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Read Part One and Part Two of Do airline dreams come true?

In the previous Cirium Ascend Consultancy Team Perspective, I looked at some examples of airline order backlogs, and how they can easily change over time, see deferrals, or even disappear altogether. This week, I look at the opposite viewpoint. In other words, which airlines are likely to place additional orders in the near future? Have these carriers played it clever, exhibiting sound fleet management, or have they missed the boat in terms of securing fuel-efficient next generation replacements?

Again, all fleet figures refer to single-aisle and twin-aisle passenger aircraft, both in service and stored, operated by airlines.

Current order status

The concept of being ‘underordered’ is not that simple. Backlog-to-fleet ratio is a good measure, and if this is above 1.0, clearly the airline is either planning to grow rapidly, or it plans to replace all its current fleet. If the ratio is 0.4 or 0.5, this could well be sufficient for medium-term planning. Variables include market growth rate, the age distribution of the current fleet, as well as the competitive position of the airline. It is necessary to consider the airline group, rather than individual operators or brands, to get the full picture.

The chart below includes airlines or airline groups that have at least 100 aircraft in service today, and have backlog-to-fleet ratios below 0.4. The average age of the current fleet varies widely, between 8-16 years.

Chart 1: Largest ‘underordered’ airlines

Eight of the 22 airlines shown are major network carriers in North America and Europe. They are in slow-growing mature markets, generally own rather than lease their fleets, and also tend to keep aircraft until final removal from service and retirement. Within these, all but Alaska Airlines have average fleet ages above 12 years. Delta and American have the oldest fleets, at 15.5 and 13.8 years respectively. Even allowing for slower growth and older retirement policy, clearly some of these, particularly Air France/KLM Group and IAG, could readily use additional new-generation aircraft. These would cut fuel costs and help airlines reduce their emissions in-line with commitments to Net Zero.

ANA is in a similar situation, with just 59 aircraft on order, and a backlog-to-fleet ratio of just 0.24. However, it does have a younger fleet age profile.

Ryanair has comparatively few aircraft on backlog. After taking delivery of its remaining 38 737 Max 8-200s, it has a backlog of 150 Max 10s. However, in its investor update, it does state it has 300 Max 10 aircraft on order, implying its Letter of Intent (LoI) for another 150 units is almost certainly to be converted to a firm order soon.

Several airlines in Latin America have smaller backlogs at present. However, many in the region have gone through restructuring process, and are traditionally reliant on leasing, so it may be expected some of their shortfall in orders will be met from lessor backlogs.

What about China?

The lack of backlog for Chinese airlines is very apparent. This is a market that grew at 13.3% per annum between 2009 and 2019, and took delivery of 2,900 jets in the decade. Fleets Analyzer data shows just 550 Airbus and Boeing aircraft on order for Chinese airlines today, plus another 475 C919s. Even including the COMAC aircraft, this gives a backlog-to-fleet of just 0.25.

However, there are 1,100 Airbus and Boeing aircraft recorded as being on order for ‘unannounced commercial customers’. Several hundred of these are likely to be for Chinese airlines and leasing companies. The actual destination of these often only becomes apparent at delivery. At this point Boeing unveils ‘unidentified customers identified at delivery’. For example, in its December 2024 data Boeing listed three aircraft delivered to Chinese airlines that were ordered in 2014 and 2016, having lain as unannounced customers for a decade!

In summary, the real backlog for Chinese airlines is higher than 1,025 units, but even so, the country’s airlines will require more aircraft. The obvious conclusion is that they will rely on COMAC to fill the gap, in order to obtain the 400 new aircraft per annum that are called for in the latest Cirium Fleet Forecast.

Lessor backlog

Chinese operating lessors currently have 495 C919s on order that are not allocated to a specific airline. This highlights an alternative source of new aircraft for airlines that are late to the current order cycle. There are just over 1,400 Airbus and Boeing aircraft on order with lessors with unknown lessees. Obviously some of these will already have been placed with airlines, but they have not been made public yet. Thus it is possible that some of the airlines highlighted as being ‘underordered’ may already have sourced some additional aircraft from the lessor backlog.

For any of the airlines with low backlog-to-fleet ratios that are looking to acquire new aircraft via lessors, they will still have to get in line for a delivery slot. The A320neo and 737 Max families are now sold-out for several years, but even unplaced lessor slots are limited in the next two years as shown in the slide.

Chart 2: Unplaced operating lessor backlog

Source: Cirium Fleets Analyzer, Cirium Ascend Consultancy analysis

Conclusions

Earlier, we highlighted how some airlines have placed huge orders that don’t always come to 100% fruition, for multiple reasons. However, there are currently several large airlines or airline groups that could be considered to be underordered, especially considering the long lead-times required from an order placed in 2025 to delivery.

The first available OEM slots for 737 Max and A320neo family types, as well as twin-aisle 787s and A350s, are now likely to be in the early 2030s, so airlines may have to consider alternative sources of supply. One is via lessors, but how many of their 1,400 unplaced aircraft are really available? There is some earlier OEM availability on the A220 and A330neo, so we may see more interest in these types. It also seems clear that China will look towards the C919 programme to help fill its lack of backlog for Airbus and Boeing single-aisles.

History teaches us that opportunities sometimes arise to reallocate aircraft from airlines that have ordered too many aircraft, or those that find themselves in financial problems. Price escalation is also an issue for some orders placed many years ago, such that an airline may seek to renegotiate its order backlog.

However, deals such as these cannot be done without the full agreement of the aircraft manufacturers themselves, as they retain ownership of the delivery slots. Boeing has recently undertaken a major exercise to find homes for 737 Max aircraft that were originally destined for China. Many have been delivered to India, helping that fast-growing market obtain earlier capacity. In the past, well-capitalised airlines in the US and Europe have obtained slots that have been deferred by airlines during economic downturns. Might we see nearer-term slots at overordered airlines in Southeast Asia become available, or even backlogs transferred to lessors?

In conclusion, some airlines may wish they had placed orders earlier in the post-Covid recovery cycle, but there are always ways that enable a win-win for both airframer and airline when the latter is seen as a ‘strategic customer’. 

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