Airlines around the globe are looking to downsize due to the current pandemic. This presents an especially challenging situation when it comes to future aircraft orders.
In this post:
Airlines are trying to defer aircraft deliveries
The past decade in the airline industry has been more-or-less as stable as we’ve ever seen. Airlines have done pretty well overall, and most airlines planned to continue to grow in the 2020s.
Commercial planes are usually ordered many years in advance, so collectively airlines have thousands and thousands of planes on order with major manufacturers, like Airbus and Boeing.
At this point a vast majority of airlines with aircraft on order are negotiating with manufacturers:
- Some airlines are looking to cancel orders altogether, while others are looking to defer delivery of aircraft
- Understandably aircraft manufacturers need to do everything they can to keep producing planes in the next couple of years, or else they’ll struggle to stay in business
- While airlines and aircraft manufacturers work closely together, airlines take the risk about future demand when they place orders, so they should expect to pay dearly in the event that they’re looking for deferrals or cancelations
As a result of all this, we’re seeing airline executives take different approaches towards messaging related to future aircraft. For example, Emirates President Tim Clark has said that “all bets are off” in relation to the massive aircraft orders that the airline has with Airbus and Boeing.
Well, a CEO at one of Emirates’ Gulf rivals had an even more extreme warning for aircraft manufacturers…
Airlines around the globe are trying to defer aircraft deliveries
Akbar Al Baker puts Airbus & Boeing on notice
Qatar Airways CEO Akbar Al Baker had some interesting things to say about future aircraft deliveries, per Reuters. According to Al Baker, Qatar Airways is currently negotiating with both Airbus and Boeing about deferring delivery of future aircraft, and he “hopes” that both manufacturers will oblige.
Qatar Airways has over 160 planes on order from the two leading manufacturers, including:
- 10 Airbus A321LRs
- 40 Airbus A321neos
- 29 Airbus A350-1000s
- 10 Boeing 777-8s
- 50 Boeing 777-9s
- 23 Boeing 787-9s
As Al Baker sees it, the manufacturers have no option but to allow deferrals, and he even makes what I’d consider to be a rather questionable threat:
“They have no other alternative to oblige and if they make it difficult to oblige we will keep them in mind and we will not do business with them again.”
Al Baker is known for making empty threats, and this is no different, if you ask me. There’s not really an alternative to Airbus and Boeing, and if anything perhaps he’s trying to get Airbus and Boeing to compete for Qatar Airways’ future business with favorable terms.
What we don’t know is whether Al Baker is approaching this in a reasonable way or not. In other words, surely he’s not expecting that Airbus and Boeing will let Qatar Airways defer deliveries without some major penalties, especially if they can’t find another airline to fill their production slots?
Qatar Airways is well known for being a picky client when it comes to new planes. While the airline has been the launch customer for some planes (like the A350), the airline has also been notorious for delaying entry into service of new aircraft.
Qatar Airways has a large Boeing 777-9 order
Bottom line
Airlines have an uphill battle ahead of them when it comes to deferring future aircraft deliveries, and it’s anyone’s guess how the negotiations will work out.
One thing is for sure — virtually all airlines would like to defer future aircraft deliveries, the question is just how costly it’s going to be. Ultimately airlines know the risks they take when ordering planes for the future.
While I’d hope Airbus and Boeing will do what they can to help out airlines, they also can’t be blamed for wanting to maintain plane production per contractually agreed upon terms, because their survival depends on it.
I’m not sure Al Baker has that much leverage when it comes to “demanding” orders be deferred, but I guess we’ll see how this plays out…
Dear K4
Everything was done by a plan by the Almighty, most of the people never realize it n they think they can do anything, now at present the world is fighting to over come from a unseen viruses, even the super powers are helpless, n some are struggling to control their own people which are gone beyond their control. n still they think they are the super power, anyway my belief is very soon Asian will take the stearing of the future world.
@Naffas
Yes, don’t miss the potential of Honda aviation too.
To say only Boeing and Airbus can make big jets is idiotic, they are the only two at the moment because the market only needs that many planes.
If Boeing or Airbus were to close, Bombadier or Honda would take over before anyone can blink.
Most of the comments are racial n boasting, that there are only 2 players in the world market , which the Boeing n Air Bus, but still there there are more small players n they can become 3 rd n 4 th force, don't forget Japan has all the ability to do so as still they are dominating the world in vehicle trade, hope there will be a 3 rd player very soon from Asia,
I'm not impressed at all with these state funded airline CEO's
Oil rich country fund me and I can run a hell of an airline !
I suppose Mr Baker will be found in Mojave or Pima searching the budget aisles for "lightly used" aircraft. He will hire a refurbish startup, spray them with new car smell and move along. By that time the terms won't matter as much and the world will move on.
