and the FAA were fortunate to avoid a fatal crash. Max deliveries were stopped previously when two 737 Max aircraft were crashed resulting in the deaths of 346 people between October of 2018, and March of 2019.
Airbus seized the moment and arranged a semi-secret meeting with United CEO, Scott Kirby, at its French headquarters. United ordered more than 530 737 Max aircraft of which it’s the largest 737 Max 9 operator in the world. More than 370 Max aircraft remain undelivered. The carrier’s Airbus order book includes 220 aircraft is split across 125 A321-neos, 25 A321XLRs, and 45 A350-900s though the wide bodies in this order have been pushed out by United.
The A321, especially Neo and XLRs are highly coveted at the moment because expansion is tough for carriers and access to new aircraft is key to growth. The XLR in particular has just shy of 10% longer range than the best equipped 737 Max and will replace aged out 757 aircraft on long thin routes from the US East Coast to Europe.
Matthew speculated this week in the above post, that Airbus might be willing to work with other customers in order to deliver aircraft sooner in exchange for a firmer commitment on the A350 deal and replacing the Boeing 777 in United’s fleet. This is of particular importance as Boeing has an extensive market position in the long-haul wide body space and this would be a chance to replace the type for which United was the launch customer. United also has 150 Boeing 787 Dreamliners on order.
Airbus saw a moment to capture the attention of one of the largest operators in the world who potentially have cause to quit its contract with Boeing. Initially, it appears that Airbus was unsuccessful, but time will tell whether the decision is permanent.
If United Were To Convert Orders
Should United and its board ultimately decide to take some form of a deal with Airbus and leave Boeing either partially or entirely in the cold remains to be seen. However, if United wants to keep up its current schedule of receiving just shy of three new planes every week in 2024, Airbus would have a difficult time moving enough customers to make that possible. And even if Airbus could pull that off, it’s next to impossible that aircraft engine manufacturers would be able to deliver power plants on time.
“As reported by Reuters, Airbus has already begun notifying airline customers about delivery delays in 2024 for its best-selling A320neo family of aircraft. The delay will mean that deliveries of several hundred single-aisle planes will be postponed by up to three months.
Airbus has confirmed that while it expects unspecified delays for A320neo aircraft in 2024, the delays do not reflect any worsening of the supply chain problems that have plagued the manufacturer since it revised its production plans for its best-selling range of jets earlier [in 2023].” – Simple Flying
What does that mean for other customers of Airbus? It means that while the manufacturer might be willing to provide an incentive to give up a delivery position, it says “your business is not as valuable to us as United’s.” It says that for customers it wants to capture, it will move heaven and earth to make it happen, but for less significant customers, they simply have to wait.
For Boeing, losing part or all of the United order would not be a death blow, but it would put the manufacturer in a compromised position. It’s not just the orders but the message it sends throughout the rest of the market. It would indicate that an airline with 700 orders, the launch customer for the 737 Max and the 777 – has lost faith.
Even If United Never Even Considered Moving Its Business To Airbus
Scott Kirby, in what could be his best move in management for an airline, took that meeting with Airbus. Though United may have never had the intent to move its business to Airbus, its negotiating power with United just increased dramatically. The ability to secure better terms and pricing in the future, and a favorable remedy on its current manufacturing concerns.
It also demonstrates to Airbus – and for that matter, other manufacturers – that even with a commitment as large as United has made to Boeing, it can be swayed by the right circumstance. That makes every order up for grabs, not only at United and not only due to the 737 Max situation but every order at every manufacturer. Commitments for the A220 might switch to Embraer or Boeing, Egyptair just abandoned the type. Airbus engine delivery issues could have some clients switching too, or A350 paint issues as Qatar Airways encountered.
Boeing also has to consider the situation for what it is. Spirit AeroSystems (the 737 Max 9 fuselage manufacturer) has some culpability in the issue. But if United were even considering a cancellation of its order, they won’t just cancel the fuselage. United doesn’t cancel a part, they cancel the whole plane and everyone in the supply chain loses equally. That also has a dramatic effect on its vendor relationships.
Boeing can’t apologize and comply, it needs to prove to the market that quality is of the highest importance and that a Boeing aircraft is a well-made, safe, and reliable. It needs to prove to customers that their business is also protected.
Conclusion
Airbus may have thrown its own delivery schedule up in the air, and while United doesn’t appear to have accepted the deal offered it could change how all manufacturers and airlines interact going forward. No sale is safe. For Boeing this should be the last, final, most serious warning that its business could be in jeopardy if its response is not well received by regulators and airline customers alike.
What do you think?
punish boeing by replacing the 737-7s with the A-220
The A220 a smaller Airplane than the A320 is built in Mirabel, (YMX), Quebec Canada, in a smaller assembly line, I think. And also in Mobile Alabama.
A-220 not intended to replace the A-320s
They’d make a great replacement for the 737-7s
They are both in high demand. They probably won’t have enough resources for all the planes needed to be built, Airbus nor Boeing. Airbus preferred for me. Maybe the two should just join together and become one company.
its Airbus sticking it to Boeing; It’s Kirby sticking it to Boeing. Whatever Boeing gets out of all this is richly deserved.
Dividends over Safety; Lack of Honesty over the facts. For Boeing is seems financial legerdermain is the order of every day. Engineering has flown the coop.
United is already having engine trouble on A321NEO
The engine isn’t Airbus, it’s a US company!
