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Will Easyjet cancel its Airbus order?

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Will Easyjet cancel its Airbus order?

Old 31st Mar 2020, 14:06
  #21 (permalink)  
 
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Disappointing to see the stereotypical jealousy against Stelios, Branson, Willie Walsh etc in the various threads. I know things are suddenly tough, but ...

No Stelios, no Easyjet in the first place, no jobs there. No Branson, no Virgin in the first place, no jobs there. Etc. I know Easyjet seem to be profitable overall, and Virgin honestly never have been, but that's a separate discussion. These guys do need to devise ways to save the company, otherwise it's all lost for them as well. They have managed to ride the roller-coaster so far.

I suspect that a number of carriers will come out of this. The real long-term issue is going to be at Boeing and Airbus.
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Old 31st Mar 2020, 14:11
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That will affect the suppliers base again then like it did with the MAX?
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Old 31st Mar 2020, 14:16
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Originally Posted by WHBM View Post
I suspect that a number of carriers will come out of this. The real long-term issue is going to be at Boeing and Airbus.
Thatís an interesting one. We know Trump will keep Boeing alive. Who will stump up the Billions for Airbus?

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Old 31st Mar 2020, 14:58
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Originally Posted by qwertyuiop View Post
Thatís an interesting one. We know Trump will keep Boeing alive. Who will stump up the Billions for Airbus?
Germany and France as they employ the majority of their staff in those two countries AFAIK.
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Old 31st Mar 2020, 20:57
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https://aviationweek.com/air-transpo...5-analysts-say"A 40% drop in global revenue passenger miles followed by a rapid snap-back and leveling out of 5% year-over-year growth starting in 2023 would cut near-term new-aircraft demand about 25% from pre-coronavirus pandemic estimates, Vertical Research Partners analysts conclude.

Vertical plugged a 40% traffic decline into its model for 2020, with rebounds of 19% next year and 10% in 2022, the company said in a Mar. 30 research note. Among the outputs: airlines would need 6,300 new aircraft over the next five years, down from its previous forecast of 8,300.

On a percentage basis, the reduction would hit narrowbodies and widebodies equally, reducing demand for each category by about 25%. Vertical’s revised analysis shows airlines would need 1,540 fewer narrowbodies and 380 fewer widebodies. "

There's more in the article
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Old 31st Mar 2020, 23:33
  #26 (permalink)  
 
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The only reason that more MAX orders have not been cancelled is that Airbus has a 5-year order book for the Neo.

I suggest that once MAX customers realise the Neo's order book has shrunk, they will desert Boeing in droves and place orders for the Neo.

In the narrowbody market at least, Boeing is going to suffer a lot more than Airbus.
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Old 1st Apr 2020, 01:35
  #27 (permalink)  
 
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Originally Posted by Chris2303 View Post
https://aviationweek.com/air-transpo...5-analysts-say"A 40% drop in global revenue passenger miles followed by a rapid snap-back and leveling out of 5% year-over-year growth starting in 2023 would cut near-term new-aircraft demand about 25% from pre-coronavirus pandemic estimates, Vertical Research Partners analysts conclude.

Vertical plugged a 40% traffic decline into its model for 2020, with rebounds of 19% next year and 10% in 2022, the company said in a Mar. 30 research note. Among the outputs: airlines would need 6,300 new aircraft over the next five years, down from its previous forecast of 8,300.

On a percentage basis, the reduction would hit narrowbodies and widebodies equally, reducing demand for each category by about 25%. Verticalís revised analysis shows airlines would need 1,540 fewer narrowbodies and 380 fewer widebodies. "

There's more in the article
yep about 1900 less bodies, right now the world has about 34000 less bodies.
get a grip
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Old 1st Apr 2020, 03:03
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Originally Posted by marchino61 View Post
The only reason that more MAX orders have not been cancelled is that Airbus has a 5-year order book for the Neo.
I suggest that once MAX customers realise the Neo's order book has shrunk, they will desert Boeing in droves and place orders for the Neo.
In the narrowbody market at least, Boeing is going to suffer a lot more than Airbus.
Particularly as a Boeing customer with aircraft undelivered for more than a year can cancel without penalty.
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Old 1st Apr 2020, 03:11
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Northern Monkey - Apologies for being downbeat...I would hope that the modelling plays out.

"A 40% drop in global revenue passenger miles followed by a rapid snap-back and leveling out of 5% year-over-year growth starting in 2023". But..

