Production wars coming: Airbus v Boeing

If some industry observers are concerned about the prospect of over-production now, the current state of affairs may only be the tip of the iceberg.

Airbus CEO Fabrice Bergier says he expects to boost production of the A320 and A350 families over the next few years, overtaking Boeing by 2018.

Airbus currently produces the A320 at a rate of 42 per month. The A330 rate is 10/mo and the A380 at 3/mo. Production of the first customer-destined A350 is to begin by the end of this year, with a targeted delivery in the second half of next year. Ramp-up to an initial production target of 10/mo is planned over a four year period, but the wing factory in Broughton, Wales, has a capacity for 13/mo, inferring a greater rate is already planned. Airbus is considering a second A350 production line, largely focused on the A350-1000.

Boeing currently produces the 737 at 38/mo, going to 42/mo next year. The 777 rate is 8.3/mo and the 747-8F/I rate is 1.75/mo. The 767, driven by the USAF tanker, is 1.5/mo. The 787 is ramping up to 10.mo, with a target by year end, but we believe this will be more likely in Q12014.

Boeing has notified the supply chain to consider higher rates for the 737, 767 and 787. We posted the chart below last June, reflecting the higher planning rates.

Boeing is exploring the possibility of a higher rate for the 777,  but we haven’t been told of any expectation at this time.

Any rates adopted by Boeing will undoubtedly be matched by Airbus.

But this is only part of the story. Bombardier, Embraer, Mitsubishi and Russia’s Irkut each have new planes going into production. China’s COMAC has plans for its new C919, though this is a question mark. The following chart takes into account existing, announced and anticipated construction rates of the major manufacturers. The ARJ21 is excluded because the disarray in this program allows no rational basis on which to make a projection. The Sukhoi SSJ100 is excluded for similar reasons. We don’t have enough visibility of the Irkut MC-21 to have an understanding of this projected rate. The following chart doesn’t include twin-aisle aircraft.

Production rate 2020

These projections do not allow for geo-political or terrorist events, global recessions and health scares. The OEMs have become pretty adept at managing the skyline of orders to stabilize production through these.

The supply chain implications are obvious. Most suppliers service the Big Four OEMs (Airbus, Boeing, Bombardier and Embraer) and are also on the emerging programs from the new entrants (COMAC, Mitsubishi, Irkut). Ramping up to meet this demand will require capital expenditures and employment growth, with the risk that a geo-political or terrorist event could be of such magnitude that OEMs have no choice but to reduce production rates.

28 comments on “Production wars coming: Airbus v Boeing

  1. It is amazing to me that Boeing still wishes to increase 787 production considering how much they are losing for every 787 aircraft they deliver. Maybe Boeing figures that the 787-9 will be profitable soon and save the day (i.e., somehow make the program profitable).

    If Airbus can produce the a350 profitably – and their conservative approach indicates that this is probably the case – then within 4 years of production start the a350 should be making airbus some money. And…by the time Airbus has produced 300 a350s, then the a350 should be making airbus some serious money.

    Anyways…I think the real production battle is going to be between the a320 NEO and the 737 Max. It is this battle in which I think that Airbus is going to drown Boeing in production.n I think customers are going to like the A320 NEO and as Airbus can produce at higher rates and thus and insure reasonable delivery dates, then I think even more customers will opt for the A320 until the a320NEO/737MAX sales split is well beyond the 60/40 split it’s at now. At this time, everyone will realize that the 737s glory days are over for good.

    • “It is amazing to me that Boeing still wishes to increase 787 production considering how much they are losing for every 787 aircraft they deliver.”

      Think about the consequences if Boeing stepped away from their taget of increasing production for the 787 family (Even if neccesary for fixing problems in an effective way).

      All that carefully built image of superiority would tumble down into a bedraggled heap. The stock value could well implode.

      • It amazes me how much the European taxpayers are shelling out to keep Airbus afloat and the fact the A380 surpassed 45 Billion in debt. In Dubai Airbus slashed A380 prices to well below cost which means every A380 built and delivered cost Airbus 250 Million Euros. The Dreamliner will make a profit and by the time Airbus starts A320-NEO production in 2016 and A350 production 2015 before Airbus makes a dime. By that time Boeings 787 production will be at 15 per-month and turning a profit with the 787-9 and Airbus is aware that 737 is Boeings eternal money maker that never stops production from one model to the next and in four years at 42 737′s per month that comes to about 1,000 planes. Fact Airbus cannot match that with Boeings non-stop 777 production line at 10 per-month totaling 480 777′s built in four years and add 600 787-8s, 787-9s and the 787-10 will be close to production. It astounds me how British and Europeans pray for bad luck to happen to Boeing.

