Slim orders tally at Farnborough with backlogs still near all-time highs
In July, a month that also featured the 2024 edition of Farnborough International Airshow, deliveries were strong, however, the orders tally from Farnborough was not impressive. In light of ongoing supply chain challenges and the uncertainty faced by airlines concerning when they will receive aircraft already on order, a somewhat slow order haul should not have come as a big surprise. In total, 286 firm orders and commitments were announced compared to 441 at Farnborough in 2022, and 1,464 in 2018. In 2020, the airshow was cancelled due to the COVID-19 pandemic. We will provide a full overview of orders from Farnborough later in this article.
On the deliveries front, Boeing handed over 43 commercial jets (compared to 24 in May and 44 in June) while Airbus delivered 77 units, up from 67 last month. This compares to 43 deliveries for Boeing and 65 for Airbus in June of last year. Deliveries of the Boeing 737 MAX were considerably higher in June and July after several sluggish months due to Boeing’s ongoing overhaul of its quality management system and processes. Regulators have allowed Boeing to produce up to 38 737s per month, however, the company has opted to slow its production until it feels ready to return to the official production rate of 38 jets per month. With 34 and 31 737 MAX’s shipped out in June and July, respectively, Boeing is still hovering around 10-20% below the official rate.
Year-to-date, Boeing and Airbus have delivered 218 and 400 aircraft compared to 309 and 381, respectively, during the first seven months of 2023. As of July, Boeing is 91 deliveries behind compared to last year’s totals to date, while Airbus is 19 deliveries ahead. In 2023, in total, Boeing and Airbus delivered 528 and 735 aircraft compared to 480 and 663, respectively, in 2022. In 2023, Airbus won the deliveries crown for the fifth consecutive year.
Following a more than challenging 2020 due to the COVID-19 pandemic, 2021-23 were recovery years for the two largest commercial plane makers. Most likely, 2024 will be another year of recovery on the deliveries front followed by new records in 2025 and beyond. Boeing still has quite a way to go before setting new all-time company deliveries records, whereas Airbus will likely finish the year just below the pre-pandemic level. In 2018, before COVID-19 and the first 737 MAX grounding, Boeing delivered 806 jets, a level that will likely not be recaptured before the 2025-26 timeframe. Airbus’ record high of 863 shipments was set in 2019, a level that will likely be surpassed in 2025. Also, Airbus is expected to retain their deliveries lead for the foreseeable future due to the company’s comfortable backlog lead over its American rival. Before 2019, Boeing had out-delivered Airbus every year since 2012.
As indicated above, in July, Boeing delivered 43 jets, including 32 737s (31 MAXs / 1 NG), four 767s, one 777, and six 787s. For most of last year, the 737 program was producing aircraft at an official rate of 31 per month. At the end of 2023, the program completed its transition to 38 aircraft per month. However, increased quality checks and audits by regulators in the aftermath of the Alaska Airlines Flight 1282 incident mean that Boeing is currently producing 737 MAXs at a lower rate. In March, Boeing Chief Financial Officer, Brian West, stated: “We are the ones who made the decision to constrain rates on the 737 program below 38 per month until we feel like we’re ready.” At the company’s second quarter earnings call in late July, Boeing announced it expects to return to its official production rate by the end of the year. With 34 737 MAX deliveries in June and another 31 in July (note: the first month in quarter 1-3 is normally always slower than the last month in the preceding quarter), the company is making good progress towards this target. Boeing’s plans to increase production to approximately 50 737 MAX jets per month in the 2025/26 timeframe are still in effect. The target of 50 per month compares to the pre-crash/pre-pandemic rate of 52 737s per month in 2018. Last year, it was reported that the company is planning to boost production to 52 jets per month by January 2025. Boeing’s plan to open a new 737 MAX production line in Everett in the second half of 2024 has likely been pushed well into 2025. The new line is in addition to the three lines currently in place at Renton. For now, in the aftermath of the Alaska Airlines Flight 1282 incident, the program will remain at 38 aircraft per month. The company is still producing 737 NGs but now only has 13 737-800s remaining in backlog of which 11 are P-8 Poseidons for the U.S. Navy and allies.
