Satisfactory orders haul ahead of Farnborough. Boeing reports solid deliveries, 737 MAX rate increase.
by J. Kasper Oestergaard, European Correspondent, Forecast International.
Boeing and Airbus delivered 51 and 58 commercial jets in June 2022, compared to 45 and 77 deliveries, respectively, in the same month last year. Year to date, Boeing and Airbus have delivered 216 and 295 aircraft, compared to 156 and 297, respectively, in the first half of 2021. So far this year, Boeing is 60 deliveries ahead and Airbus is two deliveries behind last year’s totals. June was a strong month for Boeing, and one would have to go all the way back to March 2019 to find a month with higher shipments.
Following a more than challenging 2020 due to the COVID-19 pandemic, 2021 was a year of recovery for the two largest commercial plane makers. 2022 is well underway and is expected to be another year of recovery for the commercial aircraft manufacturing industry, despite events currently unfolding in Ukraine. Boeing and Airbus still have a long way to go before deliveries are back to pre-pandemic levels, though.
For the full year 2021, Boeing delivered 340 aircraft, compared to 157 in 2020 and 380 in 2019. Boeing’s last “normal” year was 2018 – before COVID-19 and the 737 MAX grounding – when it delivered 806 jets, a level that will likely not be recaptured before 2024 or 2025. The past three years have been extremely challenging for Boeing but, despite ongoing Dreamliner quality issues and 777X delays, the outlook is bright.
The 737 MAX is approved to fly in nearly every country, and since late 2020 the fleet has flown more than one million flight hours. The aircraft, however, has not yet returned to commercial service in China despite the fact that the Civil Aviation Administration of China (CAAC) ungrounded the 737 MAX in December of last year. For example, China Eastern Airlines recently announced that aircraft modifications and further pilot training are needed before it can resume commercial service with the aircraft. The top reason for the 737 MAX’s absence in the skies over China is most likely the nation’s zero-COVID approach, which has wreaked havoc on domestic air travel; hence, there has been no need to add the 737 MAX capacity. In mid-June it was reported that China Southern Airlines is making test flights, as domestic demand is now looking to pick up again. In July, Air China also carried out a test flight with a 737 MAX.
In 2021, Airbus delivered 611 aircraft and won the deliveries crown for the third year in a row. Deliveries were up from 566 in 2020 but remain well below the company’s all-time record high of 863 shipments in 2019. Airbus is expected to retain the deliveries lead for the foreseeable future due to the company’s comfortable backlog lead over its American rival. Prior to 2019, Boeing had out-delivered Airbus every year since 2012.
As indicated above, in June 2022, Boeing delivered 51 jets, including 44 737s (43 MAX / 1 NG), four 767s, and three 777s. As of June, the 737 program is producing aircraft at an official rate of 31 per month, up from 27 per month in May. The rate of 27 per month was maintained between November 2021 and May 2022 and, prior to that, the monthly rate was just 19. Recently, The Seattle Times reported that delays in the supply of parts had resulted in a slowdown in 737 MAX production. Despite the rate increase and strong 737 MAX deliveries in June in general, supply chain issues are likely to persist for the time being. According to Reuters, Boeing has preliminary plans to boost 737 production to 38 jets per month in the first half of 2023, followed by another increase to 47 jets per month by the end of 2023.
Boeing 787 Dreamliner deliveries have now been suspended for more than a year, and it is unknown exactly when shipments will resume. Boeing suspended Dreamliner deliveries in May 2021 for the second time in less than a year. The Federal Aviation Administration is reviewing Boeing’s method for inspecting and evaluating the aircraft to ensure it meets federal safety regulations. In February, the head of the FAA, Steve Dickson, stated that the agency needs a “systemic fix” from Boeing to address Dreamliner production issues and would not allow the company to self-certify individual new jets when deliveries resume. Boeing recently advised key airlines and parts suppliers that Dreamliner deliveries would resume in the second half of 2022. In June, Bloomberg reported that Boeing is “almost there” with regard to restarting 787 deliveries. The current 787 production rate is approximately two aircraft per month, and Boeing expects to continue at this rate until deliveries resume and then return to five per month over time. In March of this year it was reported that the company is currently testing the ability of suppliers to meet output scenarios as high as seven per month by the end of 2023.
