Assessing the 25 YOA aircraft factor

Discussion
787 production rate increase

Increasing the production rate is a move that many analysts do not think can supported or sustained, LNC among them. Boeing must win new orders and/or convert options and LOIs to support the new rate in 2019 and 2020, when firm orders just about match the production rate of 12/mo.

Click on image to enlarge.

From 2021, Boeing has its work cut out for it; at least there is plenty of time to sell aircraft.

Airbus’ skyline for the A350 is in better shape post-2020, but it also is only building at rate 10.

The production rate increase, along with a current, renewed trend toward reducing capacity, might spur renewed interest in the 787-8.

The airplane, because of its design and production challenges, is very different from the 787-9 and 787-10 and therefore more costly to build than the latter two. Boeing wasn’t keen on continuing the aircraft; there was little demand and after 2020, virtually no deliveries scheduled.

But large wide-bodies are increasingly being deferred or swapped for smaller aircraft. United Airlines swapped all its A350-1000 orders to the smaller A350-900 and added 10 to the deal. It also rescheduled the airplanes to 2022 and beyond.

Click on image to enlarge.

American Airlines is undecided about the future of the A350-900, which were US Airways orders and are duplicative to legacy American’s 787 deal. American has aging Boeing 767-300ERs. The leading choices to replace them are the Airbus A330-200/800 and the 787-8. American has a small sub-fleet of A330-200s from US Airways.

Emirates Airlines already deferred 777Xs. Etihad Airways deferred Xs and 787s. The latter, in a huge financial squeeze, is looking to sell about three dozen aircraft.

Although Boeing, in announcing the rate hike, said demand is there, the market indicates challenges.

Supply-demand

With Airbus and Boeing pointing to an aging aircraft surge in 2021-2025, the number of these aircraft is 543. There are 767 new wide-bodies scheduled for delivery in this period, or a ratio of 1.4:1.

Click on image to enlarge.

This doesn’t include the prospective New Midrange Aircraft (NMA) Boeing is considering for a potential entry-into-service in 2025. The number, in context to the production rates of the A330neo, A350, 777X and 787, would be negligible as the NMA production ramps up. Airbus’ response to the NMA is not factored in.

Growth demand isn’t factored in this data.

With deferrals emerging in the 2021-2025 period, and more new aircraft scheduled for delivery in this period than retirements, it’s hard to see current and announced production rates being sustainable.

The next surge in 25-year old aircraft comes with the 2030 decade.

 

 

To read the rest of the article Login or Subscribe today.