Airbus, Boeing pause on some production rate hikes

Single-aisle production

Boeing has 4,661 MAXes in backlog through January, the equivalent of 6.8 years of production at rate 57—if the delivery slots were packed together. But orders go out to at least 2029. The line is booked solid, or nearly so, through 2023, when it is oversold at rate 57. There are production slots available from 2024 in increasing numbers the farther out in the future one goes. These are firm orders only.

“We’re contemplating potentially going beyond that in the future. If you look at the skyline for Boeing 737 MAX, it’s sold out through 2023. So we are oversold against our production profile over the next many years,” Boeing CEO Dennis Muilenburg said said at a Barclay’s conference yesterday.

Airbus has 5,866 A320neos in backlog at January 31, the equivalent of 8.1 years production at rate 60. Production is sold out, or nearly so, through 2023. Slot availability opens up from 2024, but not nearly at the same pace as for the 737.

Airbus plans to go to rate 63/mo next year. It had been assumed Boeing would want to do the same to protect market share and burn off its backlog.

Suppliers at the PNAA conference reiterated that the chain is stressed to meet production rate hikes. The two OEMs share many suppliers, and it’s unclear why Airbus believes it can proceed with its rate hike while Boeing appears ready to pause moving forward.

There may be one explanation: Boeing doesn’t appear to have sold a single airplane to China in 2018. China routinely accounts for 25%-33% of Boeing’s deliveries in any given year, heavily weighted toward the 737. This equals 201-265 planes a year, based on Boeing delivery of 806 aircraft last year.

There were about 250 orders from Unidentified customers. Typically, some are for China, but it’s not confirmed that any of these are. In any event, deliveries would be stretched out over several years.

The US-China trade war may have blocked any orders from China this year. The Chinese government commonly uses orders to make political statements, withholding them to express displeasure with the US, France or Germany depending on who leaders at mad at, at any given time.  Boeing declined comment.

Twin-aisle production

Airbus said on its earnings call this month that there are no plans to increase the A350 production rate to 13/mo from the 10/mo achieved by the end of last year.

Cancellations from Etihad Airways, new orders from Emirates Airline and other moves in the skyline may account for this, although an analysis of the order-delivery stream doesn’t seem to support this theory.

There is a slight production gap next year and in 2021. Etihad has a few deliveries in each of these years. Emirates’ order for 30 A350s hasn’t yet revealed the delivery stream.

The A350 is sold out in 2022. But there are big drop-offs from 2023 onward.

Data shows the A330neo production sold out through 2021, but some of the intended customers are in financial distress or, for some lessors, no lessee appears.

According to data at Jan. 1, Lion Air and Hong Kong Airlines are scheduled to receive aircraft this year. Lion Air is suffering through the aftermath of the high-profile, fatal accident involving a Boeing 737-8. Last week, another Lion Air Boeing 737-800 ran off the runway, causing substantial damage to the aircraft. There were no fatalities, but this is yet another incident of a Lion Air jet runway excursion or landing short.

Reports have Hong Kong Airlines in financial distress, though the company states the reports are overblown.

Lessor Avolon is shown in the data to have two deliveries this year for which no lessee is listed.

The A330neo order drop dramatically from 2023.

The data excludes the recent order by Emirates Airline for 40 neos. The delivery dream has not yet been included in the data.

Boeing will increase production of the 787 this year to 14/mo. The production line is sold out this year and next and oversold in 2021. After that, it drops of dramatically for the balance of the decade.

Production ups and downs

The 737 rates need to go up but doing so is stymied by supply chain pressure and, it appears, a pause by China in orders.

The A350 production rate at 10/mo has some near-term gaps. Until the Emirates order for 30 and the Etihad cancellations are factored in, it’s difficult to draw definitive conclusions, but these appear to block a near-term increase in rates.

The A330neo has struggled for orders, but the Emirates deal provides an important boost. Airbus announced a production rate reduction to 4.5/mo and a further reduction to 3.5/mo seemed imminent. The EK order may hold this off.

Boeing’s production rate boost to 14/mo for the 787 is clearly warranted through 2021. After that, orders fall off the cliff.

Boeing and Airbus cite an expected surged in order demand starting around 2020-21 as wide-body aircraft age. The future of the Boeing 777X and A330neo depend on this.

So do the production rates of the A350 and 787.


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