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Since July’s Farnborough air show, the Airbus A330neo has recorded 57 new firm orders and 60 options from four customers, surpassing all other models as the most ordered widebody aircraft in the past four weeks. This begs the questions: Is the A330neo – Airbus’s ‘middle child’ – making a comeback, and how so? Furthermore, how will a change in operator base affect the development of the type?

Until recent weeks, Airbus’s order books have been dominated by the A320neo family and the A350, with backlogs of over 7,000 and 650 aircraft to date respectively. However, the A330neo is finally making its presence felt, especially with options from Flynas, additional orders from Virgin Atlantic, and particularly striking, new firm orders for 20 aircraft from VietJet Air and 30 from Cathay Pacific. These orders push the A330neo total order tally to 360 aircraft, with a current backlog of more than 200. This also positions Cathay as the second biggest airline customer for the A330neo programme, following Delta Air Lines and preceding TAP Air Portugal.

Among all these new orders, Cathay Pacific’s is a particularly big shot in the arm for the previously moribund A330neo programme. As the fifth largest A330ceo operator, Cathay is expecting these A330neos to “progressively replace” its existing fleet of A330ceo and 777 classics, a motive which Airbus believed would bring orders from its vast A330ceo operator base due to its “low-risk” and commonality when it launched the re-engined family a decade ago. Looking back, 21 of the 51 airline A330ceo operators with more than five A330ceos originally selected the Boeing 787 as their next generation mid-gauge widebody – a clean-sheet design that entered service some seven years before the A330neo.

Airbus A330neo and Boeing 787 Fleet Size of the Top 51 A330ceo Operators

Cathay was one of the remaining 20 operators with a fleet of more than five A330ceos that had not placed orders for either the 787 or the A330neo. While ‘significant price concessions’ undoubtedly played a role in this final decision, one can infer that Cathay had the bargaining power to negotiate a similar discount from Boeing for the 787 or Airbus for more A350s. Therefore, it appears that primary drivers for Cathay to opt for the A330neo were the smaller backlog and more-favourable mix of operating and ownership costs and payload-range performance.

The A330neo’s smaller backlog enables an earlier delivery timeline compared with the 787 and A350. OEMs have struggled for some time to crank up their production rate to go through their backlogs.

The 787 backlog is 780 aircraft currently. Coupled with concerns over Boeing’s quality control arising from multiple incidents recently, even if Boeing was to increase its production rate to 10 per month, the earliest availability would not be until the end of the decade. In contrast, delivery for A330neo is achievable as early as 2028, given a delivery rate of four per month. Given that Cathay’s oldest aircraft is now 24 years old, beginning replacement three years earlier seems timely.

Expected Number of Delivery and Current Yearly Delivery Rate

Although Cathay’s 48-strong A350 fleet can support all its operations, the airline needed an optimal solution to scale up capacity for its high-demand regional network. This is where the A330neo comes in. Ascend’s opinion on current delivery value suggests that an A330-900 is 33% cheaper than an A350-900. Even though the type is currently a less popular option comparing to the A350, it has seen lower volatility during downtime as its new generation technology allows a more efficient operation which is more attractive to operators when demand softens. Furthermore, the operating cost is reduced due to its commonality with the rest of Cathay’s Airbus fleet.

Value Trends of A330-900 neo and A350-900

With all the above in mind, which of the remaining A330ceo operators would be expected for another major A330neo replacement order? Among the next 10 biggest A330ceo operators that have neither the 787 nor the A330neo, Air Transat and Aer Lingus are switching strategy to narrowbody long haul; Asiana is merging with Korean Air which operates 787s; Aeroflot is under sanction; Swiss’s fleet is younger and its mother group Lufthansa opted for the 787 though “had no immediate plans to introduce 787s to its fleet”, and Philippine Airlines just streamlined its fleet after recovering from Chapter 11. This leaves just Iberia, Sichuan Airlines, Brussels Airlines and Discover Airlines, with Sichuan the only one that does not have to follow a parent group decision. Operating both types simultaneously is unlikely either, with Virgin Atlantic being the only example, potentially joined by Hainan Airlines which hinted that in its stock exchange filing in April this year. The “Big Three” Chinese operators can be on watch as well since their 787 fleets are relatively small, though that also depends on the recovery pace of the Chinese aviation market.

Instead of viewing it strictly as a replacement for the A330ceo, the A330neo presents itself as an ideal type for operators looking to scale up their network and operations.

Prime examples include TAP, Condor, Cebu Pacific, ITA Airways and the newly joined VietJet Air. Notably, none of these top 10 A330neo operators have ever had a fleet of more than 10 A330ceos. The induction of the A330neo not only allows them to expand into the long-haul market, even for LCCs, but it also boosts the capacity of their trunk routes.

These observations suggest that the A330neo operator base may end up being quite different from the A330ceo’s, composed of a higher proportion of mid-tier credit and smaller scale operators, particularly given the model is still in the early stages of its product cycle. This may dissuade some of the more conservative banks from financing the aircraft, leading to less presence in SLB, JOL/JOLCO or other financial markets, and potentially impacting its liquidity and value in the long term.

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