Boeing Reaffirms Full-Year Delivery Target, Makes Good Progress toward Fixing Delays
by J. Kasper Oestergaard, European Correspondent, Forecast International.
Boeing and Airbus delivered 64 and 54 commercial jets in August 2018, respectively, compared to 66 and 46 deliveries during the same month last year. August is traditionally an average month for deliveries. With only 39 deliveries in July as a result of 737 delays due to late deliveries of fuselages and engines from suppliers, Boeing made a strong comeback. While the company’s supply chain woes have not disappeared, the company has taken steps to mitigate the problem and has stated that it is making good progress toward fixing the logjam by year end. The company has also reaffirmed its full-year delivery target. 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 August 2018, Boeing delivered 48 737s (of which 23 were 737 MAXs), slightly below the current monthly rate of 52 jets. The company also delivered two 767s, six 777s, and eight 787s. Boeing raised its 737 production rate to 47 per month in Q3 2017 from 42 previously, and recently increased it further to 52. Boeing plans a further increase to 57 737s per month in 2019. When asked about the potential for a 2020 production hike, Boeing CEO Dennis Muilenburg stated in September 2018 that the market could support a production rate higher than 57 per month. Boeing delivered 481 aircraft in the first eight months of the year and is five jets ahead of last year’s delivery figures (was seven ahead in July). A resolution to Boeing’s ongoing engine and fuselage supply chain issues is of vital importance while the company transitions to the 737 MAX and ramps up the production rate. 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. Spirit AeroSystems has faced disruptions this year in its own supply chain due to soaring demand.
In August 2018, Airbus delivered three A220s, 42 A320s (11 ceo / 31 neo), four A330s, and five A350s. Airbus has delivered 434 aircraft this year to date and is 35 jets ahead of last year’s delivery figures (was 27 ahead in July). Airbus has done an impressive job of catching up after the company was trailing its 2017 deliveries by three jets in June and as many as 19 jets in May. Airbus’ long lasting struggle with late deliveries of engines from Pratt & Whitney and CFM International for the A320neo family of aircraft appears to have been resolved – at least for now. A total of 181 A320neo family aircraft were delivered in 2017 vs. Airbus’ forecast of 200, up from 68 in 2016. By mid-2019, Airbus expects to be delivering 60 A320 jets per month. The company has internally been debating rates beyond 60. Airbus delivered 78 A350s in 2017 and plans to increase the production rate to 10 per month this year. Airbus is considering a further increase of up 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.
With 94 net new orders in August, Boeing had a fairly strong month. In August 2018, Boeing logged 99 gross orders (minus five cancellations => net of 94). The company booked three substantial 737 MAX orders, including 40 aircraft for an undisclosed customer, 30 MAX 8 aircraft for Air Lease Corporation (announced at Farnborough), and 20 MAX 8 aircraft for Aviation Capital Group (announced at Farnborough). Additionally, Boeing’s leasing and lending arm, Boeing Capital Corporation, placed orders for five 787-9 Dreamliners and one 777 freighter. Also, Air Lease Corporation’s Farnborough order for three 787-9s was booked in August.
Airbus’ August bookings were slim and totaled five gross orders (no cancellations => net of five). The two orders booked were three A320ceos for Lufthansa and two A321neos for Air New Zealand. 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.
Airbus’ order backlog as of August 31, 2018 stands at 7,415 jets (of which 6,318 or 85%, are A220 and A320ceo/neo family narrowbodies), ahead of Boeing’s backlog of 5,964 aircraft (of which 4,746, or 80%, are 737 NG/MAX narrowbody jets). Boeing set a new all-time backlog high in August, surpassing the old record of 5,946 set just recently in July. Airbus set a new all-time backlog record in July (7,464 unfilled orders), thanks to the addition of the A220, formerly known as the Bombardier CSeries. 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 boasts a book-to-bill ratio of 1.21 (1.17 in July), with Airbus at 0.50 (0.56 in July).
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://www.airleasecorp.com/press/boeing-air-lease-corporation-announce-orders-and-commitments-for-78-boeing-jets
http://www.flightglobal.com/news/articles/boeing-sees-potential-for-more-737-production-rate-h-451853/
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.