The 777 program was expected to get a new addition in late 2023 with the first delivery of the 777X, but in April Boeing announced this will now not happen before 2025. This reflects an updated assessment of the time required to meet certification requirements. According to Boeing, the 777-9 production rate ramp-up is being adjusted to minimize inventory and the number of planes requiring “change incorporation,” including a temporary pause through 2023. However, Boeing is taking advantage of the adjustment to the 777-9 production schedule by adding 777 freighter capacity starting in late 2023. In January of this year, Boeing launched a new 777X-based freighter, thereby expanding its 777X and cargo portfolio. Qatar Airways will be the 777-8F launch customer.
In June 2022, Airbus delivered 58 jets, including six A220s, 47 A320s (all NEO), two A330s, and three A350s. During 2021, Airbus steadily increased A320 production from 40 per month to 43 in Q3 2021 before finishing the year at a rate of 45 per month. Production will continue to be increased until reaching a monthly rate of 65 by the summer of 2023. Airbus has also discussed a scenario with a rate of 70 by Q1 2024. On May 4, Guillaume Faury, the CEO of Airbus, announced that the company continues to see strong growth in commercial aircraft demand driven by the A320 family. As a result, Airbus is now working with its supply chain to increase the A320 production rate to 75 aircraft per month in 2025. The A321XLR successfully accomplished its first flight on June 15, 2022. Entry into service, initially planned for the end of 2023, is now expected to take place in early 2024.
The A220, meanwhile, is being produced at a rate of five aircraft per month. The rate will be increased to six in the coming months – with a monthly production rate of 14 envisioned by the middle of the decade. The A350 production rate currently averages five per month and will be increased to six by early 2023. Airbus is currently producing two A330s per month, a rate that will be increased to nearly three aircraft by the end of 2022.
In 2021, Airbus launched the new A350 freighter, or A350F, which is a major and much-needed boost to the company’s competitiveness in the cargo segment. Boeing has long dominated the cargo space with its 737-800BCF, 767-300BCF, 767-300F, 777F, 777-8F and 747-8F offerings. Until now, Airbus has only offered the A330-200F, which has not performed well in competition against Boeing’s popular 767-300F. With the launch of the A350F, it appears Airbus is getting serious about capturing more of the cargo aircraft market. The A350F, which carries up to 120 tons (109 metric tons) of cargo, received its first order in November and will predominantly compete with the 777F. In comparison, the 777F has a cargo capacity of up to 112 tons (102 metric tons). To date, the A350F has accumulated 31 net new orders.
Turning to the June orders review, both companies had a satisfactory month. Boeing booked orders from three customers for a total of 50 jets. However, the company also reported 35 cancellations (29 737 MAXs and six 787s), resulting in just 15 net new orders in total. The largest order, for 48 737 MAXs, was placed by an undisclosed customer. Also, FedEx Express ordered a single 777F. Finally, American Airlines ordered a single 737 MAX for the second consecutive month. Year to date, Boeing has accumulated 186 net new orders (286 gross orders). In 2021, Boeing booked 909 gross orders and received 430 cancellations, for a total of 479 net new orders (before ASC 606 changes). Please note that for comparison reasons, we do not include the so-called ASC 606 accounting adjustments in the numbers reported in this article and regard net new orders as gross orders minus cancellations.
In June, Airbus booked orders from seven customers for a total of 78 jets and reported 10 cancellations, resulting in 68 net new orders. The largest order by far was placed by Qantas Airways and included 20 A220-300s, 20 A321XLRs and 12 A350-1000s. The Qantas order was announced in early May but not finalized before last month. Also, an undisclosed customer ordered seven A350 freighters and Turkish low-cost carrier Pegasus Airlines booked eight A321neos. Finally, International Airlines Group (IAG) ordered five A320neos and one A321neo, Silk Way West Airlines booked two A350Fs, and Delta Air Lines placed an order for a single A330-900.
Year to date, Airbus has accumulated 259 net new orders (442 gross orders). In 2021, Airbus booked a total of 771 gross orders and received 264 cancellations, for a total of 507 net new orders – enough to win the orders crown for the third year in a row. It should be noted, however, that if Boeing’s 2021 ASC 606 adjustments are included, Boeing comes out ahead with 535 net new orders.
