Following the news that SAS Scandinavian Airlines will defer and review its order book with Airbus.
Nicolas Jouan, Aerospace and Defense Analyst at GlobalData, a leading data and analytics company, offers his view on the situation;
“Scandinavian airlines SAS is only the latest of a growing number of airlines engaging in a slimming down of their order books after announcing poor results for the first quarter of 2020. The company declared that it would postpone and adjust future deliveries of aircrafts from Airbus, opening the possibilities of further cancellations for the European plane manufacturer. SAS still has 35 A320neo and 5 A350-900 in the backlog, but the collapse of air travel since the beginning of the COVID-19 outbreak has rendered new deliveries pretty much useless for many airlines.
“Earlier this month, Australian flag carrier Qantas advised Airbus and Boeing it did not intend to take delivery of new Airbus or Boeing jetliners in 2020, a week after shelving its long-haul Project Sunrise and freezing the order of 12 A350. Lufthansa and Kuwait Airways also declared that they intended to reduce their fleet. The pandemic is set to impose hundreds of billions of dollars of losses on the industry in 2020 alone, and no return to normal should be expected for at least two years. In this context, postponement and cancellations of order are set to become the new normal.
“Airbus has already announced reduction of production until next year. The A320 and A350 production rates were reduced respectively to 40 and 6 per months until 2021. But these rates are still likely to be too high for the expected demand. Even if Airbus’ backlog remains solid with about 300 net orders in 2020, cumulating cancellations on the clients’ end combined to disruptions on the suppliers’ end are making the life of the plane manufacturer very difficult. Adjusting the output of assembly lines and ensuring deliveries is proving difficult on its own, especially if clients keep readjusting order books.”