It’s a Bad Time to Be a Big Jet

For the better part of a decade, the skies have grown increasingly hostile to jumbo jets such as Boeing Co.’s 747 and Airbus SE’s A380. Now the fuel-efficient planes intended to replace those behemoths are also encountering resistance. Interest in Boeing’s 777X, a revamped version of its biggest wide-body set to begin deliveries in 2020, is flagging. And in recent weeks, United Airlines and Cathay Pacific Airways Ltd. together have scratched 41 orders for the Airbus A350-1000, a twin-aisle plane designed to carry about 370 passengers, leaving Airbus with only 171 orders for the model. “We’re seeing sluggish demand” for the biggest planes, Steven Udvar-Házy, chairman of U.S jet-financing giant Air Lease Corp., said on a conference call in August. “So we’re staying away from that segment of the market.”

The problem is that jet fuel is cheap—$550 per metric ton, down 40 percent from 2014. At that price, it’s profitable for an airline to continue operating older wide-body models that launched in the 1990s, such as the Airbus A330 and Boeing’s original 777, and delay purchases of more efficient planes like the A350—which has a fuselage and wings made from lightweight carbon fiber. Even if crude prices rebound, sales of the big jets might not fully recover, says Nick Cunningham, an analyst at Agency Partners LLC in London. That’s because airlines are shifting from channeling traffic through megahubs toward nonstop routes between second-tier cities using smaller twin-aisle planes. “As the market evolves to favor direct flights and higher frequencies, it could be that the A350-1000 and 777X are needed in smaller numbers,” Cunningham says.