@ Eskimo
Regarding taking 8 years, to launch the A350. I did a research project years ago, Airbus was developing the A3XX at that time, it was a key element of my research, that the A3XX (became the A380) was ready at that time, but they were working on the right timing to launch the plane, based on orders and lifespan of existing models. This was 5-7 years before we saw the first A380 take...
@ Eskimo
Regarding taking 8 years, to launch the A350. I did a research project years ago, Airbus was developing the A3XX at that time, it was a key element of my research, that the A3XX (became the A380) was ready at that time, but they were working on the right timing to launch the plane, based on orders and lifespan of existing models. This was 5-7 years before we saw the first A380 take commercial flight.
It’s a fact that it does not take Boeing or Airbus this long to develop a plane. They already make planes! The launch is more to do with not making older models obsolete too soon and getting enough orders to justify production.
We all know how quickly the A340 died after the A380 launched.
Oh and at this time Boeing also had the 7X7 ready (which became the 787), and this launched several years after the A380! Nobody was interested in the 7X7 at the time because the A3XX offered something new, the 7X7 seemed to just be baby steps, look at the state of the A380 now compared to the 787 and A350.
I digress, id really like to understand why you think making an existing plane larger would be like reinventing the wheel for Bombadier say?
@Eskimo
Al Thani, a royal family of the country which probably has the highest average wealth per person in the world, barring maybe Abu Dhabi.
“El Thanos” ??? sounds like a Greek cleaner got hijacked by a Mexican cartel :/
Let’s ignore the fact that your comment reeks of a jobsworth not wanting to put in a second overtime, rather than the views of mid size aviation manufacturer with great potential.
Given your negativity, I...
@Eskimo
Al Thani, a royal family of the country which probably has the highest average wealth per person in the world, barring maybe Abu Dhabi.
“El Thanos” ??? sounds like a Greek cleaner got hijacked by a Mexican cartel :/
Let’s ignore the fact that your comment reeks of a jobsworth not wanting to put in a second overtime, rather than the views of mid size aviation manufacturer with great potential.
Given your negativity, I assume you have some sort of engineering experience or even or producing planes, so do you care to tell me what is the huge difference between producing the A220 and the A350? The panels and chassis would be larger, I don’t see this some mean feat taking 300 years. The technology is exactly the same, they are both jets.
I don’t know whether you have some technical expertise to back up what you’re saying or you’re just making this up as you go along.
We already know how to manufacture large jets. The only barrier is costs, nobody is reinventing the wheel here.
@K4
You're probably right. Go consult El Thanos family and rule the galaxy. You can start by advising Thanos to developing the A350 with a billion $ and two months. As simple as collecting gems on a glove.
Your Marvel level fantasies aside, A fact for you about Airbus, who had built A300 A330 A380, spent 10+ billion Euros across 8+ years to develop the A350.
So please go scam El Thanos out of...
@K4
You're probably right. Go consult El Thanos family and rule the galaxy. You can start by advising Thanos to developing the A350 with a billion $ and two months. As simple as collecting gems on a glove.
Your Marvel level fantasies aside, A fact for you about Airbus, who had built A300 A330 A380, spent 10+ billion Euros across 8+ years to develop the A350.
So please go scam El Thanos out of this world about a new plane with a billion Dollars in two months. You will make the Nigerian prince look like a baby.
In the end. Airbus as well as Boeing will come to an agreement with Qatar Airways for sure. QR is their best client and they would want to keep them happy. Especially since many airlines would go out of business totally post Covid or would be cancelling their orders from Boeing and Airbus.
What leverage do airlines have? They are not going to go to another aircraft manufacturer because right now there exist none. Boeing and Airbus own the skies and the only other manufacturers do small commercial aircrafts but those also barely sell. Yes I know attempts have been made for bigger commercial aircrafts but it haven’t worked out otherwise we would see them. Also refurbishing aircrafts? That won’t work in the long run with a world...
What leverage do airlines have? They are not going to go to another aircraft manufacturer because right now there exist none. Boeing and Airbus own the skies and the only other manufacturers do small commercial aircrafts but those also barely sell. Yes I know attempts have been made for bigger commercial aircrafts but it haven’t worked out otherwise we would see them. Also refurbishing aircrafts? That won’t work in the long run with a world that is going more and more carbon neutral and as Boeing has shown putting new engines on old design can lead to a lot of problems. Not only that. If airlines buy old aircrafts they pay for refurbishing, higher fuel costs and eventually emission cost as well assuming it goes up. Even if a new manufacturer comes in it will take years before their Aircraft is flight ready and then you have to account for the production time and add even more time until their aircraft is proven reliable.
AAB: I don't have any passenger business; no income , so don't need any new planes
A: OK we will defer delivery for you
B: No we won't
AAB win
or
B: OK we will defer delivery for you
A: No we won't
AAB win
or
A; No we won't
B: No we won't
AAB: OK, then my airline will have restricted income for...
