Here is a piece we did for Commercial Aviation Online:
The debate continues whether production rates on the Airbus A320 and Boeing 737 families should be reduced.
Both manufacturers are in a tug-of-war with their supply chain over rates should be reduced in 2010 and aerospace analysts seem ignored by the Big Two airframers.
During the Paris Air Show, Airbus officials revealed that they are taking a hard line with their suppliers, saying the suppliers should listen to them, not their own internal forecasts. Significantly, suppliers contacted by CAO seem intent on charting their own course on assumption they are right and Airbus is wrong. But they recognize the risk if it is the other way around. The suppliers told CAO that they are planning for A320 rates in the 26-28 per month range next year. Airbus is already talking about returning to its previously planned rate of 40 per month by the end of 2010.
Boeing, which builds 737s at the rate of 31 per month, has been adamant all year that it will not adjust rates. Until Paris, that is, when Boeing Commercial Airplanes President Scott Carson revealed that suppliers should be prepared to adjust rates up or down by 10%. This is the first time Boeing signaled that it might go down on rates. Suppliers are also assuming a 737 rate of 26-28 per month.
According to a data run provided to CAO by Aviation Specialists, as of 29 May there are 399 737s and 418 A319s/A320s/A321s scheduled for delivery next year.
At a rate of 31/mo, Boeing can deliver 372 737s. At a rate of 34 per month, which Airbus said it will effect in October, Airbus theoretically could deliver 408 A320s, but the company generally works 11, not 12, months a year, generating a capacity of 374 aircraft.
There are several key customers for Airbus and Boeing that could portend adjustments in rates. For Boeing, Ryanair and American Airlines are two key airlines to watch.
The rating agency Fitch identified American as a potential bankruptcy candidate by this winter. Ryanair, although bombastically talking about placing an order for 200-300 aircraft, was hurt by falling traffic yields this year. These two airlines alone have 88 737s scheduled for delivery next year (see below chart). China’s Xiamen Airlines has 22 737s scheduled. These three airlines account for 28% of the 737 deliveries.
For Airbus, two Chinese government procurement agencies have 108 A320 family members scheduled for delivery next year. China Southern Airlines has 10 more. China accounts for 28% of the A320 deliveries next year. easyJet and Air Asia account for another 11% of the A320s.