<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "In July, Airbus (NASDAQOTH: EADSY) signed agreements in principle to sell a large number of A220s to JetBlue Airways (NASDAQ: JBLU) and a project to create an American airline headed by JetBlue founder, David Neeleman. Yet by the end of November, these contracts had still not been included in Airbus' official order book. "Data-reactid =" 11 "> In July, Airbus (NASDAQOTH: EADSY) have signed sales agreements to sell a large number of A220s to JetBlue Airways (NASDAQ: JBLU) and a project to create a US airline headed by JetBlue founder David Neeleman. However, by the end of November, these offers had still not been entered in Airbus' official order book.

Both orders were confirmed at the end of 2018. This will help increase the Airbus A220 order backlog by more than 30% – and an even larger percentage if you exclude existing orders likely to be used. to be canceled. However, for the A220 program to be financially successful, Airbus will need to leverage the momentum of the program and capture more orders outside the US market.

Finalization of the first two Airbus A220 contracts

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Beginning of July 2018, Airbus took over the management of BomberCSeries aircraft program in difficulty and also acquired a majority stake in the program. He quickly renamed the CS100 and CS300 to A220-100 and A220-300, respectively. "Data-reactid =" 14 "> In early July 2018, Airbus took over the management of BomberCSeries aircraft program in difficulty and also acquired a majority stake in the program. He quickly renamed the CS100 and CS300 to A220-100 and A220-300, respectively.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Airbus did not take long to start a few weeks after the transfer of control, JetBlue announced that it was going to set up landing commands for its new family of aircraft. buy 60 A220-300sand Moxy Airways (code-named start-up Neeleman) have also decided to acquire 60 A220-300. "data-reactid =" 15 "> Airbus was quick to place orders for its new family of planes.A few weeks after the transfer of control, JetBlue announced that it would buy 60 A220-300sand Moxy Airways (code-named start-up Neeleman) have also decided to acquire 60 A220-300.

Rendering of an A220-300 in JetBlue livery.

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JetBlue Airways has confirmed its order of 60 A220-300. Source of the image: Airbus.

<p class = "canvas-atom web-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Last week, Airbus announced that the two airlines Their orders were firmer during the last week of December, adding 120 firm orders to a relatively slender order backlog of 353 firm orders at the end of November. at least 600 firm orders data-reactid = "28"> Last week, Airbus announced that the two companies had confirmed their orders during the last week of December. This adds 120 firm orders to a relatively small backlog of 353 firm orders at the end of November. at least 600 firm orders for all 2018 aircraft programs – excluding cancellations booked last month.

New capabilities for new missions

Mb (0) – sm Mt (0.8em) – sm "type =" text "content =" The two leaders of JetBlue and Moxy Airways have great hopes JetBlue indicates its A220-300s will be 29% cheaper to operate per seat than both Embraer E190s they will replace. The A220-300s also have sufficient autonomy to operate transcontinental flights – unlike E190s – allowing greater use. An A220-300 could even theoretically fly from Boston to Iceland, Ireland or Scotland. "Data-reactid =" 30 "> The two leaders of JetBlue and Moxy Airways have high hopes for the A220.JetBlue says that its A220-300 will be 29 years old% cheaper to operate per seat than the Embraer E190s they will replace. The A220-300s also have sufficient autonomy to operate transcontinental flights – unlike E190s – allowing greater use. An A220-300 could even theoretically fly from Boston to Iceland, Ireland or Scotland.

Given all the benefits of the A220-300, JetBlue expects its fleet replacement campaign to strengthen its pre-tax margin for the entire company by around 3 percentage points and pre-tax profit of several hundred million dollars a year.

Neeleman also believes that the low operating costs of the A220 and its wide range will allow Moxy to profitably serve a large number of markets that currently lack nonstop services. In fact, he said his new start-up could face no direct competition on any of his routes. Neeleman believes that non-stop direct flights will allow Moxy to quickly become a force in small US markets.

Will there be more sales?

These two important orders of A220 are certainly interesting for Airbus. However, to avoid prosecution of public subsidies to the CSeries / A220 program, Airbus decided to build A220s for US airlines at new facilities in the United States.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Between an earlier order of Delta Airlines and for these two orders, the capacity of the new assembly line is almost entirely reserved until 2024, with a production rate of up to four aircraft per month. On the other hand, the original Mirabel plant in Quebec could theoretically build up to 120 A220s per year – but there are hardly more than 200 orders in the backlog of customers outside the United States. As it stands, Airbus would build A220s at low production rates in two separate facilities. It's an inefficient way of doing business. "Data-reactid =" 35 "> Between an earlier order of Delta Airlines and for these two orders, the capacity of the new assembly line is almost entirely reserved until 2024, with a production rate of up to four aircraft per month. On the other hand, the original Mirabel plant in Quebec could theoretically build up to 120 A220s per year – but there are hardly more than 200 orders in the backlog of customers outside the United States. As it stands, Airbus would build A220s at low production rates in two separate facilities. It's an inefficient way of doing business.

The story continues

In order for the A220 program to achieve a respectable level of profitability, Airbus must achieve a production rate at Mirabel that is approximately equal to the capacity of this plant. To do this, it is expected to obtain hundreds of additional firm orders from customers outside the United States in the next few years.

The JetBlue and Moxy orders should give potential buyers more assurance that the A220 program has a long-term future. Airbus must now do this by recruiting new A220 customers in order to make full use of its existing production capacity at Mirabel.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " More from The Motley Fool "data-reactid =" 42 "> More from The Motley Fool

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Adam Levine-Weinberg owns shares in Delta Air Lines, Embraer and JetBlue Airways and has been making long stopovers of $ 10 on JetBlue Airways since January 2019. Motley Fool owns shares in Delta Air Lines. The Motley Fool recommends Embraer and JetBlue Airways. The Motley Fool has a disclosure policy."data-reactid =" 50 ">Adam Levine-Weinberg owns shares in Delta Air Lines, Embraer and JetBlue Airways and has been making long stopovers of $ 10 on JetBlue Airways since January 2019. Motley Fool owns shares in Delta Air Lines. The Motley Fool recommends Embraer and JetBlue Airways. The Motley Fool has a disclosure policy.