PARIS – Air Lease Corporation (ALC) signed a firm order for 12 Airbus A321neo aircraft Monday at the Paris Air Show, growing its A321neo order book to 141 frames. It now has 152 A320neo family aircraft on order with 4 already delivered. The order takes the total number of Airbus aircraft delivered to or ordered by ALC to 279 aircraft (70 widebodies and 209 narrowbodies.
“The market for A321neos is strong, and our customers want more aircraft. This latest order for additional NEOs will fill our customer placement commitments,” said John L. Plueger, Air Lease Corporation’s CEO and President.
A shot across the bow of the 737 MAX 10
The order by ALC comes just hours after Boeing announced its intent to build the 737 MAX 10, a direct competitor to the A321neo and the new largest variant in the 737 MAX family of jets. Speaking at the Paris Air Show, Airbus Chief Operating Officer – Customers John Leahy challenged the 737 MAX 10 program, saying “We see the 737 MAX-10 as a competitor to the -9. That’s why you’re seeing order conversions.”
— Airbus (@Airbus) June 19, 2017
— John Walton @ #PAS17 (@thatjohn) June 19, 2017
“The A321neo is delivering substantial fuel burn savings and that is good for the bottom line for operators and for lessors alike. Unbeatable operating economics married with the best in class comfort levels makes the NEO the aircraft of choice – after all 60 percent market share speaks for itself,” said John Leahy, Chief Operating Officer, Customers, Airbus Commercial Aircraft. “
Our view is that the 737 MAX 10 closes the operating economics gap with the A321neo, and should shore up the 737 MAX’s order book at the top end of the narrowbody segment (the so-called middle of the market, or MOM). But the big value for Boeing will come from keeping existing 737NG customers in line and preventing defections to the A321neo, which were a substantial risk prior to the announcement of the 737 MAX 10.
When viewed in that context, ALC’s order is less a validation of Leahy’s comments on the 737 MAX 10 than the natural outgrowth of a strong A321neo customer. Air Lease Corporation has been one of the biggest boosters of the A321neo (though it also has more than 100 737 MAX 8s on order) and founder Steven Udvar-Hazy even poured cold water on the 737 MAX 10 at the ISTAT conference earlier this spring. This order is merely a massive A321neo customer re-affirming and upping its buy – it does not mean much about the viability of the 737 MAX 10 one way or another.
ALC Orders Despite A320neo Engine Concerns
Just last month, ALC President and CEO, John Plueger, announced that some of the initial A320neo aircraft destined for ALC had been delayed due to problems with Pratt & Whitney’s 1000G geared turbofan engine. According to RunwayGirl Network, Plueger said he was “very disturbed – particularly with Toulouse.” At this time it is unclear whether ALC has chosen the Pratt & Whitney 1000G or the CFM Leap-1A for this particular order.
However, these kinds of teething problems are par for the course with modern airlines (the 737 MAX, at least initially, appears to be an exception), and our read is that lessors and customers are for the most part still happy with the A320neo product. We do think on the margin that a few customers will switch over to the CFM LEAP-1A engine however from Pratt’s GTF.