Oct. 5, 2015, © Leeham Co. Airbus appears to be closing in on a decision to boost the production rate of the A320 family to 63/mo by the end of the decade, a new report from Bernstein Research Group says.
Boeing is sure to follow with rate boosts for the 737, Bernstein writes in an Oct. 1 note.
Leeham Co. has been predicting these moves all year, and in LNC’s interview with Airbus Group CEO Tom Enders last month at the opening of the A320 Final Assembly Line (FAL) in Mobile (AL), Enders indicated the decision to boost rates would be made by the end of the year.
Bernstein’s note is the first I’ve seen with the number 63 per month as a more-or-less definitive Airbus target, a result of its interview with Enders on Sept. 29. John Leahy, Airbus chief operating officer-customers, hinted at rate 60 all year long, also indicating even this dramatic increase from the already-announced plan to go to rate 50 was insufficient to handle the backlog.
Boeing long ago announced it will take 737 rates to 52/mo by 2018. We reported early this year Boeing’s been evaluating taking the rate to 60-63 a month, the latter being the capacity of the current 737 plant in Renton (WA). Bernstein now reports the same.
Our Market Intelligence indicates Boeing may now be considering a 737 production rate even higher than 63: up to 75/mo.
This would require an entirely new FAL since Renton will cap out at 63/mo. There are a few options for Washington State and the Seattle/Puget Sound area.
Boeing could open a 737 FAL at Boeing Field. For those with long memories or who know their history, the 737 actually was first produced at Boeing Field and moved to Renton shortly after the FAL opened.
Or, Boeing could move the 737-based P-8 assembly line to Boeing Field and expand the 737 operation to the current P-8 line, something that logistically would have a lot of advantages.
Or, and I think this is more likely, Boeing could open a 737 FAL in another location, with China being the top of my list of possibilities.
The announcement last month that a 737 Completion Center will be opened in China seems to be a “telegraphing” move toward a 737 FAL there. LNC has already written why we thought Boeing had to set up this expanded business in China. Note I use “had to,” and the choice of words was deliberate.
Boeing’s 737 backlog is significantly less than that for the A320, but it’s still out beyond 2020 and Boeing sometimes finds it difficult to offer delivery slots to win key campaigns.
The supply chain needs an estimate 18-24 months notice to gear up to the kind of rate increases being discussed, which will have to occur in increments.
The next few months will be more than a little interesting to watch.