        Airbus is in a mess and A330s are not selling because who wants to by an outdated plane when you can have a 787-,787-9 and the 777? The only reason the A320-NEON is a good selling plane is because of American technology and the Green fuel efficient American designed and built GE LeapX technology jet engines that conserves fuel. Airbus acts like it invented fuel efficiency when Boeing has led the way and the A320-PEON has no new changes of any kind except it’s new US designed and built engines. The real Airbus Killer is 777-9X that stomped the A350-900 and A350-1000 at the Dubai Air Show. So it’s going to be a while before Airbus makes a profit however if the European Taxpayer stops subsidizing Airbus they would be out business in three months. Oh and I forgot to mention Airbus has not repaired the cracked wings on 100 A380′s in service and I would like to see them do it instead of making excuses how their going to do it!

        Helga Schmidlap,

        • How about you keep your ‘anti-Airbus’ nonsense to yourself or at the least, confine it to YouTube. Your remarks are nothing other than heresay, neatly collected from your library of nonsense. How someone ends up questioning production levels of aircraft is beyond me but judging by the dubious content of your comment, it’s clear you’re a troll with nothing to fill their lives other than the Internet.

          As an aside, it may be an idea you take a cold, hard look at the downward trend of Boeing Corp. Poor decision making by supposedly key personnel led to the fiasco that is the 787. Even now, operators are queuing at Boeing’s door for compensation and Air India is questioning the manufacturers marketing figures on fuel saving. It’s also well known that Qatar Airlines have returned two of their 787 fleet for repair work. No wonder their CEO is eagerly awaiting the A350-900s. I doubt he’ll be kept waiting another three or more years as a result of incompetence.

          I suggest you take your propaganda to the Az desert and bury it, much like your head in the hot sand.

    • The only way how they can reduce is the losses is by producing more, thereby distributing fixed costs over a larger number of frames, and by getting out of the system as quickly as possible the very low-priced copies they sold in the first years of the programme.

      • “Fixed Costs” like tooling and facilities can surely be amortized into a higher number of planes delivered, but what about the variable cost of each copy of the plane itself – which doesn’t seem to be falling quick enough for Boeing to break-even anytime soon? Sure, higher production will lead to a lower-cost per plane, but it also leads to more overall costs. What about this?

        There is a precedent for an aircraft program that was just unable to reduce the cost per plane enough to ever make it profitable: the Lockheed L-1011. Passengers and Pilots loved the high-tech L-1011 and Lockheed just kept selling them and cranking them out even though they were bleeding cash. It was madness, and it forever dashed all aspirations of Lockheed being a commercial Jetliner producer.

        Also, the was a financially successful jetliner program whose initial production costs were so hight that the company needed to be bought out in order to survive: the Douglas DC-9. The DC-9 was a great aircraft – but Douglas fell anyway.

      • What could break Boeings back is increasing production rate while the
        process is still in flow and most issues remain unfixed.
        There is an exponential penalty coming with late fixes.
        Things that could have been fixed by way of a cortical pause early on
        escalate into major money sinks later in the process. (see change incorporation, battery grounding and keeping the fleet afloat today. I’d like to trudge out my literature tip here: “The Mythical Man Month”)

    • “It is amazing to me that Boeing still wishes to increase 787 production considering how much they are losing for every 787 aircraft they deliver. ”

      Please cite a recent impartial authoritative source to document this statement.

      • toyuths,
        He can’t cite an authoritative source because he does not have one.

        All of the authoritative analyses I’ve seen so far indicate Boeing is making excellent progress up the learning curve on the 787. Some analyses are more conservative than others and therefore give differing estimates for when the program will break-even. The most rosy prediction is 1100 frames and the pessimistic predictions are around 1400-1500 frames.

        Bottom line is that Boeing needs to sell more 787′s so the program can break even, and eventually make a small profit. They absolutely need to increase production to open up slots sooner so they can make the sales.

      • Mike, you have to keep in mind that the 787 project is financially so far out in lala land that anything below a “fantastic learning curve” could endanger making profits forever.( i.e. the progress you make is eaten up by serving debt )

      • Uwe,
        C’mon. It is trivially easy to make generalized statements like “the 787 project is financially so far out in lala land”, but is is much, much harder to back those statements up with real evidence.

