Both Companies Report Strong Deliveries, Weak Orders
by J. Kasper Oestergaard, European Correspondent, Forecast International.
Boeing and Airbus delivered 48 and 68 commercial jets in November 2022, compared to 34 and 58 deliveries, respectively, in the same month last year. Year to date, Boeing and Airbus have delivered 411 and 565 aircraft, compared to 302 and 518, respectively, in the first 11 months of 2021. So far this year, Boeing and Airbus are 109 and 47 deliveries ahead of last year’s totals, respectively.
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. With the last month of the year remaining, 2022 has, as expected, been another year of recovery for the commercial aircraft manufacturing industry, despite supply chain challenges, inflation, macro-economic weakness, labor shortages, and 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 2025. The past three years have been extremely challenging for Boeing but, despite Dreamliner quality issues and 777X delays, the outlook is mostly bright. Dreamliner deliveries have resumed and the 737 MAX is approved to fly in nearly every country. The aircraft, however, has not yet returned to commercial service with Chinese airlines despite the fact that the Civil Aviation Administration of China (CAAC) ungrounded the 737 MAX in December of last year. On October 30, China Southern Airlines canceled two 737 MAX flights that would have marked the aircraft’s return to commercial service with Chinese airlines. On October 10, a Boeing 737 MAX flight by MIAT Mongolian Airlines landed in Guangzhou – the first commercial flight by the model to China since the aircraft’s grounding in March 2019. Earlier this year it was announced that Boeing had begun to remarket some 737 MAX jets earmarked for Chinese customers. Ongoing political tensions between the United States and China are impeding deliveries, and Boeing is facing perhaps its most difficult situation since entering the Chinese market half a century ago. Chinese airlines are no longer ordering its jets, and hundreds of new aircraft cannot be delivered to Chinese customers. On top of that, Boeing is stuck with a completions and delivery center in Zhoushan that it has no need for until the political situation improves. The Zhoushan plant was scaled to accommodate 100 aircraft annually.
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 November 2022, Boeing delivered 48 jets, including 33 737s (32 MAX / 1 NG), one 747, six 767s, two 777s, and six 787s. Since June of this year, the 737 program has been producing aircraft at an official monthly rate of 31 per month, up from 27. The rate of 27 per month was maintained between November 2021 and May 2022 and, prior to that, the monthly rate was just 19. Despite the recent 737 rate increase, ongoing supply chain issues are likely to persist for the time being. Boeing had been considering a boost in 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, but these plans have now been postponed. In connection with the release of Boeing’s third quarter 2022 earnings, the company announced that the monthly delivery trend is expected to remain in the low-30s into next year. Boeing ended the third quarter with 270 737 MAX jets in inventory, down 20 from Q2 2022. At present, Boeing’s main supply chain headache is its engine supply; however, the situation improved somewhat during the third quarter. It has been reported that a shortage of structural castings used in the CFM LEAP engine is the main bottleneck. Boeing expects that supply chain constraints will remain a significant challenge in 2023.
On August 10, deliveries of the Boeing 787 Dreamliner were resumed following a suspension of shipments that lasted nearly 16 months. Boeing suspended Dreamliner deliveries in May 2021 for the second time in less than a year. The current 787 production rate is two aircraft per month, and Boeing expects to continue at this rate for now but will likely return to five per month over time. Boeing ended the third quarter with 115 Dreamliners in inventory, down five from Q2 2022.
The 777 program was expected to get a new addition in late 2023 with the first delivery of the 777X, but in April of this year 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 November 2022, Airbus delivered 68 jets, including six A220s, 53 A320s (all NEO), four A330s, and five 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 early 2024 (recently pushed back from mid-2023 due to supply chain challenges). Also, Airbus is working with its supply chain to increase the A320 production rate to 75 aircraft per month in 2025. The newest A320 NEO family addition, the A321XLR, successfully accomplished its first flight in June. 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 six aircraft per month, up from five at the beginning of the year – with a monthly production rate of 14 envisioned by the middle of the decade. The A350 production rate currently averages five per month and was expected to be increased to six by early 2023. However, the rate increase will likely be delayed until the end of 2023 due to sanctions on Russia and a legal fight between Airbus and Qatar Airways over A350 paint/surface issues. Based on past announcements from Airbus and deliveries figures during the past few months, it is believed that the A330 production rate was recently increased from two to three aircraft per month.
Turning to the November orders review, Boeing had a quiet month and booked orders from three customers for a total of 21 jets. The company reported no cancellations. The largest order was for 18 777 freighters placed by an undisclosed customer. Also, Japan ordered two KC-46 tankers (based on the 767-2C), followed by an order for a single 767-300F for FedEx Express. Year to date, Boeing has accumulated 571 net new orders (685 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 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 November, Airbus booked 29 orders from six different customers and reported 14 cancellations (12 A320neos and two A321neos), for a total of 15 net new orders. Condor, a German charter airline, ordered four A320neos and six A321neos, followed by British Airways, which booked four A320neos and two A321neos. Also in November, Croatia Airlines booked six A220-300s. Year to date, Airbus has accumulated 825 net new orders (1,062 gross orders), surpassing both 2021 gross orders and net new 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 were included, Boeing would have come out ahead with 535 net new orders.
At the end of November 2022, Airbus reported a backlog of 7,344 jets, of which 6,725, or 92 percent, were A220 and A320ceo/neo family narrowbodies. This is 381 aircraft below the company’s all-time backlog record of 7,725 aircraft set in January 2020. By the end of November, Boeing’s backlog (total unfilled orders before ASC 606 adjustment) was 5,296 aircraft, of which 4,262, 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 8.5 years of shipments at the 2019 production level (the pre-pandemic level), or 12.0 years based on the 2021 total. In comparison, Boeing’s backlog would “only” last 6.6 years at the 2018 level (the most recent “normal” year for Boeing), or 15.6 years based on 2021 deliveries. In 2022 to date, Boeing’s book-to-bill ratio, calculated as net new orders divided by deliveries, is 1.39. Airbus’ book-to-bill ratio is 1.46. 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 407 and 668 commercial jets, respectively. Compared to the 2021 level, this is a 19.7 percent increase for Boeing and a 9.3 percent increase for Airbus. Please note these figures exclude militarized variants of commercial platforms such as Boeing’s P-8 Poseidon and KC-46 Pegasus and Airbus’ A330 MRTT tanker.
Boeing released its third quarter 2022 results on October 26 and now expects to deliver 375 737 MAX jets, down from its previous guidance in the low 400s. This means that the company has to deliver 54 737 MAXs in the month of December alone. Airbus released Q3 2022 earnings on October 28 and maintained its target of 700 commercial aircraft deliveries this year. However, on December 6, the company announced that 700 was now out of reach. However, according to Airbus, the final figure is not expected to fall materially short of the “around 700” delivery target.
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/2022-10-26-Boeing-Reports-Third-Quarter-Results
- https://www.airbus.com/en/newsroom/press-releases/2022-10-airbus-reports-nine-month-9m-2022-results
- https://www.airbus.com/en/newsroom/press-releases/2022-12-airbus-no-longer-maintains-2022-commercial-aircraft-delivery-target
- https://boeing.mediaroom.com/2022-12-07-Final-Boeing-747-Airplane-Leaves-Everett-Factory
- https://www.condor.com/eu/fly-with-us/condor-partner/our-new-look.jsp
- https://seekingalpha.com/news/3916662-boeing-will-overcome-supply-chain-issues-slowly-to-keep-up-with-the-delivery-schedule-ceo
- https://seekingalpha.com/article/4549454-boeing-company-ba-q3-2022-earnings-call-transcript
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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.
