Thursday, January 14, 2016

A Very Important Deal For Boeing

Regional airplane warfare is a big deal. Having an anchor order in a region is a bigger deal. Boeing is on the cusp of such an order with PAL (look-up PAL like you know something). The Philippine Airlines who have two players on the edge are just where they want its bidders. Either PAL will tilt in favor of Airbus or Boeing for a half dozen WB's ordered. They are pausing in its decision. PAL knows what it is going to do, but a "pause" as a subtitle of this picture uses a defining study excuse, and makes the manufacturers both nervous. Once signed on a manufacturer wins some valuable turf. A Southeast Asia follow-on order situation would follow, and a fleet requiring the commonality of future type orders from the same manufacturer is the PAL game afoot. 

Boeing could be played at this point also giving Airbus fits on pricing schemes it would have to offer PAL. This order is not about wide bodies it's about PAL leverage.

“We’ll make the announcement when we sign the purchase agreement,” he said.  Bautista did not identify the aircraft manufacturer, but he earlier said the company was looking at either Airbus 350 or Boeing 787 Dreamliner. 
Bautista said the purchase contract would amount to about $1 billion, consisting of six long-range, twin-engine wide-body jets, aircraft parts and support equipment.  
“It’s an ultra-long-range aircraft that can fly non-stop from Manila to New York. The airplane can be used to other destinations also,” Bautista said. 
As you can see the tease gauntlet has been thrown down to the manufacturer and "the airline knows" the answer. However, it pauses for more airline bling thrown-in, playing one against the other. The pure order line-up of types by Boeing could suggest a win here as the 787-9 is in the middle of the mix, and also having earlier delivery slots confounding Airbus. This could also give Boeing an advantage for a later 777X order, if this order swings Boeing's way. PAL's heady and important thoughts for the future purchases sets this table.

However, it was tipped from an observation about PAL, and through its pondering for a 787 order type mention against the A350-900 order, the purchase for the six WB's is the lever. Pricing by Airbus and a slow startup of its A350 build rate could swing the gate towards a Boeing order. Then comes the commonality anchor for future types coming into the fleet.

PAL Fleet Cross Roads

So here is the story behind the order is the PAL chart above dominated by Airbus Single Aisles. A possible Boeing/PAL fleet set back for Airbus is where an Airbus price may not matter. Boeing needs the 787 as a win for future Max orders, as it has no single aisle active in the PAL fleet. Boeing may drop a "lost leader" price or provide a 787-9 lowball offering for the airline. If PAL "does take" the Boeing offer, expect a PAL fleet renewal within a few years where Boeing gives PAL a deal it can't refuse concerning single aisle MAX aircraft. 

The 777 and 787 become key in this deal making for the next PAL prize for any single aisles Boeing orders by 2020 flying the Southeast asia region. It's not about six WB's, it's about building a modern PAL fleet family, at the lowest cost.