Looking at the CFMU portal - Europe has gone from around 24000 movements a day to around 4000. The remaining 4000 includes freighters so the actual decrease in pax is massive.

At the other end of the world NZ has gone to handfuls of passengers a day during lock down. If/When countries get control they will likely impose restrictions for some time.

Singapore, as a hub, is a good one to watch. They have avoided lock down, for the moment. The airline and airport are effectively not operating. Daily cases have always been low.

The bounce back will be the key, but when. There are probably no models for this scenario. Will people want to travel. Will they have the money to travel.

The simple model says this kills 2% of the people. Maybe half of those people did not fly anyway. Clearly it is not that simple.

Last edited by sheepless; 1st Apr 2020 at 03:28.
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Old 1st Apr 2020, 09:17
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Originally Posted by sheepless View Post
Northern Monkey - Apologies for being downbeat...I would hope that the modelling plays out.

"A 40% drop in global revenue passenger miles followed by a rapid snap-back and leveling out of 5% year-over-year growth starting in 2023". But..

Looking at the CFMU portal - Europe has gone from around 24000 movements a day to around 4000. The remaining 4000 includes freighters so the actual decrease in pax is massive.

At the other end of the world NZ has gone to handfuls of passengers a day during lock down. If/When countries get control they will likely impose restrictions for some time.

Singapore, as a hub, is a good one to watch. They have avoided lock down, for the moment. The airline and airport are effectively not operating. Daily cases have always been low.

The bounce back will be the key, but when. There are probably no models for this scenario. Will people want to travel. Will they have the money to travel.

The simple model says this kills 2% of the people. Maybe half of those people did not fly anyway. Clearly it is not that simple.
The numbers we have at the moment are useless. The data is garbage.

Since we don't know the extent of community transmission, we cannot know the true death rate or the true serious complication rate. In the UK, we are only testing people admitted to hospital with respiratory symptoms. So the death rate as a proportion of those cases is going to be much higher than the true death rate. The same is true for nearly every other country out there. There will be large numbers of asymptomatic or mild cases in the community which do not form part of the official statistics. When all that is taken into account, I would bet at least a months salary on the eventual death rate being under 1%. Possibly under 0.5%.

As to your other point, will people want to travel, will people have the money to travel? As soon as we have a vaccine or an effective anti-viral and the restrictions can be lifted on every day life, people will want to travel again. I've used zoom video conferencing this week and despite it being a laugh to have a few beers with your mates, it doesn't come close to meeting someone face to face. So business travel will come back. As for leisure travel, are we really saying that generation selfie won't want to go to the Eiffel Tower, or NYC, or for their gap year adventures in Thailand? I think not.

There is definitely a bigger question about whether they will have the money to travel, at least initially. I do think for a while there will be less flying as people prioritise putting their day to day finances back in order. It will probably take a couple of years to get back to any kind of normal. Now is not the time to start training to be a pilot, despite whatever CAE/L3/FTE may tell you.

Back to the title of the thread, should easyjet cancel its airbus order? I would argue that it shouldn't cancel entirely but should defer as much as possible and reduce the size of the order if possible. There will be opportunities for well placed airlines to do well in a few years from now as capacity comes out of the market and smaller companies either fail or are taken over. It would be foolish to throw the baby out with the bathwater.
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Old 1st Apr 2020, 14:43
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Originally Posted by Northern Monkey View Post
The numbers we have at the moment are useless. The data is garbage.

Since we don't know the extent of community transmission, we cannot know the true death rate or the true serious complication rate. In the UK, we are only testing people admitted to hospital with respiratory symptoms. So the death rate as a proportion of those cases is going to be much higher than the true death rate. The same is true for nearly every other country out there. There will be large numbers of asymptomatic or mild cases in the community which do not form part of the official statistics. When all that is taken into account, I would bet at least a months salary on the eventual death rate being under 1%. Possibly under 0.5%.

As to your other point, will people want to travel, will people have the money to travel? As soon as we have a vaccine or an effective anti-viral and the restrictions can be lifted on every day life, people will want to travel again. I've used zoom video conferencing this week and despite it being a laugh to have a few beers with your mates, it doesn't come close to meeting someone face to face. So business travel will come back. As for leisure travel, are we really saying that generation selfie won't want to go to the Eiffel Tower, or NYC, or for their gap year adventures in Thailand? I think not.

