By the Leeham News Team
Nov. 5, 2020, © Leeham News: Research and Development spending by the Airbus and Boeing commercial units declined year-over-year.
The movement is in keeping with cost-cutting by the Big Two OEMs. For Airbus, the reduction is due to the coronavirus pandemic. For Boeing, it’s due to the 737 MAX grounding and the pandemic.
Boeing’s spending typically lags Airbus. Richard Aboulafia, a consultant with Teal Group, for years criticized Boeing over its smaller spending, favoring instead shareholder value. Airbus overtook Boeing is innovative single-aisle airplane development years ago. Boeing’s choice of creating a 777 derivative instead of a new design to compete with the A350-1000 proved to be a weak move. There are only a handful of customers and the skyline is weak.
COVID-related airline bankruptcies, etc.
Sundair of Germany is the latest airline to enter a restructuring under a “protective shield” during the COVID-19 crisis.
Spirit, supplier to Airbus and Boeing, shows production rates
Spirit AeroSystems, a supplier to Airbus and Boeing, listed productions rates in its 3Q2020 financial information.
As of October 1, 2020 the overall rates announced by Boeing and used by the Company in the third quarter of 2020 are as follows:
•B737 MAX, including P-8, of 72 shipsets for 2020, increasing to 31 airplanes per month (“APM”) in 2022;
•B787 average production volume of 10 APM in 2020, decreasing to 6 APM in 2021 and 2022;
•B777/777X average production volume of 3.6 APM in 2020, decreasing to 1.8 APM in 2021;
•B767 current and future production volume of 3 APM; and
•B747 current production volume of 0.5 APM and ending production in 2022.
The Company is attempting to calibrate its cost structure to the lower production volumes and manage the impact of excess production capacity across our sites. The Company’s strategy to recalibrate its cost structure is likely to lead to a consolidation of sites where excess capacity exists.
Airbus Production Volumes
As of October 1, 2020 the overall rates announced by Airbus and used by the Company in third quarter are as follows:
•Single-aisle average production volume of 40 APM;
•A350 average production volume of 3.5 APM in 2020, increasing to 5 APM end of 2021; and
•A330 average production volume of 2 APM.