Interior supplier sees 777, A330 production rates coming down

July 24, 2015: Interior supplier B/E Aerospace sees Boeing 777 Classic and Airbus A330ceo production rates coming down because Airbus and Boeing aren’t filling the “bridge” between the old and new airplane derivatives.

In its second quarter earnings call this week, company officials said that demand in the short term for interiors isn’t materializing for the 777 Classic and A330ceo as B/E had hoped. This means production rates for these wide-body airplanes will have to come down.

“When you look at wide body, when you look platform per platform, we [see] A330 coming down, 777 coming down, 747-8 coming down,” said Werner Lieberherr, president and CEO of B/E.

“There is increasing uncertainty with regard to the A330 and B777 short flow programs as a meaningful number of opportunities that we anticipated have thus far not materialized,” said Amin Khoury, executive chairman.

Airbus previously announced a rate cut of the A330ceo, first to nine from 10 per month and then to six per month. Airbus announced an order on June 30 for 70 ceos from China, but these haven’t shown up as a firm order yet so delivery dates haven’t been factored into production outside of internal information. During the Paris Air Show, Airbus officials expressed confidence they will have the production gap filled this year.

Boeing said this week on its earnings call that the 2016 777 Classic production is filled, 2017 is half-filled and some slots in 2018 are taken. Production of the 777X begins in 2018, but it will be at a slow pace. First delivery is scheduled for 2020, though Boeing would like to advance this to late 2019.

Boeing can also fill the 777 Classic production gap with sales of the 777F. Airbus also offers the A330F, but sales of the latter have significantly lagged the former in comparison. Boeing said on its earnings call it has, through last week, orders and commitments for 44 Classics. Through June, using the Boeing User Defined website feature, we identified 29 777-300ER and 777F firm orders. Last week, EVA of Taiwan firmed up an order for five 777Fs; this makes 34 firm orders YTD. This suggests 10 commitments, which we believe to be FedEx for the 777F. On July 8 we reported that FedEx was likely to order 50 767-300ERFs and perhaps 10 777Fs. The 767 order was announced Tuesday this week, but not the 777Fs. Market intelligence indicates this order is still to come this year, contingent on a number of factors, which are why this order wasn’t announced with the 767 deal.

Boeing also said on its earnings call Wednesday that it will decide next year whether to adjust 777 production rates. This is the first firm statement Boeing will consider this move. Previous statements vowed to maintain Classic production rates at the current 100 and that the Classic rate would come down by 1/mo when the 777X production began in 2018. Most Wall Street aerospace analysts believe the rates have to come down before then, some to as low as 5/mo, others to 6/mo.

Complicating Boeing’s task of selling new 777-300ERs is the fact that Aeroflot and Kenya Airways decided to dispose of late-model -300ERs in a fleet down-sizing.

8 Comments on “Interior supplier sees 777, A330 production rates coming down

  1. While both the A330 and 777 have similar backlogs, The 777NX is 2020, while the A330NEO is 2017 using existing engines and wings. A huge difference.

    A decade ago when during the transition to the 777NG a similar dive in deliveries took place to around 3 aircraft per month.

    http://airinsight.com/wp-content/uploads/2014/04/2014-04-01_13-50-08-580×316.jpg

    Most likely this will be reality 2017-2019 again. Somehow Boeing finds it difficult to openly communicate about this.

    I do not see large 777-300ER/200LR orders ahead. Most 777 customers of the past can be found in the A350 backlog today.

    • The reason for the different EIS dates are because the 777x is having more work/modifications done to it than the A330 NEO. I anticipate the 777 assembly rate to fall around 5 frames per month, which is not the end of the world.

      The outlook for the 777 looks dreary but what can end up be the saving grace is the freighter version. It could be a simple and easy transitioning for operators who need similar capacity lift but not carriers who need a nose opening door. What could hurt that is the ever increasing belly freight on the widebodies flying at the moment.

      “Most 777 customers of the past can be found in the A350 backlog today.”

      That tone suggests that 777 carriers have jumped ship to the A350 which is not entirely true . On the top of my head carriers like AF/KLM, LH, EK, CX, SQ, QR, EY, BA, JL, NH, ET, Kenyan and LATAM all have 777’s, 787’s and A350’s.

      • Lufthansa (DLH) does not operate 777, 787 or A350 at the moment. Lufthansa was one of the first customers for the 777-9X and also has A350 on order (service expected for late 2016).

        Lufthansa Cargo (GEC) operates 5 B777F in addition to 19 MD-11F (only 14 in operation). Lufthansa Cargo received the last MD-11 ever built. This aircraft is just 15 years old but the older ones have their issues. Lufthansa lost an MD-11. The aircraft break apart during landing.

        So there is an option that LH Cargo will order several late 777F to replace its MD-11. LH Cargo has even some options.

        Air France operates a fleet of 777 but has no 777X on order just the A350.

        • I started with one direction and ended in another. The point that I wanted to drive is that that there wasn’t or isn’t a mass defection of 777 operators over to the A350 backlog.

          • There are a number of airlines that have ordered the A350-1000. What this tells us might not be that there has been a mass defection to the A350, but it does say that a market space that the 777-300 had to itself is now competitive.

  2. How time changes. Back in the 80s, selling 40 wide body airplanes of a particular type in a year was consider pretty good. By today’s standard, it’s almost like a failure. These are big aircraft, is not easy for any airline to purchase many of them if the capacity to fill them is not there. With so many other aircraft been ordered in the last few years, there isn’t much needed for most of those airline for the next 5-7 years.

  3. There is increasing uncertainty with regard to the A330 and B777 short flow programs as a meaningful number of opportunities that we anticipated have thus far not materialized,” said Amin Khoury, executive chairman.

    Could that be because of B/E’s performance on seat programs over the past few years rather that an unannounced decline in the 777 rate?

  4. I wondered the same thing.

    Yes there is a gap and if there is a gap coming up are they moving to better providers, i.e. no longer stuck with what they have but shifting the fitting out to someone else who has some capacity to respond now?

    Granting I know almost nothing about that part of the operation.

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