      • Ho, Mike, you overlook the link to Boeings “real” Earnings I gave futher up.
        ( and from the horses mouth at that )
        From those unit cost accounting numbers you then could hold a level over to the Aribus numbers ;-)

      • “toyuths,
        He can’t cite an authoritative source because he does not have one.

        All of the authoritative analyses I’ve seen so far indicate Boeing is making excellent progress up the learning curve on the 787. Some analyses are more conservative than others and therefore give differing estimates for when the program will break-even. The most rosy prediction is 1100 frames and the pessimistic predictions are around 1400-1500 frames.”

        Ok, Mike. Maybe I’ve made the wrong assumptions and used the wrong data in my calculations. If I’m wrong, maybe you can straighten me out.

        Please let me know your sources and please let me know whether the number of frames to which you refer are at a per-unit basis, or a program basis.

        Thanks.

      • Jimmy,
        The number of frames are on a program basis, so the per-unit break even should, of course, be sooner.

        The analyses I’ve seen are from Boeing, UBS, and Credit Suisse. Boeing is, of course, the most optimistic at 1100 frames. UBS is the most pessimistic, and Credit Suisse was closer to Boeing a year ago but has moved away from Boeing’s view in the last six months or so.

        I do not get the analyses directly (no membership), rather I’ve seen the results quoted in several Aspire Aviation articles over the last 2 years. Aspire quotes airframe unit costs from both analyses. You can say what you want about Aspire, but they are a good source of quoted financial information.

    • It amazes me how much the European taxpayers are shelling out to keep Airbus afloat and the fact the A380 surpassed 45 Billion in debt. In Dubai Airbus slashed A380 prices to well below cost which means every A380 built and delivered cost Airbus 250 Million Euros. The Dreamliner will make a profit and by the time Airbus starts A320-NEO production in 2016 and A350 production 2015 before Airbus makes a dime. By that time Boeings 787 production will be at 15 per-month and turning a profit with the 787-9 and Airbus is aware that 737 is Boeings eternal money maker that never stops production from one model to the next and in four years at 42 737′s per month that comes to about 1,000 planes. Fact Airbus cannot match that with Boeings non-stop 777 production line at 10 per-month totaling 480 777′s built in four years and add 600 787-8s, 787-9s and the 787-10 will be close to production. It astounds me how British and Europeans pray for bad luck to happen to Boeing.

      Airbus is in a mess and A330s are not selling because who wants to by an outdated plane when you can have a 787-,787-9 and the 777? The only reason the A320-NEON is a good selling plane is because of American technology and the Green fuel efficient American designed and built GE LeapX technology jet engines that conserves fuel. Airbus acts like it invented fuel efficiency when Boeing has led the way and the A320-PEON has no new changes of any kind except it’s new US designed and built engines. The real Airbus Killer is 777-9X that stomped the A350-900 and A350-1000 at the Dubai Air Show. So it’s going to be a while before Airbus makes a profit however if the European Taxpayer stops subsidizing Airbus they would be out business in three months. Oh and I forgot to mention Airbus has not repaired the cracked wings on 100 A380′s in service and I would like to see them do it instead of making excuses how their going to do it!

      Helga Schmidlap,

  2. I think this is a case of preference and what the representatives in the industry are used to, I believe that both have their own advantages and disadvantages such as Airbus not making any military vehicles however they excel in other fields in the industry

  3. If Boeing is planning to produce as many MAXes as what Airbus for with the neo, where are the customers?

    Boeing must start to win over A320ceo customers sooner rather than later. If not the current 60% to 40% market split in favour of Airbus, is IMO becoming a seemingly insurmountable task for Boeing to reverse.

    http://www.pdxlight.com/neomax.htm

    Also, Bregier has now officially declared that Airbus should overtake Boeing as the world’s biggest planemaker by 2018. For that to happen, single aisle production must increase significantly towards the end of the decade. IMJ, Airbus should be able to produce 60 units per month by 2020, and could go as high as 70 per month a few years after that (i.e. 10 per month from Mobile, 10 per month from Tianjin, 20 per month from Toulouse and 30 per month from Hamburg).

    Meanwhile, Airbus Chief Executive Fabrice Bregier unveiled a plan to overtake Boeing as the world’s biggest planemaker within four to five years.