The issue with P&W engine were known when Kirby decided to go P&W. Patriotism has it’s risk, and he is getting bitten twice. First by Boeing with substandard quality and now by the engine maker P&W.
Maybe it’s time for Kirby to wake up.
Let’s just say I have a profound new respect for Kirby in the last couple weeks. Knowing how to play your advantage is a great skill.
You forget one thing. The location of Kirby’s meeting with Airbus was in Toulouse, France. It’s safe to say Kirby went to Airbus and not the opposite around or did I miss a meeting of Airbus execs at United’s HQ?
Accepting facts would help straighten out a distorted view of reality.
@ SNO
Airbus arranged meeting. Re-read the post. And my comment was regarding the change in Kirby’s over the top, all superlatives demeanor.
Really … time to wake up! The post is the opinion of the journalist and that’s it. It’s nothing more than a justification for Kirby going to Airbus. Call it damage containment. There are always words to twist things to your liking. The fact remains, Kirby went to Airbus and NOT the opposite around.
Airbus has enough business, no need to jump around Kirby!
LOL..you imply that Airbus doesn’t need nor want United’s business? Really? Is your European head so far up your European bum to believe this? Why wouldn’t Airbus get in the dance deeper with one of the largest airlines in the world. The idea that it wouldn’t is just ridiculous. How profitable really is the French government? Such hubris is comical….and oh so European. How’s that working for your economies? Right….which explains why their economies are just a fraction of what we have in the US.
Keep yappin…..we’ll see who’s really listening.
@SNO – You may have inside information that it was Kirby that arranged the meeting and not Airbus, but that conflicts with reports from Reuters and other sources. Based on your rhetoric in other comments, it seems this is something you have inferred, but don’t actually know. I could be wrong, perhaps Kirby arranged the deal instead, but not only does that counter worldwide media reporting and some private sources, but it also suggests that Kirby – with one of the largest order books in history, is chasing after Airbus after awarding it mostly to Boeing. That seems illogical to me. Yes, he may want to switch providers, but he holds the cards because he can demand whatever he likes from Boeing at the moment and they will give it to him to protect their order. Airbus, however, has an opportunity to steal that order and would be highly incentivized to do so.
Regarding “it’s next to impossible that aircraft engine manufacturers would be able to deliver power plants on time”, both the A320neo family and B737 MAX planes use variants of the same power plant, the CFM International LEAP 1 engine! United needs to negotiate directly with CFM to ask that their MAX 10 LEAP 1B engines be redirected to LEAP 1A engines for the A321neo. At first glance, it seems like a simple contractual change, no?
Brian SFO – Perhaps, but there haven’t been nearly the delivery delays on 737s vs A320s when specifically citing engine availability issues. It makes me think that something about the A320 version must be slightly different but I am not an engine expert.
If Airbus delays deliveries to other clients in order to cater United, they will have to compensate them for it. And in order to sway United, who must have gotten a wild heck of a deal for what´s probably one if the biggest order in the market, they must be competitive. They could do this if they wouldnt have buyers… but they do. Then why would they? Would make more sense if UA called for this meeting.
Airbus has sold out its A321 production slots until the end of the decade. Why, why, why would Airbus offer Kirby a heck of a deal? Are you assuming jumping over his shadow and traveling to France will buy Kirby a special treatment? It’s more take it or leave it situation. Airbus has enough business, the company is in a healthy financial state, what isn’t the case with its main competitor. There is no reason for Airbus to offer the A321neo at diminishing returns to United. Yes, United could cancel the A350-1000 order and go 777-8. So what, Airbus has healthy demand for the A350-1000, let Kirby cancel the order and go for another much delayed Boeing product. It would fit his style. Maybe it would on the time to replace a delusional CEO with a more down to earth candidate.
I’m sure they discussed it, thus the meeting.
I thought Kirby preferred Gulfstream.
Only when it is his mess to flee.
He is, as long as there is a golden parachute in the cabin.
Considered the current issues with the 737-10 certification some time will pass until the plane is finally certified. The FAA freeze of the 737 MAX production rate at current level won’t help either. United’s 737-10 will be delayed for years. In such a situation it’s nothing more then normal, that an airline CEO is assessing its options, and they are looking good for Airbus. Although it’s questionable Airbus will bend over for Kirby since he didn’t really treat Airbus with priority. What comes around goes around.
In regard to Kyle Stewart’s interpretation of Kirby’s visit at Airbus in Toulouse, France I’m scratching my head. Where does a travel agent and freelance journalist get all this detailed information about Airbus courting United? It’s not looking good when the strongest Boeing supporter suddenly visits the HQ of Boeing’s main competitor, but that’s not reason enough for all the nonsense written by Kyle Stewart. This article sounds as it comes straight out of the Trump campaign and the MAGA followers. The fact, that the United CEO visited the Airbus HQ is getting completely distorted. What CEO with a little bit proud and backbone would visit in the middle of a crisis exact the competitor of it’s main supplier?
One can interpret any nonsense into Kirby’s visit at Airbus, the fact remains Kirby went to Airbus and not the opposite way around!
@SNO – It might behoove you to click on the links and sources, but you’re new around here so we will give you a pass.
If United want now to buy their shorthaul fleet from Airbus and ditch Boeing, they need to join the queue at the back. Others will not want to give up their A20/21N slots for delivery no matter how much Kirby kicks and screams. If he wants Airbus aircraft, he can start by taking delivery of his A350s and order some more to replace his ancient 772s.