The 787 program will be ramping up production next year. In January of this year, the 787 production rate was raised to five per month with a target of 10 per month by 2025/26. However, Boeing has for now reduced the 787 rate to four before returning to five by the end of the year.
The 767 program is currently producing jets 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 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 delivery of the first 777X, however, the 777X’s entry into service was postponed to 2025. Boeing recently reaffirmed the first delivery of the 777X will happen next year as planned. Boeing will also launch 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, Airbus delivered 77 jets, including seven A220s, 58 A320s (all NEO), five A330, and seven A350s. On average, the company delivered 48 A320s per month in 2023 compared to 43 in 2022 and 46 year-to-date. Production is currently being increased, however, Airbus is no longer releasing their production rate changes and prefers to announce in what year they will reach a certain rate. At this time, we consider the unofficial A320 production rate to be 52 per month, up from 50 last month, with further increases expected in the coming months. Airbus is working with its supply chain to increase A320 production to 75 aircraft per month by 2027. Previously, the target of 75 was expected to be reached in 2026, however, in late June, Airbus pushed the target out by a year as suppliers are simply unable to keep up with demand. Also, Airbus cut its 2024 deliveries target from 800 to 770. The A320 program was expected to reach a monthly rate of 65 by late 2024, however, while Airbus did not specify whether this target has also been pushed out, we would now not expect this level of production to be reached before well into 2025. The commercial aircraft fleet is getting a new addition this year with the entry-into-service of the A321XLR. Final assembly of the first production aircraft commenced in December 2023 with entry-into-service expected to take place in Q3 2024. On 19 July, Airbus announced that the A321XLR has received its EASA type certification. This fall, the first A321XLR production aircraft is set to roll of the production line for delivery to launch customer Iberia, which will use its first aircraft on transatlantic flights.
The A220, meanwhile, is being produced at an unofficial rate of seven aircraft per month (our estimated rate was raised from six to seven this month), with a monthly production rate of 14 expected by 2026. Airbus is reportedly considering to introduce a stretch version of the A220.
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 this year. The A350 production rate was raised to six per month at the end of 2023 in line with Airbus’ announcements. Airbus expects to produce 10 A350s per month by 2026 and 12 by 2028.
Turning to the July orders review, in terms of reported bookings, Boeing had a good month and reported 72 gross orders from five different customers. Boeing reported a single cancellation in July (a 737 MAX), resulting in 71 net new orders. The largest order – by number of aircraft – was placed by California-based Aviation Capital Group (ACG), which booked 35 737 MAX jets, including 16 737-8s and 19 737-10s. In second place, we have Macquarie AirFinance with 20 737-8 MAXs (order placed at Farnborough), followed by 10 787-9 Dreamliners for Japan Airlines +10 options (Farnborough), and finally five 777Fs and two 737 MAXs also for undisclosed customers. Year-to-date, Boeing has accumulated 186 net new orders (228 gross orders), compared to 467 net new orders (579 gross orders) after the first seven months of last year. Last year’s figures include Paris Air Show held in June 2023, where the general ordering activity was much stronger than at Farnborough this year. In 2023, Boeing booked a total of 1,314 net new orders (1,456 gross orders) – before ASC 606 changes – compared to 774 net new orders (935 gross orders) in 2022. 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 addition to the above, at Farnborough Qatar Airways ordered 20 firm 777-9s (777X), Luxair ordered two firm 737-10 MAXs + options for two more, and National Air Cargo booked four firm 777 freighters. Also at Farnborough, Korean Air signed an MoU for 20 787-10s + 10 options as well as an MoU for 20 777-9s.