    Airbus was seeking to achieve this by increasing production of its A320Neo and its long-haul A350 model, Bregier told German Sunday newspaper Welt am Sonntag.

    “In 2017/2018 we will therefore again be able to gain the lead in deliveries,” he said.

    Bregier also said that the subsidiary of European Aeronautic Defense and Space Company (EADS) would reach deliveries of more than 600 aircraft this year and that the figure would be even higher next year.

    http://www.dw.de/airbus-set-to-deliver-a350-next-year-in-bid-to-challenge-boeing/a-17155748

  4. Doesn’t Boeing have a backlog of around 2,000 737′s as well?

    On this forum you’d think it was an overweight dog, but they did sell around 1200 in 2012 alone.

  5. Airbus will not be able to overtake Boeing in 2018. The neo lead is exactly the two years early to market. Boeing will still build the same number of narrow body in 2017/2018 of the NG. They have the backlog to do that. The A330 do not have the backlog to produce more than 5 a month in 2018. The 787/777 combo will crank out about 20/25. The A350 will be at 10 a month according to Airbus in 2018. They will go higher in the 2020′s.

    • I’m just curious, but how is Boeing going to continue “cranking out” 777s at a rate of 10 per month. The 777-300ER (77W) is currently uncontested in the 350-seat market segment. That will change when the A350-1000 enters into service in 2017.

      Will Boeing still be producing 77Ws and 77Fs at a rate of 10 per month between 2017 and 2020? If the A350-1000 and 777-9X split the 350-400 seat market in half post 2020, how many 777-9s, 777-8s and 77Fs can Boeing realitically expect to produce per month at that time?

    • @Dave, if you look at the total 737 NG/MAX and A320 CEO/NEO backlogs, the A320 has about a 55% share. If the production rates are the same for the foreseeable future, the B backlog will run out sooner.

  6. 777 sales:
    We saw a large order rush when the A350-1000 was announced as being delayed by two years. But this was a rather narrow peak:
    2008 39
    2009 30
    2010 75
    2011 194
    2012 75
    2013 55 ( 44 @ ( 9/12 )
    (numbers are across all 777 derivatives. source Boeing custom reports)

  7. To quote Scott, “The question is, which company goes first? We think Boeing has the greater need and greater motivation. We believe Boeing will be first off the mark.” You are absolutely right Scott, but you did not stress the principle reasons why, i.e., The A320 has a much taller landing gear compared to the 737, allowing Airbus to put the all-new Geared-Fan-Engine (GFE) on the A320 ASAP, while this will NOT be possible on the 737, because of inadequate ground clearance, putting the 737 at a very serious disadvantage v.v. the A320GFE!
    With 10,000+ 737s sold so far, Boeing should and will, therefore, produce an all new carbon-fibre 737 replacement a/p with the GFE, as you indicated, which will in turn be a much better a/p than ANY A320 with the same GFE, but with a non c / f airframe. This will put Airbus at a serious disadvantage v.v. the all new (737)GFE!
    My conclusion: Airbus would be foolish to put the GFE on the existing A320 air- frame, but instead sell as many of the existing A320NEO’s as possible and follow Boeing ASAP thereafter, with an all new CarbonFibre-GFE powered a/p, putting them in second place to the all-new Boeing (737)GFE, for several years there-after!

  8. I think the issue for Boeing during the last 20 years was they knew airlines would prefer a 737 that was a little more comfortable, silent, FBW, had cargo capability, lower trip cost, a silent glass cockpit and could house higher BPR, more efficient engines.

    Problem was/is it existed already, the A320. Building it too, would costs a lot without creating clear advantages. So they had to wait until a clear technology shift would enable an aircraft beating the A320 and justifying the investment. Boeing could not close a 2018 business case 2 years back..

    Now (this decade) Boeing is a less then desirable position too. Airbus will mass produce NEO’s, maybe do some further variants, http://i191.photobucket.com/albums/z160/keesje_pics/AirbusA320NEOfamilyconcepts.jpg , and wait what Boeing will do. Boeing will have to move first. Airbus will plot EIS 2 years later, enough to listen to the airlines, take lessons learned, select a slightly diffrent positioning and offer long before an NSA fiies. Avoiding a steep learning curve.. Of course R&D move an maturing new technologies meanwhile.

  9. Pingback: Odds and Ends: Supply chain demands; Southwest hints?; Retrospective on A320/737 replacements | Leeham News and Comment

Leave a Reply: Note Reader Comment Rules

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s