Last month AerCap CEO Gus Kelly revealed that the ME3 carriers have entered discussions with Airbus and Boeing about aircraft deferrals.

AerCap chief Gus Kelly says the Gulf carriers are talking to Airbus and Boeing about deferrals. Could be hit to 777X, other programmes.

https://twitter.com/e_russell/status/893098882363793408

What could this mean for future production rates at Airbus and Boeing? With Emirates A350/787 decision off the table, it's starting to look like the ME3 have too many aircraft on order.

It had been predicted that something had to give as their growth could not be sustained.

https://www.ft.com/content/c8334df6-8da ... 6f43c5825d

We can already see how QR is treating its A359 deliveries, and EK has become less eager to take deliveries of new A380s. I wonder how EK was confident enough to place an order of 100 A380neo a couple of years ago.

Yeah, the current ME3 order books are absolutely insane. I ultimately think that the big loser here will either be the 777X or the A350.

With the number of 787s and A350s Eithad has on order, combined with the relatively few production slots in 2017 and 2018, one could easily speculate that they have already deferred quite a number of deliveries.

In the long run I don't think that these airlines will fall away, but they will simply become more like regular airlines and place new orders in more modest numbers.

KarelXWB wrote:

Last month AerCap CEO Gus Kelly revealed that the ME3 carriers have entered discussions with Airbus and Boeing about aircraft deferrals.

AerCap chief Gus Kelly says the Gulf carriers are talking to Airbus and Boeing about deferrals. Could be hit to 777X, other programmes.

https://twitter.com/e_russell/status/893098882363793408

What could this mean for future production rates at Airbus and Boeing? With Emirates A350/787 decision off the table, it's starting to look like the ME3 have too many aircraft on order.

It was about time, the bubble had to burst. The ME3 placed orders like the sky had no limit.
Already airlines are converting to smaller (widebody) aircraft, CX and UA from A35K to A359, BA from 787-9 to 787-8, and/or deferring deliveries.
I suspect EK tried to combine the A350/787 order with conversions from bigger aircraft already on order. When Airbus/Boeing didn't give, EK shelved the order. A380s have already been deferred, 77W's can't really be deferred as the 777X is nearing EIS. I wouldn't be surprised to see EK/QR negotiating new delivery schedules for their 777X order.
EY has overordered massively. Heard rumors about leasing part of their 787 fleet out to TK. I think EY felt they could place a large part of their A350/787 orders with airlines they bought a stake in like AB, 9W, Alitalia. I think they really don't know what to do now.

Reducing production rates is something Airbus nor Boeing wants, both have development cost to recoup from their recent new products. But I think they have to. 12 a month for the 787 cannot be sustained. The A350 and 777X production ramp ups will need to be reconsidered.

There are more carriers than just the ME3 in the gulf region.

The ME3 have reduced their annual capacity growth to something like 3%. If they continue this way, one can calculate their needs and see that something doesn't fit. I.e. some deferrals are to be expected.

waly777 wrote:

There are more carriers than just the ME3 in the gulf region.

Right, but the bulk of the orders from the Gulf region are from the ME3. Everyone knows what Gus Kelly means when he says "Gulf carriers."

This was not difficult to predict. Poor management decisions, coupled with an insatiable desire to devour the competition and assert worldwide aviation dominance led to the inevitable. Color me unsympathetic.

The airline business is one of the most cyclical there is. The ME3 growth rate was not sustainable, so this is not surprising....but it does not mean death and doom either. Many A380 and 77W's will need to be replaced eventually. Both Boeing and Airbus make good products. The frames will sell....just maybe not as quickly as many expected.

I wonder if there is also a lack of demand for their old frames. I believe they may have been overly optimistic of their ability to sell or get out of leases for their older frames and replace them with newer ones.

The ME3 dont like planes that are more than 10 years old. It's part of their business plan to stay ahead of the competition. QR took delivery of its first 777 in 2007. And the 330s even earlier. But they are not moving the older 330s on. The 350 was supposed to replace the 330s, but as yet they keep flying their 330s. They also had a desire to convert those 330s to freighters but the proposed P2F scheme still hasn't materialised.

As for EK they simply will never be able to get rid of 100 A380s. As for their 777s I really don't know who would take them in the current climate. It seems that even LCCs and those who traditionally took used aircraft from mainline carriers are now being incentives enough by the major manufacturers to buy new.

waly777 wrote:

There are more carriers than just the ME3 in the gulf region.

And I'm not sure why the focus is on just the ME3.

We see LH making noises about deferrals.

As nice as the A350 order was for UA, in essence it was a five year deferral of a whole lot of A350s.

CX is also deferring.

What we probably are seeing is the impact of the long predicted, industry wide, order glut.

Revelation wrote:

And I'm not sure why the focus is on just the ME3.

I'm not sure why you believe the focus is on the ME3. We do have separate threads on LH, UA and CX.

Do we see Boeing and Airbus stock prices decline, or had the market already priced in some high likelihood of deferrals?

KarelXWB wrote:

Revelation wrote:

And I'm not sure why the focus is on just the ME3.

