Phew! After hitting an all-time low in 1994, aircraft order books are filling up again - but more for some than for others. Total orders for the big three manufacturers soared 117 per cent in 1995 to reach 582 and, with cancellations on the decline, net orders rose even more steeply from 139 to 482.
The picture was similar for the regional jet market, which saw a 40 per rise in orders. Deliveries also accelerated, reaching 103 compared to just 82 in 1994. That delivery upturn has yet to come for the major manufacturers, which continued to log lower delivery rates due to the twin effects of the collapse in orders and heavy cancellations in 1992-4.
The only clouds on the horizon continued to plague the overcrowded turboprop market, in which demand shrank from 1994 by a hefty 103 orders or 37 per cent. Furthermore, a rise in the number of cancellations produced a halving of net orders. However, turboprop deliveries increased by 24 per cent over 1994.
The recovery in demand for medium and large jets was led by narrowbody aircraft orders: these accounted for 76 per cent of the orders for Airbus, 55 per cent for Boeing, and 93 per cent for McDonnell Douglas.
Only Boeing performed well in terms of widebody sales, which are crucial given their higher financial value. The B777 sold spectacularly well with 83 net orders, taking the company's widebody net orders from 13 in 1994 to 144 in 1995. Airbus sold 17 widebodies on a net basis, the same number as in 1994. Cancellations for the MD-11 exceeded orders by six.
Demand for narrowbodies is expected to continue to lead the order recovery in 1996 though widebodies should pick up in 1997, says David L Williams, general manager strategic business development at McDonnell Douglas.
The indications for 1996 are that the upsurge in orders will continue: the major manufacturers took over 100 new orders in January alone, over half of which were made by operating lease companies. However, despite the optimism on their part, the reduction in manufacturer lead times and greater caution on the part of the airlines means a return to the boom years is unlikely. 'I don't think airlines will ever again buy aircraft in those quantities or that we will ever again see the backlogs of 1991-2,' said Williams at the 1996 Geneva finance forum.
A year is a short time in the context of aircraft orders, and the results can be skewed by a small number of large commitments. However, some notable trends emerged among the big three manufacturers in 1995. Airbus Industrie went against recent trends by suffering a decline, with 106 orders compared to 125 in 1994. Orders for the Airbus widebodies totalled just 25 with eight cancellations.
This can only accentuate the current debate within the consortium over a change in ownership structure that would allow it to boost efficiency and compete more effectively on costs against Boeing. This could see the groupement d'interet economique become a public limited company with more freedom to raise capital and control costs. But the most crucial factor will be the pooling of the production capabilities of each of the four partners, British Aerospace, Aerospatiale, Daimler Benz and Casa. A committee is due to report back on its deliberations in mid-1996.
Airbus' lacklustre total of 106 orders, with cancellations taking net orders down to 87, pushed it into third place for the first time in many years, with a market share of just 18.2 per cent compared to 59.5 per cent for Boeing and 22.3 per cent for McDonnell Douglas. However on the delivery front the consortium's market share was a much healthier 32.6 per cent, versus 54.2 per cent for Boeing and 13.2 per cent for McDonnell Douglas.
Airbus argues that the dip in orders is largely the result of its A330/A340 programme losing market share, blaming the fact that Boeing can offer a package deal combining the B747 and B777. The European consortium is now pressing its partners to consider an early launch for its A3XX project, which it wants to launch as a 550-seater with an option to stretch it to accommodate 700 at a later date.
McDonnell Douglas rebounded last year with a total 130 orders, though cancellations exceeded orders for the both the MD-80 and the MD-11. However this was more than compensated for by net orders of 57 for the MD-90 and a crucial launch order from ValuJet for the MD-95.
Boeing fared well, registering healthy orders for each of its models except the B757, and has announced an increase in production rates for 1996. The Seattle-based manufacturer is also planning another efficiency drive in a bid to reduce its costs further, especially for the new generation B737. This move can only increase the pressure on Airbus. Boeing's talks with McDonnell Douglas over a possible merger of part of the two companies' businesses were discontinued early this year.
Intense competition between the regional aircraft manufacturers poses serious questions about Fokker's future after shareholder Daimler Benz and the Dutch government failed to reach an agreement over a new capital injection. At presstime the search for partners for Fokker continued, but while the Dutch company has serious cost and financial problems, its 1995 orders for the F70 and F100 totalled a healthy 47 aircraft and gave it a 33.6 per cent share of the regional jet market. This puts it in second place behind the new Aero International Regional (AIR) consortium, which took 35.7 per cent of the regional jet orders. Bombardier, with only a 50-seat product, took just over 27 per cent and Embraer lagged way behind with a mere 3.6 per cent, but it expects this to change once the EMB.145 enters service.
In contrast AIR dominated the turboprop market, with 32.1 per cent of total orders and 26 per cent of deliveries. Its closest rivals were Saab, with 18.9 per cent of the orders, and Bombardier, with 17.9 per cent.
As 1996 gets fully underway, the recovery in aircraft orders will undoubtedly continue. But price is an increasingly important factor in determining the timing and number of new aircraft purchases and the most efficient manufacturers will glean the greater advantage. In the lacklustre turboprop market a reshuffling of partners due to Fokker's difficulties could help to relieve the overcrowded marketplace.
Source: Airline Business
