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February 14, 2020
In the Spotlight: The Airbus A321XLR
Understanding the Appeal of the Airbus A321XLR to Operators
by Ryan Cross
First to Market Advantage
Airbus scored a victory with the timing of its launch of the XLR program. Since it quickly locked down a healthy order book from an operationally diverse range of airline customers, it proved the market’s appetite for a longer-ranger narrowbody aircraft with current technology. The wise decision to launch the XLR dealt a blow to Boeing’s product development strategy. Boeing was sidetracked for most of 2019 by the grounding of the 737 MAX program. As it labors over the safe return of the MAX to service, it will probably not make a counterpunch in the first half of 2020.
For several years, Boeing executives have pondered whether to commit to the full development of the New Midsize Aircraft (NMA). A number of loyal Boeing customers are clamoring for a modern replacement for midsize 757 and 767 aircraft. Nevertheless, the American airframer must now reevaluate the prospects of its NMA; several would-be customers have already defected to its European counterpart.
At the start of the Paris Air Show last June, Air Lease Corporation (ALC) placed the first public order for the XLR. John Plueger, the leasing company’s chief executive officer, described why the XLR might could squash interest in the NMA for prospective operators: “We think that [the XLR] addresses the smaller size of what Boeing envisions to be the NMA (a larger and smaller version). It remains to be seen as to market acceptance and economic viability of that program in terms of being able to develop it and deliver it to the airlines at a price point, which is compelling… We will assess, and we are talking with Boeing as they continue to look at the NMA.” More recently, Lueger stated that the NMA’s development prospects had “diminished significantly” because of the broad range of difficulties weighing Boeing down.
Following ALC’s order book jump-start with 27 aircraft, GECAS placed an order for 20 aircraft in November. By winning orders from a duo of prominent lessors plus a pair of market-making American network carriers, Airbus demonstrated the XLR’s appeal among top-tier customer base.
Expert Opinion
Lindsey Webster, mba’s Vice President of Asset Valuations, explains how Airbus attempted to outmaneuver Boeing in the midsize aircraft market:
“Airbus’s launch of the A321XLR comes at a time when Boeing is feeling immense pressure to both fix a grounded aircraft and to launch a new market aircraft. While it can be seen as optimal timing for Airbus, we can’t help but wonder: was range the only ingredient missing from the A321LR? Boeing’s NMA concept offers longer range, more seats, quicker turn times and optimal cargo space. If airlines are looking for more than range, perhaps the A321XLR’s order book will look similar to the A330 neo against the 787 with a lot of potential but with a fraction of the orders. We anticipate the NMA will be priced well above the A321XLR but, with 30 more seats and a completely new design, the aircraft may instead be competing in overlapping but not direct competition.”
