Thursday 4 April 2013

IAG/BA's new 787 order,- "Oh, the disappointment" ?

Remember the short series of BA ads way back in the first days of the Marshall/King era which ran "Oh the disappointment" ...of finding you were not booked on a BA flight? It looks as if this may well be the shape of the future too.

IAG's announcement today that it is exercising the BA option on 18 787s-presumably -9s unless hidden here is the emergence of a further stretch to take the aircraft to a-10 version,- is timely for Boeing in the midst of its lithium battery woes .One would hope that as a mark of appreciation a few points have come off the contract price. If  these aircraft are only -9s and intended to replace the last of the larger 747-400s in 2017-2021 on a one for one basis, the order is not a cause for celebration by those who want to fly BA in the future,-particularly in the back end,-or for Heathrow Airport Plc. The opponents of new Heathrow runways might also raise gleeful eyebrows and claim that the capacity of the two existing ones is not being exploited to the full.

The 787-8 is broadly seen as a replacement for the 767-200 while the 787-9 is the same for the 767-300, with a smidgen of growth depending on configuration. The 777-300 and the A350-900 and -1000, fall into the no growth end of the 747 replacement slot and the A380, particularly the likely eventual stretched versions, fill the growth end.

The choice of the 787 is therefore a surprising choice for a business which, with its heavily slot constrained base and relatively low overall, high yield-orientated, configurations, is already spilling large amounts of  particularly lower yielding business to competing European and Middle Eastern hubs and to other airlines. It is even more surprising when you consider that in purchasing new aircraft airlines tend to go for something that will match demand around the midpoint in its front line life. That would have pointed to upgraded 777-300s or A350-9s or -10s for part of the BA task and A380s for the rest. Heathrow Airport which depends a lot on the sheer numbers passing through its terminals would have hoped that its predominant base carrier would have opted for as big as they could get.

Maybe we will see some explanation of IAG's logic later. Pending  that  this new order does look disappointing for anyone hoping to see a vigorously resurgent revitalised BA fighting its corner against all comers. It seems to be an updating of what the airline does now, along with the uninspiring acceptance of a longhaul future of little or no passenger growth and an ongoing steady decline in overall market share on many routes other than the Atlantic. It doesn't give the airline's staff much to go for either.

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