Boeing Reports Weak Shipments Due to 737 Supply Chain Woes
by J. Kasper Oestergaard, European Correspondent, Forecast International.
Boeing and Airbus delivered 39 and 77 commercial jets in July 2018, respectively, compared to 58 and 47 deliveries during the same month last year. July is traditionally a slow month for deliveries, but Boeing’s shipment tally was unusually low as a result of 737 delays due to late deliveries of fuselages and engines from suppliers. Airbus’ July shipments were unusually high, as the company is now able to deliver already assembled aircraft that have been sitting on the tarmac waiting for their engines. In 2017, Boeing delivered 763 jets (748 in 2016), in line with company expectations, while Airbus surpassed its delivery target of 700 jets by handing over 718 aircraft during 2017 (688 in 2016).
In July 2018, Boeing delivered 29 737s (of which 12 were 737 MAXs), well below the current monthly rate of 47 jets. The company also delivered one 747-8, one 767, and eight 787s. Boeing raised its 737 production rate to 47 per month in Q3 2017 from 42 previously and will increase it further to 52 during 2018. Boeing plans a further increase to 57 737s per month next year. Boeing delivered 417 aircraft in the first seven months of the year and is seven jets ahead of last year’s delivery figures (was 26 jets ahead in June). A resolution to Boeing’s ongoing engine and fuselage supply chain issues is of vital importance. The 737 MAX is powered by LEAP-1B engines built by CFM International, a joint venture between France’s Safran and General Electric. Boeing 737 fuselages are supplied by Wichita, Kansas-based Spirit AeroSystems, which makes about 70 percent of the structure.
In July 2018, Airbus delivered two A220s, 63 A320 series aircraft (19 ceo / 44 neo), five A330s, six A350s, and one A380. Airbus delivered 380 aircraft in the first seven months of the year and is 27 jets ahead of last year’s delivery figures. Airbus has caught up well after the company was trailing its 2017 deliveries by three jets in June and as many as 19 jets in May. With very strong narrowbody deliveries in July, Airbus’ persistent struggle with late deliveries of engines from Pratt & Whitney and CFM International, for the A320neo family of aircraft, appears to be over for now. A total of 181 A320neo family aircraft were delivered in 2017, vs. Airbus’ forecast of 200 – up from 68 during 2016. By mid-2019, Airbus expects to be delivering 60 A320 jets per month. The company has internally been debating rates beyond 60. Airbus plans to deliver up to 120 A350s (all variants) in 2018, when the production rate hits 10 per month. Airbus is considering a further increase to 13 A350s per month in 2019. The ramp-up of A350 XWB deliveries combined with a higher A320 production rate means that the company is narrowing Boeing’s deliveries lead and could surpass its top rival by 2019 or 2020.
In July, both manufacturers landed hundreds of orders and commitments at the Farnborough International Airshow 2018. Airbus garnered orders and other commitments for 431 aircraft, while Boeing announced orders and commitments for 676. For more detail, please read Forecast International’s report from Farnborough here: http://www.defensesecuritymonitor.com/wordpress/biggest-sales-haul-in-five-years-at-2018-farnborough-airshow/
Despite a strong FIAS 2018, July order bookings were weak, as most of the new orders and commitments have yet to be finalized and booked. In July 2018, Boeing logged 30 gross orders (minus three cancellations => net of 27). Boeing’s July bookings included an order for 10 787-9s for Hawaiian Airlines. Also, Qatar Airways ordered five 777Fs due to strong air cargo demand, while Brazil’s GOL Linhas Aéreas placed an order for 15 737 MAX jets.
Airbus’ July bookings were slim and totaled eight gross orders (no cancellations => net of eight). The only order booked in July was for eight A350-900s for an undisclosed customer. Despite being well behind Boeing in this year’s orders race, Airbus has retained an orders lead over its rival every year since 2012. In 2017, just as Boeing looked set to win the orders race, Airbus finished the year on a very high note and reported a full-year intake of 1,109 net new orders, ahead of Boeing’s 912.