AAB: I don't have any passenger business; no income , so don't need any new planes
A: OK we will defer delivery for you
B: No we won't
AAB win
or
B: OK we will defer delivery for you
A: No we won't
AAB win
or
A; No we won't
B: No we won't
AAB: OK, then my airline will have restricted income for a few years. Do you want the spare part business for my existing fleet and I'll pick the order up when income permits. Up to you
I think it's called tough negotiating.
Meantime A continues on EU subsidies for R&D (notably not production, there's the loophole) and B continues on US defence contracts, also funding their R&D
Although an avid flyer, I'm currently more concerned about the low paid market, retail, hospitality and others who are looking to have no employer soon, and no income.
@ Eskimo
Because Al Baker is a relative of Al Thanis. In the Gulf it’s all in the family. The didn’t scout him from the aviation industry as the UAE did with both its airlines. Someone in the family needed a privileged role, and they chose CEO of Qatar Airways for him.
Boeing may have it’s fair share of investment from US government, but this pales in comparison to the generosity of Middle Eastern Sheikhs,...
@ Eskimo
Because Al Baker is a relative of Al Thanis. In the Gulf it’s all in the family. The didn’t scout him from the aviation industry as the UAE did with both its airlines. Someone in the family needed a privileged role, and they chose CEO of Qatar Airways for him.
Boeing may have it’s fair share of investment from US government, but this pales in comparison to the generosity of Middle Eastern Sheikhs, not to mention that you’re addressing targeted investment in military products, whilst Boeing still has a huge dependence on orders from commercial aviation, and where QR does anything or not, other airlines will be going bust and cancelling orders.
Oh and if a company can produce a A220 they can makes A350 with a billion $ and two months, not underestimating anything.
Didn't Emirates also threaten to not accept delivery of planes unless they were 100% "up to standard"? That was pre Covid-19, but QR can become a difficult customer and find fault with planes and delay delivery
With this airline and the country supporting terrorism, why does anyone still fly it?
Maybe Al Bakr can get a good deal on the IL-96.
@Donna - Really? At least if you’re going to commandeer my name here on OMAAT, where I’ve been posting for many years, at least you could come up with something better than that.
I wanted to jokingly suggest he could downsize and fill his fleet with the C Series 300's from Bombardier. Sadly someone else beat me to the punch. No longer available thanks to a US president who "protected" Boeing from an avaricious little Canadian #3 plane-maker who was going to destroy Boeing.
It turns out Boeing has done a wonderful job destroying itself and didn't need the President's help.
Sad for all involved.
@K4
Concept is wrong (or at least not feasible),
First why would any state invest in something that would not benefit their economy (or any proof of financial success) but just to fill some CEO's ego.
Second, you are underestimating the cost of development and overestimating what their current technology can do. Even you give Bombarier the money, it would take them near decades and billions to develop any plane that would fit...
@K4
Concept is wrong (or at least not feasible),
First why would any state invest in something that would not benefit their economy (or any proof of financial success) but just to fill some CEO's ego.
Second, you are underestimating the cost of development and overestimating what their current technology can do. Even you give Bombarier the money, it would take them near decades and billions to develop any plane that would fit QR fleet plan (range + capacity) and still being able to compete with Airbus or Boeing.
And you really don't know who is knocking Boeing's door with investment.
POTUS and his fleet of F-22, F/A-18, B-52, C-17, KC-135, AWACS, ICBM nukes, cruise missiles, etc. Ring any bells?
@Donna
Lucky for you they use "Karen" instead of "Donna". If you added some racism you would have just pulled a "Karen".
And you named Bastian, Parker, but how can you forget ~ The Honorable Smisek. The only CEO who is connected to bribery. The person who had dinner with Port Authority Chairman David Samson before launching an exclusive flight to his SC summer home, the top money losing route which ended with the Chairman's...
@Donna
Lucky for you they use "Karen" instead of "Donna". If you added some racism you would have just pulled a "Karen".
And you named Bastian, Parker, but how can you forget ~ The Honorable Smisek. The only CEO who is connected to bribery. The person who had dinner with Port Authority Chairman David Samson before launching an exclusive flight to his SC summer home, the top money losing route which ended with the Chairman's tenure, and resulted in felony charges to the Chairman.
*Bombadier
@Eskimo
But who’s knocking on Boeing’s door with investment?
My whole theory relies on Qatar (more likely the state than the airline) handing funds to a company like Bombarier.
If Qatar does not give the funds, fair enough but that situation has no relevance to my speculation.
Yes it’s speculation, but that doesn’t mean the concept is wrong.
“They have no other alternative to oblige and if they make it difficult to oblige we will keep them in mind and we will not do business with them again.”
AAB looking forward to Comac getting their C919 rolling off the production lines?
