Both companies reaffirm 2023 guidance. Boeing closing in on 737 production rate hike.
Boeing and Airbus delivered 43 and 64 commercial jets in July 2023, compared to 26 and 46 deliveries, respectively, in the same month last year. Year-to-date, Boeing and Airbus have delivered 309 and 381 aircraft, compared to 242 and 341, respectively, during the first seven months of 2022. As of July, Boeing and Airbus are 67 and 40 deliveries ahead of last year’s totals to date. In 2022, Airbus won the deliveries crown for the fourth year in a row by delivering 663 aircraft, compared to Boeing’s 480 shipments. In 2021, Boeing and Airbus delivered 340 and 611 aircraft.
Following a more than challenging 2020 due to the COVID-19 pandemic, 2021 and 2022 were recovery years for the two largest commercial plane makers. Another year of recovery for the commercial aircraft manufacturing industry is expected in 2023 despite continued supply chain challenges, higher interest rates, labor shortages, and the war in Ukraine. However, Boeing and Airbus still have quite a way to go before deliveries are back to pre-pandemic levels. In 2018, before COVID-19 and the 737 MAX grounding, Boeing delivered 806 jets, a level that will likely not be recaptured before the 2025-26 timeframe. Airbus’ all-time record high of 863 shipments was set in 2019, a level that could be surpassed in 2024 if supply chain challenges ease, but most likely not before 2025. Also, 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 July 2023, Boeing delivered 43 jets, including 33 737s (32 MAXs and one NG), three 767s, three 777s, and four 787s. At the Q2 2023 investor earnings call on July 26, Boeing announced that “the 737 program is transitioning production to 38 per month.” However, the wording indicates that the official rate hike has not yet taken place but will follow at a later date, likely during the fall. Since June of last year, the 737 program has been producing aircraft at an official rate of 31 per month. Year-to-date, Boeing has delivered 36 737s per month, on average; please note, however, that this figure includes aircraft from inventory. At the Q2 earnings call, Boeing reaffirmed its guidance for 400-450 737 MAX deliveries for the year. Longer term, Boeing expects to increase production to approximately 50 jets per month in the 2025/26 timeframe. This compares to the pre-crash/pre-pandemic rate of 52 737s per month in 2018. Recently, it was reported that the company is planning to boost production to 52 jets per month by January 2025. The company plans to open a fourth 737 MAX production line in Renton in the second half of 2024. Boeing ended the second quarter with 228 737 MAX jets in inventory, up three from Q1 2023. Customers in China account for 85 of these aircraft. Boeing expects most of the inventoried jets will be delivered by the end of 2024. Boeing believes that supply chain constraints will remain a significant challenge in 2023. The company is still producing 737 NGs, but only has 19 737-800s remaining in backlog.
In August of last year, deliveries of the Boeing 787 Dreamliner were resumed following a suspension of shipments that lasted nearly 16 months. Boeing had suspended Dreamliner deliveries in May 2021 for the second time in less than a year. The 787 production rate was recently raised to three aircraft per month, up from two. At the end of June, the rate was raised yet again and is now four per month. The 787 rate will return to five per month by the end of 2023 (for a total of 70-80 deliveries for the year), followed by further increases before reaching 10 aircraft per month by 2025/26. Boeing ended the first quarter with 85 Dreamliners in inventory, down 10 from Q1 2023. Most of these aircraft will be delivered during 2023 and 2024.
The 747 program closed down production when the last aircraft was delivered to Atlas Air in January this year. The 767 program is currently producing at a rate of three units per month, a mix of KC-46 tankers (based on the 767-2C) and 767-300 freighters. The 777 program is currently pushing out aircraft at a rate of three aircraft per month – recently raised from two per month. Most aircraft in backlog are 777 freighters, with only five 777-300ERs left. The 777 program was expected to get a new addition in late 2023 with the first delivery of the 777X, but in April of last year Boeing announced this will now not happen before 2025. This reflects an updated assessment of the time required to meet certification requirements. Last year, Boeing launched a new 777X-based freighter, thereby expanding its 777X and cargo portfolio. By the 2025/26 timeframe, Boeing expects to be delivering four 777s per month.
In July 2023, Airbus delivered 65 jets, including five A220s, 49 A320s (all NEO), three A330s, and eight A350s. The official A320 production rate is 45 aircraft per month and has remained at this level since the end of 2021. On average, the company has delivered 44 A320s per month in 2023 (the 2022 average was 43). Production is currently being increased and a rate hike can be expected later this year. The A320 program is expected to reach a monthly rate of 65 by late 2024 (pushed back twice now due to supply chain challenges). Also, Airbus is working with its supply chain to increase A320 production to 75 aircraft per month in 2026. The A321XLR flight test program is reportedly progressing well, and entry into service is expected to take place in the second quarter of 2024.
The A220, meanwhile, is being produced at a rate of six aircraft per month, with a monthly production rate of 14 expected by 2025. Airbus is currently planning to launch a stretch version of the A220, which many now refer to as the “A220-500” or even “A221.” Currently, the Pratt & Whitney PW1500G is the only engine option for the A220, and the new variant will most likely come with a second engine option.