It will be very interesting to track the ordering activity at this month’s Farnborough International Airshow. Given the current economic uncertainty and resurgence of COVID in some parts of the world, it is unknown if airlines and leasing companies will have an appetite for fleet renewal and expansion or if they are in wait-and-see mode. What we do know is that Airbus will likely present a major order for as many as 292 A320neo family aircraft combined for Air China, China Eastern, China Southern, and Shenzhen Airlines. The order was announced in early July but has not yet been firmed up. Also, rumors are circulating that Delta Air Lines is close to ordering more than 100 Boeing 737 MAX 10 narrowbody jets.
At the end of June 2022, Airbus reported a backlog of 7,046 jets, of which 6,376, or 90 percent, were A220 and A320ceo/neo family narrowbodies. This is 679 aircraft below the company’s all-time backlog record of 7,725 aircraft set in January 2020. By the end of June, Boeing’s backlog (total unfilled orders before ASC 606 adjustment) was 5,106 aircraft, of which 4,101, or 80 percent, were 737 NG/MAX narrowbody jets. Boeing’s all-time backlog high of 5,964 aircraft was set in August 2018. The number of Airbus aircraft to be built and delivered represents 8.2 years of shipments at the 2019 production level (the pre-pandemic level), or 11.5 years based on the 2021 total. In comparison, Boeing’s backlog would “only” last 6.3 years at the 2018 level (the most recent “normal” year for Boeing), or 15.0 years based on 2021 deliveries. In 2022 to date, Boeing’s book-to-bill ratio, calculated as net new orders divided by deliveries, is 0.86. Airbus’ book-to-bill ratio is 0.88. In 2021, Boeing’s book-to-bill ratio was 1.41, while Airbus reported a book-to-bill of 0.81.
2022 Forecast
Forecast International’s Platinum Forecast System is a breakthrough in forecasting technology that provides 15-year production forecasts. The author has used the Platinum Forecast System to retrieve the latest delivery forecast data from the Civil Aircraft Forecast product. For 2022, Forecast International’s analysts currently expect Boeing and Airbus to deliver 450 and 702 commercial jets, respectively. Compared to the 2021 level, this is a 32.4 percent increase for Boeing and a 14.9 percent increase for Airbus.
Boeing released first quarter 2022 results on April 27 but did not provide any updated guidance on deliveries. The company will release second quarter results on July 27. Airbus expects to deliver 720 commercial aircraft in 2022 and, as the basis for its 2022 guidance, the company assumes no further disruptions to the world economy, air traffic, and its own internal operations. The company released Q1 2022 earnings on May 4 and reaffirmed its 2022 guidance. Airbus will release second quarter results on July 27.
References:
- https://www.forecastinternational.com/platinum.cfm
- http://www.boeing.com/commercial/#/orders-deliveries
- https://www.airbus.com/aircraft/market/orders-deliveries.html
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- https://www.airbus.com/en/newsroom/press-releases/2022-06-airbus-a321xlr-takes-off-for-the-first-time
- https://www.airbus.com/en/a321xlr-first-flight
- https://www.flightglobal.com/airframers/boeing-says-737-production-hit-31-per-month-rate-in-june-as-backlog-jumps/149359.article
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- https://www.bloomberg.com/news/articles/2022-06-16/boeing-says-almost-there-on-787-dreamliner-delivery-restart
- https://www.reuters.com/business/aerospace-defense/exclusive-boeing-tells-airlines-787-deliveries-restart-second-half-2022-sources-2022-04-20/
- https://simpleflying.com/air-china-test-flight-boeing-737-max/
- https://www.reuters.com/business/aerospace-defense/china-southern-boeing-737-max-makes-test-flights-domestic-demand-picks-up-2022-06-15/
- https://www.reuters.com/business/aerospace-defense/exclusive-boeing-aims-nearly-double-737-max-production-by-end-2023-sources-2022-03-05/
- https://airinsight.com/farnborough-expectations-steady-as-she-goes/
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- https://airinsight.com/delta-and-the-max10/
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Kasper Oestergaard is an expert in aerospace & defense market intelligence, fuel efficiency in civil aviation, defense spending and defense programs. Mr. Oestergaard has a Master's Degree in Finance and International Business from the Aarhus School of Business - Aarhus University in Denmark. He has written four aerospace & defense market intelligence books as well as numerous articles and white papers about European aerospace & defense topics.