In July, Airbus booked orders from four customers for a total of 59 jets (gross orders) and reported two A350-1000 cancellations. The largest order (by # of aircraft) for 11 A321neos and 20 A350-900s was placed by Japan Airlines in Farnborough. Also, in July, an undisclosed customer booked 15 A321neos, followed by Virgin Atlantic with seven A330-900s (Farnborough), and Berniq Airways, a newly-established Libyan airline, ordering six A320neos (Farnborough). Year-to-date, Airbus has accumulated 386 gross orders (19 cancellations => 367 net new orders), compared to 1,101 net new orders (1,140 gross orders) after the first seven months of last year. In 2023, Airbus won the orders crown for the fifth consecutive year booking an astounding 2,094 net new orders (2,319 gross orders), compared to 820 net new orders (1,078 gross orders) in 2022. In addition to the above, on May 20, 2024, Saudia, the national flag carrier of the Kingdom of Saudi Arabia, and flyadeal, the Saudia Group’s low-cost carrier, signed a firm order for an additional 105 A320neo Family aircraft. The order comprises 12 A320neo and 93 A321neo narrow-body jets. The order has yet to be added to Airbus’ books. At Farnborough, VietJet booked 20 firm A330-900s, while Flynas – Saudi Arabia’s leading low-cost carrier – signed an MoU for as many as 75 A320neo Family jets and 15 A330-900s. Also, Abra Group, the holding company for Latin American carriers Avianca and GOL, signed an MoU for five A350-900s, followed by a Druk Air MoU for three A320neos and two A321neos (A321XLRs).
In total, 286 firm orders and commitments (MoUs and options) for commercial aircraft were announced at this year’s Farnborough. Airbus took the crown with 164 orders and commitments ahead of Boeing’s 118, and ATR with four. Only 124 of the bookings were firm orders of which 64 went to Airbus, 56 to Boeing and four to ATR. While Farnborough was rather quiet on the aircraft orders front, engine manufacturers CFM International, GE Aerospace, Pratt & Whitney, and Rolls-Royce booked orders for as many as 352, 296, 608, and 94 engines, respectively – or 1,350 combined.
At the end of July, Airbus reported a backlog of 8,565 jets, of which 7,655, or 89 percent, were A220 and A320ceo/neo family narrowbodies. Airbus’ all-time backlog record of 8,626 jets was set in March 2024. Both manufacturers will likely set additional backlog records this year. By the end of last month, Boeing’s backlog (total unfilled orders before ASC 606 adjustment) was 6,184 aircraft, of which 4,754, or 77 percent, were 737 NG/MAX narrowbody jets. Boeing’s all-time backlog record of 6,259 aircraft was, just like Airbus, set in March 2024. The number of Airbus aircraft to be built and delivered represents 9.9 years of shipments at the 2019 production level (the pre-pandemic level), or 11.7 years based on the 2023 total. In comparison, Boeing’s backlog would “only” last 7.7 years at the 2018 level (the most recent “normal” year for Boeing), or 11.7 years based on 2023 deliveries. Boeing’s book-to-bill ratio year-to-date, calculated as net new orders divided by deliveries, is 0.85 with Airbus coming in a bit higher at 0.92. This means that both manufacturers are currently tapping into their backlog. Boeing’s book-to-bill ratio last year was 2.49 with Airbus coming in even higher at 2.85. This means that both companies received well over two new firm orders for every aircraft delivered.
2024 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 2024, Forecast International’s analysts currently expect Boeing and Airbus to deliver 489 and 764 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.
In its current year guidance, Airbus expects to deliver 770 planes in 2024 (target reduced in June from 800), compared to 735 delivered in the previous year. Meanwhile, Boeing has decided to forgo issuing a 2024 production forecast as it focuses on safety and quality improvements in the aftermath of the Alaska Airlines incident in January. Boeing reported results for the second quarter on July 31 and says it is on track to return to 38 737 MAXs per month by the end of the year. Airbus reported H1 2024 results on July 30 and reiterated its target to deliver 770 commercial jets this year.
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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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.
