Cathay Pacific’s Order Bolsters Airbus A330neo Outlook

The Airbus A330neo program has gone through severe setbacks over the past few years. Large orders by AirAsia X and Iran Air have been struck from the manufacturer’s backlog, and a commercial breakthrough with more marquee airliner names has yet to come. Airbus hopes that is about to change.

Cathay Pacific, with its latest order for 30 A330-900s and purchase rights for another 30, has given the airframer some reason for optimism. Cathay is a premier airline brand to which other carriers are looking, and it plans to use the aircraft as Airbus has hoped: serving dense, and in some cases longer, routes within Asia, which has a substantial installed base of legacy A330s.

• Chinese replacement market opens
• U.S. and European prospects remain unclear

The Cathay deal came after large commitments by Malaysia Airlines and Vietjet for 20 A330neos each. Malaysia is due to decide on options for 20 more aircraft before year-end. And with China negotiating an even larger deal for about 100 or more A330neos that could replace its existing A330 fleet, more momentum may be about to develop.

“China is awakening to the A330neo; it is quite looked after by the airlines,” Airbus sales chief Benoit de Saint-Exupery told Aviation Week in June (AW&ST July 1-14, p. 42). One of his main 2024 targets is for “the A330neo to deploy its wings,” he said.

Four passenger widebody types are competing for orders. Boeing has collected 540 firm orders for the 777X, launched in 2013 and slated for first delivery in 2025, and 2,378 for the 787, in service since 2011. Airbus has received 1,327 orders for the A350, launched in 2006 and in service since 2015. The A330neo, launched in 2014 and in service since 2018, now has firm orders for 326 aircraft, 139 of which have been delivered. Arguably, there is some catch-up work to do.

When Air Asia X upped its order to 100 aircraft in 2018, it seemed as if the A330neo could be the vehicle for long-haul low-cost carriers (LCC). But that commitment has since dropped to 15 units, none of which have been delivered. Philippine carrier Cebu Pacific opted for 16 A330-900s. However, Indian LCC IndiGo, in its plans to enter the widebody segment, decided to go with the A350.

While Iran had hoped to rebuild its airline industry partly on a large A330neo order of 29 for Iran Air, renewed sanctions made that deal impossible and required Airbus to remove it from its backlog.

The challenge and opportunity is the A330ceo. Airbus sold 1,805 of the first-generation A330s, many of them during a production hike in the boom years of the 2010s, with a substantial portion going to China. While that creates considerable potential for replacement orders, much of the in-service fleet is still young. Half of the Chinese A330 fleet is less than 10 years old, according to Aviation Week Network Fleet Discovery data, one-third is 15 years or younger, and only 18 are older than 15 years.

Chinese carriers have 212 A330-200s and -300s in service, parked or stored. This excludes Cathay, which has 43 of the type in service and stored, and Hong Kong Airlines, which has eight in service and eight more in storage.

Another issue is the A330neo’s sluggish pickup by big legacy airlines elsewhere. Delta Air Lines was a driving force behind the type’s launch decision in 2014 (AW&ST March 17, 2014, p. 36) and remains the largest airline customer, with 37 ordered and 29 in service. TAP Air Portugal has 19 of the aircraft, and Condor has 17.

Interestingly, some lessors have bet big on the type. Air Lease Corp. placed the launch order and has committed to 31, and Avolon has ordered 64, partly because of its 2017 acquisition of CIT Leasing, which had ordered 35.

Where can the A330neo make further inroads? In Europe, ITA Airways, a newly acquired Lufthansa Group subsidiary, is operating 11 A330-900s. Within the group, Lufthansa Airlines, Swiss and Austrian are focusing on the Boeing 787, the 777/777X and the A350. Discover Airlines and Brussels Airways, two additional group affiliates, are operating substantial A330 fleets. International Airlines Group and Air France-KLM are growing their 787 and A350 fleets. In the U.S., Delta is the only carrier that has ordered the A330neo.

One growth prospect could be Brazilian carrier Azul—which operates seven A330-900s and six -200s—assuming it makes a successful financial turnaround.

As for Cathay, deliveries are due to begin in 2028 and conclude in 2031. In a stock market filing, the carrier said the A330neos will “progressively replace [its] existing fleet of midsize widebody aircraft and enable future growth.” Cathay has 43 A330s in its fleet, two of them inactive, according to the Aviation Week Network Fleet Discovery database.

While the new aircraft primarily will be used on short-haul routes, they also provide “flexibility to serve longer-haul destinations at a later stage,” the carrier said.

Chief Customer and Commercial Officer Lavinia Lau says the A330neos will be mainly deployed on 3-4-hr. flights to destinations in Northeast and Southeast Asia. However, Lau noted that the aircraft are capable of flying stage lengths up to 8 hr., which also gives the airline the option of flying them to parts of Australia or India.

Cathay’s order announcement aligns with comments from CEO Ronald Lam about the selection campaign at the International Air Transport Association annual general meeting in Dubai in June. At that time, Lam said the carrier was targeting a single aircraft model to fill the gap between Cathay’s narrowbodies and larger widebodies. He explained that Cathay wanted an aircraft versatile enough to fill a wide variety of roles, including short- and medium-haul flights and even some long-haul ones.

Cathay is investing more than HK$100 billion ($13 billion) in its fleet, cabin products, airport lounges, digital initiatives and sustainability efforts over the next seven years. The majority of this spending, which includes the A330neo deal, will be on aircraft.

The carrier plans to introduce new cabin products on its refreshed Boeing 777-300ERs this year, on 777-9 deliveries starting in 2025 and on its existing A330 fleet in 2026.

The Cathay Pacific Group—comprising Cathay and subsidiaries HK Express and Air Hong Kong—has more than 100 aircraft orders in its delivery pipeline, with purchase rights for another 80. Cathay placed major orders last year for Airbus narrowbodies and A350 freighters. In addition to its post-pandemic orders, Cathay has 21 777-9s due for delivery from a deal announced in 2013. The 777-9s are scheduled to begin arriving in 2025 and are intended to add to the airline’s long- and ultra-long-haul capacity as well as eventually replace some of its existing 777 fleet.

The airline also has reactivated all of the aircraft that it had put in long-term storage due to the COVID-19-related downturn. The 85th and last of the stored aircraft—an Airbus A330—was flown in June from a storage facility in Alice Springs, Australia, to Hong Kong.