Re: Northwest and Airbus: good news for A320, more bad news for A330

From:         Chuanga@cris.com (H Andrew Chuang)
Organization: Concentric Internet Services
Date:         19 Mar 96 00:44:06 
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In article <airliners.1996.300@ohare.Chicago.COM>,
Karl Swartz <kls@ohare.Chicago.COM> wrote:

> On Monday, Northwest announced an order for 20 Airbus A320 aircraft,
> with ten to be delivered in 1998 and 1999.  Northwest's fleet already
> includes 50 A320s with CFM56-5A1 engines.  (The announcement did not
> specify Northwest's engine choice but it's unlikely that they would
> switch to the IAE V2500.)

I seem to have read it some where that they have specified the CFM56
engines for the new order, but I don't remember where I read it.

BTW, I thought the reported value of the order was quite interesting.
The order was said to be worth US$500 million, which translates into
an extremely low US$25 million per aircraft.  A year ago, the listed
price for the A320 was close to US$40 million, now it is reported to be
US$35 million.  Aircraft manufacturers usually announce the face value
of an order; they seldom give the actual value.  Hence, I was really
surprised by the US$500 million number.  Just to give everyone a
reference point, ValuJet's order of 50 MD95s was valued at US$1 billion
and so was SAS's order of 36 B737-600s (both the MD95 and the B737-600
are significant smaller aircraft than the A320).

> The agreement also included a five-year deferral of deliveries of 16
> A330 aircraft, which had been scheduled for eight each in 1999 and
> 2000.  The new delivery dates are in 2004 and 2005.  More significant
> was that the agreement, with Airbus and engine supplier Pratt and
> Whitney, allows Northwest to substitute other products from the two
> manufacturers.  Northwest apparently pressed hard for this option as
> they are not happy with what they've seen of the A330.

IMHO, this is another setback for the A330.  I think you can pencil it in
that NW is not going to fly the A330 (or at least not the A330-300 that
it has originally ordered).  Recently, TWA has openly hinted that it will
drop the A330 from its future plan.  The A330 seems to have a hard time
setting a foot in the North American market.  Even the A340, which is
selling quite well in other parts of the world, has Air Canada as its only
North American operator (or two if you include BWIA).  Nevertheless, I
think the new A330-200 should have a better luck in the US if Airbus can
get AA interested in buying the aircraft.  NW's fleet has a big hole
between the B757 and DC-10.  The A330-200 may fill the hole for NW.

During the past two years, Airbus has only gained two new A330 customers,
namely Gulf Air (6 aircraft) and Philippines (8).  Also, during the same
period, it has received only three add-on orders from Aer Lingus (1
aircraft), Cathay Pacific (2), and yet-to-be-finalized order from Thai
(4).  With the danger of losing two A330 customers (NW and TW), the A330
definitely needs a revival.  Hopefully for Airbus, the A330-200 will be
it.

> Presumably the Pratt engines don't have to be on Airbus aircraft --
> the A300-600 and A310 are the only other Airbus offerings which can
> use Pratt engines, unless you count the A320 with V2500s from IAE, of
> which Pratt is a partner.  It seems more likely that, if Northwest
> were to convert the A330 order, they'd either opt for the A340 or more
> A320s, while putting the Pratt engines on Boeing products such as the
> 747 or 757, which Northwest already has, or a 777 order should they
> choose the 777 to take the place of their A330 order.

Remember the "rumor" that NW was going to launch the PW6000-powered MD95
(along with ValuJet which chose the BR715 for the new aircraft)?
However, it's clear now that the MD95 will not be offered with the PW6000
engine.  Another distant possibility is NW may convert the A330 to the
proposed PW2000-powered A340-400X.  NW can use the A340-400X to replace
its aging B747-100/200 fleet.  Nevertheless, the A340-400X market is
probably not big enough to have two powerplant offerings, and I can't see
CFMI (especially SNECMA) withdraws its CFM-XX from the contention.  (Just
a side note, GE may finally find its way to get on the B757 with the
CFM-XX which should be a candidate for the B757-200X and B757-300X.)
Actually, in the unlikely event that there is a significant change in the
US-Japan bilateral (i.e., NW and UA have to drastically reduce their
Japanese beyond rights), the smaller A340 will be an ideal plane for NW's
trans-Pacific operation (but so will the B777).

--
  H Andrew Chuang (chuanga@cris.com)