Wide-body production rates show mix of strength, weakness

Discussion
Rate hikes

Wide-body rate hikes are driven by the Boeing 787 and the Airbus A350. Boeing is committed to an increase to 14/mo next year. Airbus is likely to boost A350 production to 13/mo late next year. Officials have long complained that the lack of delivery slots hurt sales. Ramp up to 10/mo this year continues.

Boeing announced an increased in the 767 production rate to 3/mo next year. In a Rate Readiness Assessment with the supply chain last year, Boeing asked the chain about increasing the rate to 4/mo in 2021.

Weakness

Boeing: The forecast includes Boeing’s Rate Readiness Assessment for the 777X, suggesting a rate of 5/mo in 2021 and 7/mo a short time later. The initial low-rate production 2020 is a delivery rate of 3.5/mo for the 777 Classic and 777X.

But sales of the 777X have been weak. The last confirmed order for the airplane was one for 20 in 2017 from Singapore Airlines. Before this, the last confirmed order was in 2015 for 10 from an Unidentified customer.

The program was launched in 2013 by Lufthansa Airlines; the Big Three Middle East carriers announced their orders at the Dubai Air Show that November and firmed them up in 2014. There have been just 30 firm orders since then.

There are only 326 firm orders. Etihad Airways wants to reschedule its order. Emirates Airline already has adjusted some deliveries. Qatar Airways is battling regional isolation but may retain its schedule because it needs the belly cargo capacity to import goods.

The ME3 account for 72% of the 777X backlog.

Cathay Pacific Airways and Lufthansa have been under financial stress, leaving Singapore Airlines and ANA as the only customers without apparent issues.

The production rate ramp-up for the 777X may see adjustments.

The 747 ticks along on 6/yr, dependent upon UPS Airlines. The orders continue through 2022. Now, Boeing has no other orders and the 747’s future beyond 2022 is questionable.

Airbus: Airbus just announced a rate reduction for the A330 from 6/mo to 5/mo. It’s unclear whether this rate adjust was made in anticipation of President Trump’s withdrawal from the Iran Nuclear pact. Airbus has 51 wide-body orders with Iran Air (and 46 A320 orders), with deliveries starting this year. Trump’s action kills the Airbus orders—a US license is required due to US content. Boeing’s deal with Iran Air is also dead, but unlike Airbus, Boeing had not booked the deal as firm.

The A350 slots probably can be accommodated without too much problem (though the 2019/2020 might be an issue). The A330 slots, however, are another matter. The status of the 2018/2019 aircraft, while shown scheduled for delivery this year and next, may have been adjusted by Airbus in anticipation of Trump’s action.

Irrespective, the loss of 28 A330-900 orders hurts and already-struggling neo program.

Will another A330 rate adjustment be required sooner rather than later?

The A350 orders are all -1000s, another slow-selling program. Officials say the lack of A350-1000 sales was due to the lack of delivery slots. But some customers swapped the -1000 orders they had to the smaller A350-900. Coupled with the slow-selling 777X, does this indicate large twin-engine, twin-aisle airplanes are falling out of favor as happened with the A380 and 747-8?

Down-gauging

The down-gauging trend has been underway for more than two decades, accelerated by the increasing range and capacity of the 777-300ER, the A330-300 and the introduction of the 787 and A350.

Boeing long predicted the demise of the Very Large Aircraft, the 747 and A380. Boeing has all but given up on the 747-8I—only 47 have been sold and the last airliner was ordered in 2013. (VIP and Air Force One orders came later.)

Airbus stubbornly maintains that there is a future for the A380 as airport congestion grows. But there is only one customer—Emirates—that appears interested in the airplane.

Boeing placed its bets on the 777X. The ultra-long-range 777-8 is the same size as the 777-300ER and the 777-9 is nearly the same size as the 747-8I.

Neither has sold well. The customer concentration, as noted, rests with the three ME3 carriers. The 777-8 ULR is a niche aircraft. ULRs historically have seen fewer than 100 sales.

The A350-1000, as noted, has seen down-gauging.

Which leads to the question: are the large-capacity twin-engine, twin-aisle airplanes going the way of the VLAs? Is there more than a niche future for the 777-8/9 and A350-1000?

This is a topic for future discussion.

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