@ GoAmtrak
You may be saying it in jest but it's a very viable option. In a time when half the World's airlines are destined to go under, buying for dirt cheap and refitting a still modern plane with only marginally less competitive economics (It's not the oldest and most costly to operate planes which will be bought) can save an airline a ton of money. I would not put this past him.
As...
@ GoAmtrak
You may be saying it in jest but it's a very viable option. In a time when half the World's airlines are destined to go under, buying for dirt cheap and refitting a still modern plane with only marginally less competitive economics (It's not the oldest and most costly to operate planes which will be bought) can save an airline a ton of money. I would not put this past him.
As to the "empty threats" and considering AAB as a buffoon, we do not know what he got when bargaining to remain or not in Oneworld or to go back on the other threats. He certainly got his A380s and A350s finished up to specs when they originally were not.
I have absolutely no vested interest and I am neither Qatari nor even close to Qatar (except as a passenger) but I really wish that all our western airline CEOs had half his brains.
Really Andrew? That's the best you can contribute?
Aside from not even understanding what your comment's supposed to mean, I hope you remember many other airline industry heads who are less than stellar (e.g., Bastian, Parker, etc.).
Ah, yes -- His Excellency, the Karen of the airline industry.
Boeing and Airbus orders are the only reason Open Skies treaties exist, especially as America looks to exit the regions' quagmires.
With all respect, if the author of this news would really understand the aircraft manufacturing business he would understand that the airlines will always have leverage over the manufacturers and mostly when they're only 2 mayor one...just saying!!!
So Qatar Airways CEO thinks he can dictate terms, that's the contract you signed honour it, stop trying to flex none existent muscle, does he really think he can order elsewhere think again?
Best thing to do is service those who have bought the plans let him and QA wait for spares etc.
@K4
"only a relatively little investment"
I hope that is sarcasm. Otherwise, we would be expecting 797 to be flying 6 months ago. Boeing already have the technology. Space X will be half way to Uranus.
I don't know. He has some leverage. Afterall he is just looking for deferral not cancellation. There will be plenty of cancellations before this is done and the manufacturers will not be able to do a lot about any of those related to bankruptcies.
In any case there is no prospect of resuming previous production rates. So maybe delayed deliveries is not that bad an option for A & B. It will fit better with the new production rates.
I think people are missing the fact that Qatar Airways is a monolith state funded entity.
Bombardier made the (Airbus) A220 as most would remember.
Challenger and Gulfstream are both jets, and only a relatively little investment from Qatar could enable them to start making bigger planes. They already have the technology.
This might see some new or improved existing aircraft manufacturers become successful.
@Mark
Please find your nearest troll exit door. It may be behind you.
Akbar Al Baker strikes again!!!!!
“They have no other alternative to oblige and if they make it difficult to oblige we will keep them in mind and we will not do business with them again.”
Guess what, Airbus and Boeing can also not do business with QR again.
Well, QR is gonna boycott Airbus and Boeing? Well, hahahaha. Time to bring in Embraer, Sukhoi and COMAC jets.
This just sounds funny. it's like a toddler threatening to ground his mom and dad in his house if he doesn't get that toy he wants.
Typically, doesn't the "Bottom Line" somehow tie back to the headline?
@Sharon
Not everyone enjoys flying the poverty planes US airlines are using.
There’s and old saying in the airline industry; “Airlines order planes in good times, and take delivery of them in bad times.” Frankly now is probably the right time to order new planes given that you won’t take delivery of them for at least another 2-3 years.
This is just another empty threat from al Baker. Gawd but the man likes to hear himself talk! Yes, go ahead and piss off both Airbus and...
There’s and old saying in the airline industry; “Airlines order planes in good times, and take delivery of them in bad times.” Frankly now is probably the right time to order new planes given that you won’t take delivery of them for at least another 2-3 years.
This is just another empty threat from al Baker. Gawd but the man likes to hear himself talk! Yes, go ahead and piss off both Airbus and Boeing and see where it gets you.
Perhaps he can persuade Lockheed to get back into the airliner business. Good luck with that.
Time to send in the National Guard
@Sharon
KAGA!!
yeeeeeehaaaaw baby
Maybe he's secretly envious of Delta's strategy and will follow up by threatening to only buy secondhand planes going forward. ;-)
I meant Qatar Airways, not Emirates..
Strikes me as the exact reason why contracts exist. They should just say no. Chances are they will be dealing with his replacement next time they need to order planes since I'm sure Emirates won't be needing more for quite a while.
Maybe someone over ordered on planes with his state funded money???
Oh and threaten Airbus and Boeing, cause yeah, Al Baker can go and purchase jets from all the other plane manufacturers, haha, there are no others.
What was Qatar thinking ordering 112 wide bodies, when they already have a size-able fleet? I understand the need to replace aging aircraft, but most of their fleet is already young