I'm not sure why you believe the focus is on the ME3. We do have separate threads on LH, UA and CX.

We have comments in various threads such as the 77X ones that are keen to cast ME3 as particularly worrisome customers, and this thread seems to want to build on that notion by starting with a weeks-old tweet, whereas it seems to be more of a longer term, well predicted, industry wide phenomena. Just sayin'...

Revelation wrote:

We have comments in various threads such as the 77X ones that are keen to cast ME3 as particularly worrisome customers, and this thread seems to want to build on that notion by starting with a weeks-old tweet, whereas it seems to be more of a longer term, well predicted, industry wide phenomena. Just sayin'...

It is important because both A & B have WB programs exclusive ME3 kool-aid life support.

The tweet is based on a statement by a large lessor, not ME3. May be Gus Kelly is fed up with the phone calls to finance ME3 planes, and want to preempt on behalf of aviation finance community. His way of saying, No means no, Tim. We cannot lease/finance your planes.

Just Saying based on my tin foil analysis.

Revelation wrote:

waly777 wrote:

There are more carriers than just the ME3 in the gulf region.

And I'm not sure why the focus is on just the ME3.

We see LH making noises about deferrals.

As nice as the A350 order was for UA, in essence it was a five year deferral of a whole lot of A350s.

CX is also deferring.

What we probably are seeing is the impact of the long predicted, industry wide, order glut.

What is CX deferring?

dtw2hyd wrote:

It is important because both A & B have WB programs exclusive ME3 kool-aid life support.

Yes, and you keep suggesting that means the ME3 will be quick to abandon the aircraft orders, but we saw even in the 2008 GFC when Dubai went hand in hat to Abu Dhabi that Dubai was more willing to give up the national symbol of the Burj rather than curtail EK's growth. I see why people have concerns about the ME situation but to me a lot of that is just the optics, and there's a lot more commitment to the aviation sector than people comprehend. I think a lot of things will get thrown under the bus before the various emarati curtail the aviation sector.

If you've got some concrete evidence I'm wrong, fire away...

jbs2886 wrote:

What is CX deferring?

viewtopic.php?f=3&t=1373691

Revelation wrote:

KarelXWB wrote:

Revelation wrote:

And I'm not sure why the focus is on just the ME3.

I'm not sure why you believe the focus is on the ME3. We do have separate threads on LH, UA and CX.

We have comments in various threads such as the 77X ones that are keen to cast ME3 as particularly worrisome customers, and this thread seems to want to build on that notion by starting with a weeks-old tweet, whereas it seems to be more of a longer term, well predicted, industry wide phenomena. Just sayin'...

This is righteous.

I wouldn't really call the CX A350 decision "deferring" but rather getting the correct capacity they need at the right time.

Revelation wrote:

We have comments in various threads such as the 77X ones that are keen to cast ME3 as particularly worrisome customers, and this thread seems to want to build on that notion by starting with a weeks-old tweet, whereas it seems to be more of a longer term, well predicted, industry wide phenomena. Just sayin'...

The tweet is pretty relevant as nothing has changed since then. I do my best to publish news as quickly as possible. Unfortunately there was a backlog due to holidays.

Also note that this thread is about all ME3 aircraft on order, including 777s, A350s, 787s and A380s. The other thread is just about the 777X in general. Two different subjects.

Revelation wrote:

dtw2hyd wrote:

It is important because both A & B have WB programs exclusive ME3 kool-aid life support.

Yes, and you keep suggesting that means the ME3 will be quick to abandon the aircraft orders, but we saw even in the 2008 GFC when Dubai went hand in hat to Abu Dhabi that Dubai was more willing to give up the national symbol of the Burj rather than curtail EK's growth. I see why people have concerns about the ME situation but to me a lot of that is just the optics, and there's a lot more commitment to the aviation sector than people comprehend. I think a lot of things will get thrown under the bus before the various emarati curtail the aviation sector.

If you've got some concrete evidence I'm wrong, fire away...

The problem is ME3 will not abandon orders, they will not be able to take deliveries either.

Instead of saying I ordered too many A380s, Tim now saying he doesn't want planes without resale value. So it is the fault of Airbus. They will find some reason to blame Boeing to get out of 777X order.

These airlines are run based on fossil fuel, ego, and wasta. First one is running out.

Abu Dhabi bailing out Dubai again is out of the question, KSA and Kuwait were supporting and they are struggling now.

Global Banks have $$Trillions, but they are willing to lend only to real airlines. There is the rub.

dtw2hyd wrote:

The problem is ME3 will not abandon orders, they will not be able to take deliveries either.

Instead of saying I ordered too many A380s, Tim now saying he doesn't want planes without resale value. So it is the fault of Airbus. They will find some reason to blame Boeing to get out of 777X order.

These airlines are run based on fossil fuel, ego, and wasta. First one is running out.

Abu Dhabi bailing out Dubai again is out of the question, KSA and Kuwait were supporting and they are struggling now.

Global Banks have $$Trillions, but they are willing to lend only to real airlines. There is the rub.