The A350 production rate currently averages five per month and was expected to be increased to six by early 2023. However, the rate increase has likely been pushed back to late 2023. Airbus expects to produce nine A350s per month by 2025. The A330 production rate was increased from two aircraft per month to three at the end of 2022, with an increase to four per month expected in 2024.
Turning to the July orders review, Boeing had a satisfactory month and booked orders from four customers for a total of 52 jets (gross orders) and did not report any cancellations, resulting in 52 net new orders. The July orders haul was dominated by a large widebody order placed by Saudia, formerly known as Saudi Arabian Airlines – the flag carrier of Saudi Arabia, which ordered 18 787-9s and 21 787-10s. The order was originally announced in March of this year and includes options for 10 additional 787s. Also, Luxair and two undisclosed customers ordered a total of 12 737 MAXs and one 777F. Year-to-date, Boeing has accumulated 467 net new orders (579 gross orders), compared to 312 net new orders (416 gross orders) in the first seven months of last year. In 2022, Boeing booked 774 net new orders (935 gross orders), up from 479 net new orders (909 gross orders) in 2021 (before ASC 606 changes). Please note that for comparison reasons, we do not include Boeing’s so-called ASC 606 accounting adjustments in the numbers reported in this article and regard net new orders as gross orders minus cancellations.
In July, Airbus had a satisfactory month and booked orders for 60 aircraft from five different customers and reported three A350-900 cancellations, for a total of 57 net new orders. The largest order was placed by Pegasus Airlines, a Turkish low-cost carrier, which ordered 36 A321neos, followed by Icelandair’s order for 13 A321neos, and three orders for A350-900s (total of 11 jets) placed by Iberia and two undisclosed customers. Year-to-date, Airbus has accumulated 1,101 net new orders (1,140 gross orders), compared to 656 net new orders (843 gross orders) in the first seven months of 2022. In 2022, Airbus booked 820 net new orders (1,078 gross orders), surpassing both 2021 gross orders and net new orders. In 2022, Airbus won the orders crown for the fourth consecutive year by a fairly slim margin of just 46 aircraft compared to Boeing. In 2021, Airbus booked a total of 771 gross orders and received 264 cancellations, for a total of 507 net new orders.
At the end of July, Airbus reported a backlog of 7,959 jets, of which 7,270, or 91 percent, were A220 and A320ceo/neo family narrowbodies. Last month, following the Paris Air Show, Airbus reported a backlog of 7,967 jets and surpassed its old record of 7,725 aircraft set in January 2020. By the end of last month, Boeing’s backlog (total unfilled orders before ASC 606 adjustment) was 5,588 aircraft, of which 4,358, or 78 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 9.2 years of shipments at the 2019 production level (the pre-pandemic level), or 12.0 years based on the 2022 total. In comparison, Boeing’s backlog would “only” last 6.9 years at the 2018 level (the most recent “normal” year for Boeing), or 11.6 years based on 2022 deliveries. As of July 31, Boeing’s book-to-bill ratio this year, calculated as net new orders divided by deliveries, is 1.51, compared to Airbus at 2.89. This means that Airbus has received nearly three orders for every aircraft the company has delivered so far this year. In 2022, Boeing’s book-to-bill ratio was a very strong 1.61. Meanwhile, Airbus’ book-to-bill ratio was a solid 1.24.
2023 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 2023, Forecast International’s analysts currently expect Boeing and Airbus to deliver 520 and 710 commercial jets, respectively. Please note that these figures exclude militarized variants of commercial platforms such as Boeing’s P-8 Poseidon maritime patrol aircraft and KC-46 Pegasus tanker and Airbus’ A330 MRTT tanker.
Boeing released it Q2 2023 results on July 26 and reaffirmed the 2023 737 MAX and 787 guidance from November of last year. On the investor earnings call, CFO Brian West stated, “We still project full year 737 deliveries of 400 to 450 with sequential improvement in the second half.” In November of last year, Boeing announced that it expects to deliver 400-450 737s and 70-80 787s in 2023, which equates to a monthly average of 33-38 for the 737. Airbus released its H1 2023 results on July 26 and reaffirmed the previous guidance for 720 commercial jet deliveries in 2023.
*Boeing is currently transitioning from 31 to 38 737 MAXs per month. The official rate is still 31/mo.
References:
- https://www.forecastinternational.com/platinum.cfm
- http://www.boeing.com/commercial/#/orders-deliveries
- https://www.airbus.com/aircraft/market/orders-deliveries.html
- https://boeing.mediaroom.com/2023-07-26-Boeing-Reports-Second-Quarter-Results
- https://boeing.mediaroom.com/2023-07-11-Boeing-Announces-Second-Quarter-Deliveries
- https://www.airbus.com/en/newsroom/press-releases/2023-07-airbus-reports-half-year-h1-2023-results
- https://investors.boeing.com/investors/news/press-release-details/2023/SAUDIA-to-Grow-Long-Haul-Fleet-with-up-to-49-Boeing-787-Dreamliners/default.aspx
- https://www.flypgs.com/en/press-room/press-releases/pegasus-airlines-places-order-for-36-new-a321neo-aircraft
- https://seekingalpha.com/article/4620104-boeing-company-ba-q2-2023-earnings-call-transcript
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.
