IAG long-term fleet cuts “drastic” compared to other carriers – Jefferies 

IAG plans announced early in May to reduce the size of its fleet over the next two years is “drastic” in comparison with other major carriers, according to an equity analyst note by Jefferies.

Jefferies US Aerospace & Defense Electronics analyst team last week  published a research note titled, Commercial Aero Implications from Airline Reports, which looked at the disclosures of 19 airlines and one lessor (AerCap) during the Q1 results season. Jefferies pointed out that while 2020 would see the parent firm of Iberia and British Airways take six fewer airplanes than planned, much bigger cuts are on the table in the long term.

IAG is planning to take 68 fewer aircraft between now and 2022, while accelerating plans to retire parts of the fleet.  While IAG’s revised delivery plans for 2020 of 38 aircraft (22 widebodies) is only six short of the original target of 44 the analysts point to a more altered schedule for the following two years.

“However, the long term cuts are more drastic, with 15 and 22 deliveries expected in 2021 and 2022, down from 42 and 57. [IAG] will also return 20 leased aircraft in 2020,” Jefferies said in a note.  “It is also considering early retirement of 747-400 and A340s,” the note added.

It must be pointed out that these are only figures that carriers have announced so far, Delta, which has a fleet of 874 aircraft is “working with the OEMs to optimize the timing of future aircraft deliveries”,  according to Jefferies. Likewise American, which has a fleet of nearly 1,500 airplanes, is conducting a six-month review into what the future shape of the fleet should look like.

Reproduced below is the list of publicly announced retirements and rescheduled and cancelled deliveries. All research by Jefferies.

AerCap 

• Rescheduling the delivery of 37 aircraft that were scheduled for 2021/2022. Deliveries for these aircraft pushed to 2023 and later
• In total AerCap has rescheduled 100 aircraft for 2020-2022; capex reduced by $4.7 billion in 2020/2021.

[caption id="attachment_34803" align="aligncenter" width="1030"] Aercap B737-8[/caption]

Air Canada 

• Current Fleet as of 3/31/2020: 406 aircraft.
• Order Book and Deliveries: Order book of 50 B737 MAXs (cancelled 11) with 26 left to deliver. Firm order for 45 A220-300s with four delivered and 14 additional in 2020. Expects one A330 delivery in 2020.
• Expected Retirements: Accelerating the retirement of 79 older aircraft from the fleet, including Boeing 767, A319 and E190.

Air France 

• Current Fleet as of 3/31/2020: 549 aircraft, including 178 long haul, 248 medium haul, and 123 regional jets.
• Order Book and Deliveries: Just over 100 aircraft, mostly A220s. Working on postponing some of the aircraft that were expected to be delivered end of 2020 and pushing to 2021.
• Expected Retirements: Earlier phase out of the 747 (8) and A340 currently under study.
  Airbus and Boeing have asked Air France to delay some widebody jets given slowdown in manufacturing.
• Have some A350s planned for end of 2020 that will be pushed in to 2021 and some 2021 A350s that will be pushed into 2022.

Air New Zealand 

• Current Fleet: 64 aircraft, mostly 27 A320s, 16 B777s and 14 787s.
• Order Book and Deliveries: 17 aircraft on order mostly 787 and A321s.
• Expected Retirements: No announced plans, but temporarily parking fleet of 16 B777s.
  Will ground fleet of 777-200/777-300s until at least end of 2020 due to cost-cutting measures.
• Will defer planned deliveries of A321neo.

American Airlines 

• Current Fleet as of 3/31/2020: 1,484 aircraft including regional aircraft operated by third parties. Mainline fleet totals 942 aircraft.
  Order Book and Deliveries: currently planned of 47 for the remainder of 2020 with 34 in 2021. In total order book includes 103 A320 family aircraft, 76 B737 MAXs, 46 787s and 11 E175s.
• Expected Retirements: Accelerating retirement of 757s, 767s, A330-300s, and E190 fleet
  Will park the remaining A330-200 aircraft for the next two years until at least 2022; aircraft were bought between 2009 and 2014. Will fly A330 routes on the 777 and 787.
• Previously decided to retire up to 100 jets including 757 fleet, 767 fleet and older A330-300s.
  Also decided to retire the Embraer E190 and Bombardier CRJ200 fleets. American Airlines conducting six-month review of future scope and size; could potentially replace older 777-200ERs with 787s

Azul 

• Current Fleet as of 3/31/2020: 140 aircraft, mostly A320neo family, E-Jets, and ATRs.
• Order Book and Deliveries: Approximately 90% of fleet is under an operating lease. Taking 59 E2 deliveries for 2020 to 2023 and deferring to 2024 and beyond.

