WHO WILL WANT AN A320NEO?

Dino D'Amore
By Dino D'Amore December 2, 2010 14:48

WHO WILL WANT AN A320NEO?

Commercial banks remain reticent in financing aircraft and those banks still in the market are only looking to fund purchases of lower risk single aisle aircraft with a high resale value such as the 737-800 and A320 workhorses. This is one reason why there are just not any 737-800s around at the moment and the residual values have gone through the roof. Airlines are finding it very difficult to finance widebody aircraft, even the most appealing the 777-300ER is not getting the green light from financiers as it should in an ideal world.

All airlines are looking to buy new, more fuel efficient aircraft rather than take the risk of flying with older aircraft, all remember being burned by oil costs topping $149 a barrel and it is this overriding thought that is driving the new aircraft orders in many instances. So where to draw the line? Who is going to take the plunge for an A320neo when the aircraft will most likely have a 15 year life span? Take into account the additional cost of the A320neo against the potential fuel savings over 15 years , it does not take long for even the worst mathematician to come to the conclusion that the sums do not add up and an airline would be better off with the original A320 at the lower initial cost. This of course should also rule out the lessors for purchasing the type. There are orders in the pipeline for the A320neo from the Middle East (who else) and we have to ask: Why? Do the Middle East carriers expect oil prices to go sky high again and stay there for the long term in which case the A320neo will give them the edge they need? Airlines would be better of with the C919! Airbus has lunched the A320neo to compete with the C919 but they will not be able to match it on cost.

Dino D'Amore
By Dino D'Amore December 2, 2010 14:48
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