At the Dubai Air Show Emirates placed a firm order for 50 Airbus A350-900s “at $16 billion in list prices. Deliveries will start in May 2023 and run until 2028.”
Great news for Airbus? No, not really. This is the same deal announced last February, when Emirates reduced its outstanding order for Airbus A380s, and ordered 30 A350s and 40 A330neos in their place. Moving all the orders to A350s, which Emirates ordered in 2007 – and cancelled in 2014 – is a blow to the A330neo program. And 50 A350s is still less than the 70 A350s Emirates had ordered 12 years ago.
Emirates Airbus A380
There are some basic principles to follow in interpreting aircraft orders.
- Orders are announced. Those mean very little. They’re often non-binding letters of intent, an agreement to agree, that may be real or designed for PR.
- Then orders are announced again when they’re actually placed. Terms vary in how firm they are, what costs may be associated with changes, delays, or termination.
- The firm order may be different than the announced order.
- The prices that are announced when orders are placed (‘order value’) are always fake. Deal values are cited at ‘list prices’ although literally no one pays list prices. Roughly speaking airlines pay about half of list price.
In June Boeing announced that British Airways parent IAG had ordered 200 Boeing 737 MAX aircraft. Boeing was desperate. IAG CEO Willie Walsh is a bottom-feeder. This was a deal made in heaven and there was little reason for the airline group not to do this.
They no doubt got much better pricing than they’d ever get at any other time – with the plane grounded – and Boeing got a PR win. But the June announcement still hasn’t turned into a real order.
This is a very strange game. Everybody knows that prices are lower than reported. Everybody knows that many announced orders won’t ever happen. And most people know that the same orders get announced more than once. There’s a cottage industry in tracking what orders are ‘real’ (and non-duplicative). Yet media keep reporting statements as though they’re true, though better reporters offer the relevant cautions and trace the history of a given order.