The 787 orders have reached a
bottom lull as if it were an inverted bubble about to burst. Several noted
slips of the tongue suggest more 787 orders could be announced. One customer
has already spoke of more 787 orders in the makings, Norwegian Air and TUI have
mentioned they need more wide bodies. China is in need of further expansion from
its leading Airlines. Hainan has already filled in with 787-9 orders not noted. The
Boeing 787 backlog is rapidly shrinking making a Boeing purchase more likely as
it goes for producing twelve 787 a month. The "tea leaves" suggest a
market ready to absorb more 787 orders during 2016. So what are the ordering
stoppers and shoppers?
Ordering
Stoppers:
· Fuel
Prices staying low indefinitely
· National
economy and lower currency valuations (ex: China Market)
· Outstanding
commitments with competitor manufacturer
Ordering
Shoppers
· Profitable
2016 (China/Hainan)
· An in
place working fleet expansion built on the 787 Model.
· Threat of
rising fuel prices
· Economic
soundness (Qantas)
· Market
opportunity remains open (Norwegian Air)
· Fleet
expansion (Air India)
· 2nd tier
airlines (waiting for its ship to come in) ordering has begun.
The above
bullet points are the obvious items affecting both buying or not buying the 787
in 2016. Further study could go deeper into causal reasons for both situations
determining the 2016 order book for the 787.
When fuel
price reaches a low plateau it will trigger the pent up energy for
ordering the 787. No longer can airlines wait it out using older less efficient
airframes on the low fuel price tide. A constant fuel price norm will force
airlines to eventually use up the used inventory of less efficient aircraft
where they will be forced to buy the newer more efficient aircraft.
Airbus has already charted this condition and is taking the opportunity with its A330-900 offering, hoping it snips at the heels of the 787 market. Airbus already sees a "flat fuel price market/fleet renewal condition" as it offers the A330NEO as its answer. If the fuel price climbs steeply, then the 787 will have its highest demand quotient.
Airbus has already charted this condition and is taking the opportunity with its A330-900 offering, hoping it snips at the heels of the 787 market. Airbus already sees a "flat fuel price market/fleet renewal condition" as it offers the A330NEO as its answer. If the fuel price climbs steeply, then the 787 will have its highest demand quotient.
The
market is in transition from the 2015 dynamics for ordering wide bodied
aircraft. The "other factor", such as reduced production backlog, hence
available production slots, are ready for the market. The internal profitability factors and fleet
opportunity, all contribute towards more 787 orders. The A330NEO is an example
of low fuel price opportunity, and the 787 is an example of higher fuel price
opportunity, and all other market conditions point towards buying the 787 first
and consider other manufacturer types second.
Market
forces will return with having a 787 choice over the A350 member of aircraft.
In light of constant low fuel prices there are too many compelling reasons for
buying the 787 offsetting the price of fuel at bottom.
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