Delta 
 

• Current Fleet as of 3/31/2020: 874 aircraft with an average age of 14.9 years. Including 442 RJs, total fleet of 1,316 aircraft.
• Order Book and Deliveries: 249 aircraft with options for 150. Firm orders include A220s (64), A321 family (127), A330-900neo (32) and A350 (26). Delta is working with the OEMs to optimize the timing of future aircraft deliveries.
• Expected Retirements: Accelerating retirement of 18 B777s in addition to its fleet of MD-88s/MD-90s. Plan to cut 717 operating fleet to 30-45 aircraft from 91 aircraft over next two years, but unclear if aircraft will be retired or eventually brought back into the fleet

EasyJet

• Current Fleet: Jefferies estimates a fleet of 339 Airbus aircraft, including 204 A320s and 123 A319s.
• Order Book and Deliveries: Current order book is for 114 aircraft, mostly A320s.
• Expects its year ends fleet size to be around 302 aircraft, which is 51 aircraft below the previously anticipated fleet size of 353 aircraft. This will be achieved primarily through the deferral of new aircraft deliveries.

Emirates 

• Current Fleet: 259 aircraft with largest pieces 115 A380s and a total of 144 777s
  Order Book and Deliveries: 203 aircraft on order with over half or 115 the 777.
• Expected Retirements: Could accelerate retirement of parts of A380s fleet. Could accelerate retirement of parts of the A380s fleet. Currently has 115 A380s in the fleet with just over half or 59 leased vs. the remaining 56 owned.
• Emirates was planning on retiring 46 A380s in the middle of the decade. The number continues to be refined as the fleet evolves.
• Seeking to cancel orders for 5 of 8 remaining A380s.

Etihad 

• Current Fleet: 126 aircraft, with largest pieces 24 A330ceos and 38 787s.
• Order Book and Deliveries: 100 aircraft on order including 26 A321s, 25 777s and 33 787s
• Expected Retirements: Has not announced any retirements. Remains committed to its A350 order.
  Will look to reintroduce Airbus A380 routes gradually.

IAG 

• Current Fleet as of 12/31/2019: 598 aircraft, up from 573 a year earlier.
• Order Book and Deliveries: Future deliveries total 147 aircraft, mostly A320neo family and A350s. The new skyline includes 38, 15, and 22 deliveries in 2020-2022, respectively, which is down from a prior expectation of 44, 42, and 57.
• Expected Retirements: Looking to finalise retirement plans but has flexibility. The current fleet has 31 747s (all owned), 15 A340s (nine owned) and 45 777-200s, 36 which are owned.
• IAG expects to take 68 fewer aircraft through 2022 and accelerate retirement of sub fleet. However, there still is some expected near-term demand. For 2020, IAG and its subsidiaries expect to take 38 aircraft (22 widebodies) down from the original plan of 44 deliveries in 2020 (25 widebodies).
• However, the long term cuts are more drastic, with 15 and 22 deliveries expected in 2021 and 2022, respectively down from 42 and 57. It will also return 20 leased aircraft in 2020. It is also considering early retirement of 747-400 and A340s. Accelerated retirement of two 747-400s that were expected this year. Current fleet has 31 owned 747s and 15 A340s, with nine owned.

Jet Blue 

• Current Fleet as of 3/31/2020: 262 aircraft, which is mostly A320 family aircraft, with the exception of 60 E190s.
• Order Book and Deliveries: Currently has an order book of 146 aircraft including 76 A321neos and 70 A220s. Deliveries are expected to total 5 in 2020 with 17, 15, and 34 in 2021 to 2023. Delivery of first A220 expected in December 2019.
• Expected Retirements: Will phase out E190 fleet.
• Cutting its order book with Airbus by ~34% through 2022 to save $1.1 billion in aircraft spending.
• Total deliveries through 2022 fall to 40, down from prior expectation of 61. In 2020, will take one A220 and seven A321neos.