Following the inclusion of the Airbus A220 (formerly the Bombardier CSeries) on its books, Airbus’ order backlog as of July 31, 2018 stands at 7,464 jets (of which 6,358, or 85%, are A220 and A320ceo/neo family narrowbodies), ahead of Boeing’s backlog of 5,934 aircraft (of which 4,704, or 79%, are 737 NG/MAX narrowbody jets). Boeing set an all-time backlog high in June with 5,946. Airbus set a new all-time backlog record in July thanks to the addition of the A220, and the company now boasts 7,464 unfilled orders. The number of Airbus aircraft to be built and delivered represents a 10-year backlog at the 2017 production level. In comparison, Boeing’s backlog would “only” last 7.8 years. Airbus booked 1,109 net new orders in 2017, resulting in a book-to-bill ratio of 1.54. Boeing booked 912 net new orders in 2017, for a book-to-bill ratio of 1.20. In 2018 to date, Boeing currently boasts a book-to-bill ratio of 1.17 (1.22 in June), with Airbus at 0.56 (0.68 in June).
2018 Forecast
Forecast International’s Platinum Forecast System® is a breakthrough in forecasting technology. Among many other features, Platinum provides 15-year production forecasts. The author has used the Platinum Forecast System to retrieve the latest delivery forecasts. For 2018, Forecast International’s analysts expect Boeing and Airbus to deliver 801 and 775 large commercial jets, respectively. These are the latest “live” forecast figures (adjusted frequently by FI analysts as new information comes in). These figures exclude militarized variants of commercial platforms such as Boeing’s P-8 Poseidon, KC-46 Tanker and C-40 Clipper and Airbus’ A330 MRTT tanker.
In late January 2018, Boeing reported that it expects to deliver 810-815 commercial aircraft during 2018 (including militarized variants of commercial jets). On February 15, 2018, Airbus announced that it expects to deliver around 800 commercial jets this year (including militarized variants of commercial jets), but at the same time emphasized that it depends on engine manufacturers meeting commitments.
Please feel free to use this content with Forecast International and analyst attributions, along with a link to the article. Contact Ray Peterson at +1 (203) 426-0800 or via email at ray.peterson@forecast1.com for additional analysis.
Joakim Kasper Oestergaard is Forecast International’s AeroWeb and PowerWeb Webmaster and European Editor. In 2008, he came up with the idea for what would eventually evolve into AeroWeb. Mr. Oestergaard is an expert in aerospace & defense market intelligence, fuel efficiency in civil aviation, defense spending and defense programs. He has an affiliation with Terma Aerostructures A/S in Denmark – a leading manufacturer of composite and metal aerostructures for the F-35 Lightning II. Mr. Oestergaard has a Master’s Degree in Finance and International Business from the Aarhus School of Business – Aarhus University in Denmark.
References:
http://www.boeing.com/commercial/#/orders-deliveries
http://www.airbus.com/company/market/orders-deliveries/
http://thepointsguy.com/news/boeing-behind-on-737-deliveries/
A military history enthusiast, Richard began at Forecast International as editor of the World Weapons Weekly newsletter. As the Internet grew in importance as a research tool, he helped design the company's Forecast Intelligence Center and currently coordinates the EMarket Alert newsletters for clients. Richard also manages social media efforts, including two new blogs: Defense & Security Monitor, covering defense systems and international issues, and Flight Plan, which focuses on commercial aviation and space systems. For over 30 years, Richard has authored the Defense & Aerospace Companies, Volume I (North America) and Volume II (International) services. The two books provide detailed data on major aerospace and defense contractors. He also edits the International Contractors service, a database that tracks all the contractors involved in the programs covered in the FI library. More recently he was appointed Manager, Information Services Group (ISG), a new unit that encompasses developing outbound content for both Forecast International and Military Periscope.
