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  • To NEO or Not To NEO
    Posted by Robert Wall 8:43 AM on Oct 22, 2010

    Airbus boss Tom Enders expects to take a decision on whether to reengine the A320 before Christmas.

    The story is basically the same it has been now since Farnborough, Airbus sees a business case for the program, but isn’t sure it has the engineering wherewithal to pull it off alongside with the work it needs to do on the A350, A380 and A400M.

    But is it really so clear cut? The company has a backlog of around 2,300 A320 family aircraft, or almost five years of output at currently planned production rates.

    What is more, given Airbus’s recent program execution track record, should the fact the company is even hesitating with doing the project not a good reason to think it shouldn’t be done.

    There is, of course, the pressure from customers to do something.

    Here’s a list of some of the pros and cons of a NEO

    Pros:

    Meets customer demand for lower fuel burn product relatively quickly

    Strong offering for Boeing 757 replacement market, particularly in the U.S.

    Near-term order increases

    Near-term competitive edge over Boeing 737

     

    Cons:

    Financial risk

    Defers A30X, the A320 replacement to 2025 or beyond

    Validates Bombardier CSeries

    Risks being overtaken by a Boeing 737 replacement around 2020

    Uncertainty, mainly about maintenance costs

     

    For potential airline customers it is also not a clear cut issue.

    Some of the cons there are that for existing A320 customers face a drop in residual value of A320 classics that may be on their balance sheet, and the prospect of having to operate a mixed fleet. There is uncertainty over maintenance costs, and the price for the NEO will be higher.

    On the pro-side are that fuel-burn should drop, and with it also any bills associated with emissions trading in Europe. The NEO also would provide new opportunities for route optimization given its increased range.

    The reengining story was always going to be the big topic for this year in commercial aviation. How befitting it is going down to the wire.

    Tags: tw99, Airbus, NEO, CSeries

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