There is definitely a bigger question about whether they will have the money to travel, at least initially. I do think for a while there will be less flying as people prioritise putting their day to day finances back in order. It will probably take a couple of years to get back to any kind of normal. Now is not the time to start training to be a pilot, despite whatever CAE/L3/FTE may tell you.

Back to the title of the thread, should easyjet cancel its airbus order? I would argue that it shouldn't cancel entirely but should defer as much as possible and reduce the size of the order if possible. There will be opportunities for well placed airlines to do well in a few years from now as capacity comes out of the market and smaller companies either fail or are taken over. It would be foolish to throw the baby out with the bathwater.
UK data might not be indicative of how widespread virus will become, or give correct indication of death rates, but this data is already available from parts of Asia where they've mass tested since months now.

Once restrictions are lifted I agree that people will want to travel again, but I do think they'll be even more price sensitive than before. This will benefit companies like easyJet, Ryanair, Wizz Air etc.

Taking aircraft deliveries doesn't necessarily mean expanding. Selling off older frames and saving up to 15% in fuel costs, fuel representing 30% of easyJet's total costs, and maintenance costs makes sense when you are looking at running a long term healthy and sustainable business.

CP
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Old 2nd Apr 2020, 05:58
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Exactly.... new aircraft doesn’t always mean bigger fleet. Rollover of old airframes is very important in a healthy airline
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Old 2nd Apr 2020, 06:11
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Originally Posted by goeasy View Post
Exactly.... new aircraft doesnít always mean bigger fleet. Rollover of old airframes is very important in a healthy airline
That depends. Most large western airlines, with enough maintenance facilities, tend to use their aircraft until end of life.
If increased maintenance and down time is an issue, then a young fleet makes some sense, but only if the old airframes have enough residual value. That last thing is very much in doubt now. Even if you lease aircraft, you can probably negotiate a really good deal in the near future if you keep them compared to buying new ones.
Increased fuel burn, especially with fuel prices now, does not matter much on shorter routes and for freighters with limited flight hours per day.
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Old 7th Apr 2020, 14:40
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Post Covid airlines are going to have a problem divesting themselves of excess fleet capacity. I can't see anyone being in a hurry to buy aircraft.
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Old 8th Apr 2020, 01:23
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Old 8th Apr 2020, 01:29
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I can't see Airbus being too concerned about airlines cancelling when there is so much uncertainty over the Max return to service (if it does).

There was a lot of discussion on the Max threads about airlines not being able to ditch their Max orders because Airbus had full order books until 2025. Unfortunately Airbus have had to shut down production at a number of facilities due to the current pandemic, so they aren't going to meet a few delivery dates.

Anybody noticed how quiet the Max threads have become?
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Old 8th Apr 2020, 03:29
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Originally Posted by a1anx View Post
Post Covid airlines are going to have a problem divesting themselves of excess fleet capacity. I can't see anyone being in a hurry to buy aircraft.
I would say that depends. There will still be a demand for travel, probably even more so after being cooped up in your own home for a few months. However, as money will be scarce, those that can offer lower fares due to their lower cost structure and independence from "premium" passengers will probably be in a better place to fulfill that demand. The hardest hit sector will be the premium travel, as it was in 2009 as companies will cut back on fully paid business or even first class long range travel, and if they have to, send their personnel on economy or premium economy instead.

However, how easyjet will and can react depends largely on the decisions taken by its stakeholders now, if Stelios gets his way the company will become quite irrelevant compared to competitors like wizzair and ryanair and enter a decline, which in fact it has been in already for the last years as it has been very slow to take up opportunities when they present themselves. Which of course means that both share price and dividend will dry up over time, leaving the only conclusion that Stelios is broke right now, and doesn't really care about the future.
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Old 8th Apr 2020, 05:04
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I would think it will be hard to go to government pleading poverty if they refuse to trim their spending plans on a new fleet.
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Old 8th Apr 2020, 08:32
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Originally Posted by LTNman View Post
I would think it will be hard to go to government pleading poverty if they refuse to trim their spending plans on a new fleet.
The title is whether EJ will cancel their order. Deferring deliveries or trimming their order is another matter altogether and I wouldn't be surprised if EJ is in discussions with Airbus on that very subject. However Stelios seems to just want outright cancellation.
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Old 8th Apr 2020, 08:37
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Originally Posted by LTNman View Post
I would think it will be hard to go to government pleading poverty if they refuse to trim their spending plans on a new fleet.
https://www.reuters.com/article/us-h...-idUSKBN21O1KS
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