LATAM 

• Current Fleet: Current fleet of 319 aircraft, with nearly half or 150 aircraft the A320.
• Order Book and Deliveries: 51 aircraft on order including 42 A320 family aircraft.
• Expected Retirements: No announcement but will return 6 wide bodies and 13 narrowbodies to lessors as reorganises post-bankruptcy filing.

Lufthansa Airlines 

• Current Fleet as of 12/31/2019: Current fleet of 763 aircraft across airlines with 106 of the aircraft leased.
• Order Book and Deliveries: Continues to negotiate with Airbus and Boeing in terms of deferrals
• Expected Retirements: Recently announced it would permanently retire six A380s, seven A340-600s and five 747-400s in addition to 11 A320s from short-haul operations. Has 123 outstanding Airbus orders, including 96 A320neos and 27 A350s.
• Has 40 orders with Boeing between 777X and 787.
• Plans to bring back 80 aircraft in June, bringing total operating fleet to 160, which compares to a total fleet of 763.

Qatar Airways

• Current Fleet: Current fleet of 216 aircraft, tilted toward widebodies including 54 A350s, 48 777-300s, and 37 B787s.
• Order Book and Deliveries: Order Book of 165 aircraft with 65 777s and 50 A321s on orders. Publicly stated that it does not expect to take deliveries from Boeing and Airbus until market recovers.
• Expected Retirements: A380 fleet expected to remain grounded until H2 2021 and may never fly again; previously had said fleet of ten would be grounded from 2024 onward. In negotiations to suspend delivery of new jets from Airbus and Boeing until post- COVID 19 travel demand returns to normal levels. Does not expect this to happen until at least 2023.

Ryanair

• Current Fleet: Total fleet of 313 aircraft mostly 737s, which make up 286 aircraft. Have 27 A320 family aircraft from Laudamotion acquisition.
• Order Book and Deliveries: Have 135 737 MAXs on order.

Singapore Airlines 

• Current Fleet as of 3/31/2020: Current fleet is about 210 aircraft across mainline carrier, SilkAir and Scoot.
• Order Book and Deliveries: Across airlines we count a current order book of 135 aircraft which includes A320neo family (36), A350 (19), 737 MAX (31), 777s (20) and 787 (29)
• Expected Retirements: Will phase out older 777s and A330s but has not given any indication of A380 fleet. Singapore Airlines/SilkAir have cut 96% of capacity through June, with low cost carrier Scoot cutting 98% of capacity.
• In negotiation with OEMs to adjust delivery dates due to market conditions. Trying to balance longer-term fleet renewal with current market conditions. Also looking to reschedule payments.

Southwest

• Current Fleet as of 3/31/2020: 742 aircraft with an average age of 12 years. Majority of the fleet is 737-700 (501) and 737-800 (207) with 34 737 MAX 8s. Fleet is 622 owned with 120 leased planes.
• Order Book and Deliveries: Current order book of 380 MAX, including 115 MAX 8 options. LUV has firm orders for 30 737 MAX 7s and 219 MAX 8s. Boeing and LUV have agreed to an arrangement with the airlines taking delivery of no more than 48 aircraft through Dec. 31, 2021. Have not finalized agreement but expects to receive fewer than the previous plan of 27 MAX aircraft in 2020.
• Expected Retirements: Continues to have flexibility with retirement plans for the 737-700.

Turkish Airlines 

• Current Fleet: Fleet of 298 aircraft with largest fleet the A321 at 85 aircraft and 737 of 92 in aggregate.
• Order Book and Deliveries: 177 aircraft on order including 75 A321s and 63 737 MAXs.

United Airlines 

• Current Fleet as of 3/31/2020: 1,388, up from 1,348 a year ago.
• Order Book and Deliveries: In remainder of 2020 has planned delivery of 11 787s and 16 E175s with 8 787s and 4 E175s planned for 2021. UAL expects to take delivery of 16 and 25 737 MAXs in 2020 and 2021 subject to FAA lifting ungrounding. In total commitments include 50 A321XLRs, 45 A350s, 171 737 MAXs, 19 787s and 20 E175s.