If the oil economy collapses, all airlines will collapse, not just the ME3 ones. As buzzy as it is to talk about solar and wind, we still depend on oil for most things we do. And like it or not, most of that is under the ground in the home turf of the ME3.

Meanwhile, China's crazy relation next door has nukes and is lobbing missiles throughout the region and yet all you worry about is the ME3 airline business.

Oh well...

Has any body given any thought to the US3 having something to do with this? They have lobbied hard and have been educating the public about how the ME3 receives government subsidies to continually fund there insatiable appetite for new airplanes and new routes. maybe there has been some behind the scenes moves in that regard and the ME3 were told that in order to compete and initiate new routes in the US, they have to play fair in the sandbox.

jumbojet wrote:

Has any body given any thought to the US3 having something to do with this? They have lobbied hard and have been educating the public about how the ME3 receives government subsidies to continually fund there insatiable appetite for new airplanes and new routes. maybe there has been some behind the scenes moves in that regard and the ME3 were told that in order to compete and initiate new routes in the US, they have to play fair in the sandbox.

Well at we now know one person who's swallowed the hook, line and sinker.

The finance and leasing industries aren't without blame. They are as proactive making unsolicited approaches to major and not so major airlines, encouraging them to keep competitive by buying / leasing new aircraft as the OEM's and airline CEO's (latter a.net myth).

If the ME3 can co-ordinate themselves (and use OEM's and major financiers and leasing companies to do it for them), they may be able to use the situation to their advantage, by obtaining more access to supposedly already open markets.

Air travel is a commodity. We are experiencing too much capacity in the international markets.

KarelXWB wrote:

Revelation wrote:

We have comments in various threads such as the 77X ones that are keen to cast ME3 as particularly worrisome customers, and this thread seems to want to build on that notion by starting with a weeks-old tweet, whereas it seems to be more of a longer term, well predicted, industry wide phenomena. Just sayin'...

The tweet is pretty relevant as nothing has changed since then. I do my best to publish news as quickly as possible. Unfortunately there was a backlog due to holidays.

Also note that this thread is about all ME3 aircraft on order, including 777s, A350s, 787s and A380s. The other thread is just about the 777X in general. Two different subjects.

Yes, well, that's why I said "in various threads such as", meaning not just the 77X one. And I am fine with your input that the timing was just coincidental and related to vacation etc, and I do appreciate all the great stuff you find on the Internet and the efforts you make to present it here, but feel it's valid to point out it might be triggering things you might not be intending to trigger.

And to support the notion that this one tweet is IMHO just one drop in a river that's been flowing for a while, here's a clip from Leeham ( https://leehamnews.com/2017/01/09/defer ... ttom-line/ ) in January:

Airlines have deferred or are thinking about deferring more than 400 airplanes in the near term, a review of decisions and deliberations that have been made during the last 12 months.

And:

Reasons vary widely for the deferrals, these reports indicated. Low oil prices. Slowing economies. Declining financial results. Worries about two of the three top Middle Eastern carriers. A capital squeeze in China. Pressure on long-haul carriers from the emerging sector of low cost, long-haul airlines. Preserving capital expenditures to keep the bottom line in the black.

So in January Leeham was already talking about a trend that has been going on for the last 12 months and with a list of different reasons, different carriers and yes, different widebody products being given. Now that I look back at the tweet, the first reply is Hamilton himself pointing this out.

3rdGen wrote:

As for EK they simply will never be able to get rid of 100 A380s.

Yeah they will.

Most of those aircraft are leased. Divesting of them won't be EK's problem.

Now the lessors, on the other hand.....

Revelation wrote:

If the oil economy collapses, all airlines will collapse, not just the ME3 ones. As buzzy as it is to talk about solar and wind, we still depend on oil for most things we do. .

Oil won't disappear, its price will continue to decrease as its consumer base shrinks. Customers can buy it for cheap, but one cannot make a lavish luxury fantasy living by selling oil.

Revelation wrote:

And like it or not, most of that is under the ground in the home turf of the ME3..

Are you sure about that?

Revelation wrote:

And to support the notion that this one tweet is IMHO just one drop in a river that's been flowing for a while, here's a clip from Leeham ( https://leehamnews.com/2017/01/09/defer ... ttom-line/ ) in January:

Airlines have deferred or are thinking about deferring more than 400 airplanes in the near term, a review of decisions and deliberations that have been made during the last 12 months.

And:

Reasons vary widely for the deferrals, these reports indicated. Low oil prices. Slowing economies. Declining financial results. Worries about two of the three top Middle Eastern carriers. A capital squeeze in China. Pressure on long-haul carriers from the emerging sector of low cost, long-haul airlines. Preserving capital expenditures to keep the bottom line in the black.

So in January Leeham was already talking about a trend that has been going on for the last 12 months and with a list of different reasons, different carriers and yes, different widebody products being given. Now that I look back at the tweet, the first reply is Hamilton himself pointing this out.

Generally people don't like discussing global trends in one big thread, they like discussing individual airlines or airlines groups. That's why we have separate threads on LH, CX, AA, UA, QF etc. And every time those big airlines cancel or defer aircraft orders, threads go absolutely bananas.