How Air­bus is beat­ing Boe­ing to a ‘MOM’ air­plane

Financial Mirror (Cyprus) - - FRONT PAGE - By Paul Au­sick

Among those new or­der an­nounce­ments that poured out of the re­cent Farn­bor­ough Air­show was a be­low-the-radar switch that de­serves a closer look. Low-cost car­rier Nor­we­gian Air Shut­tle changed an or­der it had placed in 2012 for 100 Air­bus A320­neo jets by con­vert­ing 30 of the planes to the A321LR, Air­bus’s so­lu­tion for de­mand in the so-called mid­dle of the mar­ket (MOM).

On Tues­day morn­ing, in con­junc­tion with its sec­ondquar­ter earn­ings an­nounce­ment, JetBlue Air­ways Corp. (NAS­DAQ: JBLU) said it is adding 30 Air­bus A321s to an ex­ist­ing or­der. The in­ter­est­ing thing about the or­der is that JetBlue has the right to con­fig­ure the 15 A321­neo jets as A321LRs.

Boe­ing Co. (NYSE: BA) has not yet en­tered the start­ing gate for an MOM plane, while Air­bus is sched­uled to make first de­liv­er­ies in 2019. Boe­ing for a long time de­nied that there was enough of a mar­ket for an MOM jet as a re­place­ment for its dual-en­gine, sin­gle-aisle 757, although it re­cently changed its tune and es­ti­mated that be­tween 2,000 and 5,000 planes could be re­quired to re­place both the ag­ing 757s and the larger wide-body 767s.

The A321LR is a sin­gle-aisle, dual-en­gine jet that re­ports es­ti­mate can carry 206 pas­sen­gers in a sin­gle-class con­fig­u­ra­tion up to max­i­mum range of 4,000 nau­ti­cal miles. As a re­place­ment for the 757, there’s noth­ing closer.

Boe­ing re­cently told Avi­a­tion Week what it be­lieves the mar­ket is look­ing for: “The MOM is start­ing to shape out to be in an area from where the 757 used to fly to where the 767-200/300 flies. That’s not 100% across the board. You have three groups: those that want to fly more peo­ple, those that want more range and the group that wants to fly more peo­ple with more range. How­ever, this air­plane re­ally wants to be transat­lantic, so most of the cus­tomers want [it] to fly 4,800-5,000 [nau­ti­cal miles]. That’s sig­nif­i­cantly longer than the 757, but the seat count wants to be be­tween 200 and 260 to 270 max. So it is a lit­tle bit big­ger than a cur­rent sin­gleaisle but not quite as big as a 767-type air­craft.”

Nor­we­gian Air ex­pects the A321LR to en­able the air­line to open up new routes be­tween the U.S. east coast and Europe, and be­tween Scan­di­navia and parts of Asia, South Amer­ica and Europe.

JetBlue is ex­pand­ing its Mint ser­vice and plans to use the A320s and A321LRs to ex­pand its U.S. transcon­ti­nen­tal ser­vice. In a clear dig at Alaska Air Group Inc. (NYSE: ALK) and its pend­ing ac­qui­si­tion of Vir­gin Amer­ica Inc. (NAS­DAQ: VA), the air­line said: “As west coast trav­el­ers face re­duced op­tions and less competition, JetBlue is quickly mov­ing to or­gan­i­cally strengthen its pres­ence on a na­tional scale with a lead­ing transcon­ti­nen­tal fran­chise be­tween the west and east coasts.”

Boe­ing ap­pears to fa­vor the larger MOM wide-body re­place­ment for the 767, while Air­bus thinks its sin­gle-aisle ver­sion will gen­er­ate more sales. The mar­ket for wide-body planes from ei­ther maker has fallen off sub­stan­tially this year, one reason why new or­ders for both Boe­ing and Air­bus are so much lower than they have been in the past few years.

If Boe­ing plans to go af­ter the nar­row-body mar­ket that the A321LR is stak­ing out, it had bet­ter get a move on. A clean-sheet wide-body MOM air­craft is not likely to be ready for de­liv­ery un­til 2024 at the ear­li­est. A stretch ver­sion of the 737 MAX 9 with new en­gines has been dis­cussed, but that would amount to an al­most new air­plane, so there’s lit­tle point in do­ing any­thing but an­other clean-sheet de­sign.

While CEO Den­nis Muilen­burg would not say this, the reason Boe­ing is so far be­hind is that for­mer CEO Jim McNer­ney de­nied that a mar­ket for the MOM plane ex­isted, even though there were re­ports that Air­bus was work­ing on an A321LR in the fall of 2014. McNer­ney and Boe­ing likely saw the MOM as noth­ing more than a transat­lantic car­rier. Nor­we­gian has much big­ger plans for the plane, and for that mat­ter so does JetBlue.(

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