Airbus A320 Replacement – Show Me The Money

The ageing A320 may be in line for a replacement with perhaps two models, but slice behind the marketing double-speak and you find that Airbus will be lucky if it could even fund just one.

Head-to-head, the Boeing 737 family and Airbus A320 family are constantly in battle for dominance, preference and market share. Both are extremely venerable offerings that provide varying degrees of value for operators.

 

While Boeing overhauled its baby with the Next Generation 737 back in 1996 and continues to incrementally improve the airplane, Airbus’ A320 family remains largely unchanged from its debut in 1984.

 

Airbus has been waiting patiently on whether Pratt & Whitney can indeed provide substance to its claims that the Geared Turbofan (GTF) engine can derive the cost/fuel/maintenance savings that would serve as a catalyst to either re-engine the current A320 line-up or whether a new airplane could be powered by it.

 

Likewise, Boeing states that any new 737 replacement must demonstrated around 25% or more efficiency than today’s narrowbody jets. Fortunately, the 737 does have the edge in performance and maintenance in contrast to the A320 family, however Airbus’ biggest headache is not a technical one.

 

It’s financial.

 

The comical A400M and A380 are such a financial drag and drain on other resources, that Airbus’ proposal for a dual-airplane solution is nothing more than a marketing gimmick. EADS simply doesn’t have the money – the several billion euros cash-in-hand is earmarked for the A380, A400M and to a lesser degree the associated penalty payments for those jets as well as for part of the $17bn A350XWB program.

 

With the WTO due to rule against Airbus and its subsidies, Airbus simply does not have the pecuniary wand to wave and fund one, let alone two new sub-200 seater airplanes. The market may want something new, but like Boeing, Airbus knows that until there is a tectonic shift in operating economics to provide a compelling business case – new 737/A320 replacements are not around the corner anytime soon.

 

Airbus also has yet to plug the black hole in the A350XWB finances, particularly as the critical engineering phase to firm up its definition is resulting in weight problems that are costing extra to deal with – a key area Airbus is concentrating on given that the A380 is several tonnes overweight and the weight-loss program for it has struggling to move more than a tonne and will not be incorporated onto production airplanes until 2012 or beyond (depending on A380 production rates).

 

A historical look at Airbus’ last dual-aisle, short-to-medium range airplane in the A310 shows that, despite being wider than the 757, it just could not compete on flexibility.

 

There is even less empirical evidence to support the prospect of a dual-aisle short-haul airplane providing the right mix of performance and lower operating cost in contrast to a single-aisle jet – purely because no low cost carrier could encapsulate such an airplane into its business model.

 

Hats off to Airbus for discussing it, but the reality is that it has to find the money first to put it where its mouth is.

 

With the WTO poised to rap the EU knuckles, EADS had better wake up to the real world of operating as a business, not an employment bureau and figure out how it aims to replace the A320 as well as plug the massive void between the A350XWB and A380 – all without using taxpayer money.