MIAMI — In looking at the aircraft orders and deliveries numbers for Airbus and Boeing in 2014, the tally also included cancellations, including 70 A350s by Emirates and 33 787s by Air Berlin. Research from AirInsight noted two major aircraft order deferrals, with Philippine Airlines deferring a large order from Airbus, along with reports that Boeing is in talks with several Russian airlines regarding delivery deferrals.

“If this trend continues, the backlogs for the big two OEMs could push further to the right,” according to AirInsight. “With low fuel prices enabling existing aircraft to increase profitability, and signs that the lower oil prices could remain more stable as energy production shifts, order deferrals can be expected from carriers that might take one additional maintenance cycle with an older aircraft rather than replace it with a new one.”

AirInsight looked into a recent trend of cancelled orders in the industry. It cited Airbus historic data from 2005-2014, which showed a rise in cancellations in recent years, peaking at 18.9 percent of gross orders in 2014. When nearly one in five cancel, you need to significantly increase the order book to ensure continuing production. This level is a new high for Airbus, as shown in the chart below.

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“Of course, some of the cancellations in 2014 can be explained, and some, such as Emirates cancellation of 70 A350XWBs, may be revisited in the near future,” said the report. “But an order taken off the books is simply that – a slot that will need to be filled by another customer.”

Is 18.9 percent a reason to panic? “Perhaps not, as Boeing had significantly higher cancellation percentages in recent years when the 787 delays caused cancellations during the height of the industry recession,” according to AirInsight. “In 2009, Boeing had 263 gross orders and 121 cancellations, a 46 percent cancellation rate.” A similar chart for Boeing is shown below:

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“We’re seeing more cancellations recently than ever before. One reason is that the OEMs have been late with programs – A380, 787, CSeries, and even A350XWB from its initial targets,” said the report. “With delays in deliveries and OEMs not meeting contractual obligations, it is much easier for an airline to recapture progress payments made to OEMs.”

This has been one of the drivers for the increase in cancellation of orders. The following AirInsight chart illustrates the percentage of gross orders cancelled by year from 2005-2014:

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While we are not in panic mode, such as when the 787 cancellations impacted Boeing in 2009 and 2010, the cancellation percentage remains higher than normal in 2014. However, with the 787 solidly in production, and the A350 entering service, there are few excuses for order cancellations today.