By J. Kasper Oestergaard, European Correspondent.
Airbus Delivers 10th A350 XWB – Boeing 777 Rate Cut Looming
Boeing and Airbus delivered 58 and 49 commercial jets in October 2015, respectively, compared to 77 and 49 in September. In 2015 to date, Boeing has delivered 638 aircraft, ahead of Airbus’ 495. Boeing strengthened its lead in the 2015 delivery race to 143 units, compared to 134 units in September and 106 units in August. In 2014 and 2013, Boeing delivered a total of 723 and 648 jets, respectively, compared to Airbus’ 629 and 626. Boeing has been able to increase deliveries in recent years mainly due to the ramp-up in production of the 787 Dreamliner. Airbus is slowly ramping up deliveries of its A350 XWB and this, combined with a higher A320 production rate of 46 per month from Q2 2016, means that the company will soon begin narrowing the gap in the deliveries race. In October, Airbus delivered four A350s and has now delivered 10 aircraft to date (the first aircraft was delivered in December 2014). The company expects to deliver a total of 15 A350s in 2015 and more than 100 in 2018, when the production rate hits 10 per month.
It is expected that Boeing will deliver 750-755 jets this year, while Airbus’ deliveries will only be slightly higher than last year’s 629 units.
In the orders race, Airbus had a disappointing month with only 35 net new orders, increasing its 2015 total net new orders to date to 850. During the month of October, China Aviation Supplies Import & Export Group Corporation (CASGC) ordered 30 A330-300s. In October, Boeing booked orders for 59 jets (42 net new orders). Norwegian ordered 19 787-9s, while Oman Air and GOL placed orders for 20 and 9 737 MAX aircraft, respectively. Boeing has now booked 489 net new orders this year to date. In both 2014 and 2013, Airbus won the orders race with 1,456 and 1,503 net new orders, respectively, ahead of Boeing with 1,432 and 1,355. In 2015, net new orders for both Boeing and Airbus will most likely fall from 2014 levels, among other factors due to the sharp decline in the price of oil. Cheap oil makes it financially more attractive for airlines to keep operating older, less fuel-efficient aircraft.
With the recent jump in net orders from August to October, Airbus’ order backlog now stands at 6,741 jets (of which 5,466, or 81%, are A320 narrowbodies), ahead of Boeing with 5,640 (of which 4,219, or 75%, are 737 narrowbodies). While Boeing has begun to tap its backlog, Airbus’ order book keeps growing, although slightly down this month.
Risk of Boeing 777 Rate Cut
Both Boeing and Airbus are facing challenges going forward. Boeing is struggling to bridge the gap in production between its current-generation 777 (777F and 777-300ER) and the future 777X to maintain the current production rate of 8.3 per month (100 per year). The 777 is a very profitable aircraft for Boeing and an important “cash cow.” It will be difficult for the company to bridge the gap, as not enough orders for the current-generation 777 are coming in. In 2015, Boeing has only booked 34 orders for the 777 (16 777Fs and 18 777-300ERs). It is more than likely that the company will be forced to cut the production rate, first to seven per month (84 per year) and later to six per month (72 per year).
Airbus Ramping Up A320 and A350 Output
Airbus faces challenges now that production and deliveries of the A350 XWB will ramp up in coming years. The company plans to produce 10 aircraft per month by 2018. Also, the company plans to increase the monthly production rate of the A320 to 46 next year and 60 by mid-2019. Airbus has officially opened its A320 final assembly line in Mobile, Alabama, the company’s first production site in America. Deliveries from Mobile are scheduled to begin in 2016 and reach an annual output of 40 and 50 A320 series jets by 2018.
A380 Uncertainty
Another major Airbus challenge is with regard to the future of the A380 as the company considers launching a NEO and stretch variant of the aircraft. The company has to make a tough choice: either 1) invest billions in developing the NEO and stretch to reduce the aircraft’s cost per seat mile; or 2) phase out the platform and terminate production when orders run out in five years. In 2015 to date, neither Boeing nor Airbus have booked new orders for their largest aircraft, the 747-8 and A380, respectively.
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