Airbus Sets New All-Time Backlog Record as Boeing 777X Makes First Flight
by J. Kasper Oestergaard, European Correspondent, Forecast International.
In January 2020, Boeing and Airbus delivered 13 and 31 commercial jets, respectively, compared to 46 and 39 deliveries in the same month last year. Boeing’s deliveries continue to suffer in the aftermath of two 737 MAX crashes and the subsequent deliveries halt and grounding of the fleet. Deliveries of 737 MAX aircraft have been suspended since March 2019. For the full year 2019, Boeing delivered 380 aircraft, while Airbus set a new all-time annual record, handing over 863 jets. Before this, Boeing had retained a deliveries lead over Airbus since 2012. In 2018, Boeing delivered 806 jets (763 in 2017), with Airbus handing over 800 (718 in 2017).
On December 16, Boeing announced its decision to temporarily suspend 737 MAX production from January 2020. Prior to this, Boeing had been producing 737 MAX jets at a reduced rate of 42 aircraft per month and thereby built up an inventory of aircraft ready to be shipped. In the meantime, test flights and software changes continue. Boeing has carried out more than 1,100 test flights with new MCAS software for a total of 2,100 flight hours.
On January 10, the FAA announced that it remains focused on following a thorough process for returning the 737 MAX to service. The FAA continues to work with other international aviation safety regulators to review the proposed changes to the aircraft. According to the FAA, their first priority is safety, and no clear timeline for the work’s completion has been set. Boeing is currently estimating that the grounding of the 737 MAX will be lifted during mid-2020.
Boeing says it will be a few years before the company will be able to hit the planned monthly production rate of 57 aircraft. American Airlines and United Airlines have pulled the 737 MAX from their schedules until August and September, respectively. On January 30, Spirit AeroSystems, the 737 MAX fuselage manufacturer, announced it had reached an agreement with Boeing for a restart of production and slow ramp-up of deliveries throughout the year to reach a total of 216 737 MAX shipsets delivered in 2020. To date, in total, Boeing has delivered 387 737 MAX jets. Of these, 256 were delivered in 2018, up from 74 in 2017.
In January, Boeing delivered three 737NGs, two 767s, two 777s, and six 787s. Boeing raised the monthly Dreamliner production rate to 14 aircraft during 2019 and handed over 158 787s last year – a new annual record. The company delivered 145 787s in 2018, up from 136 in 2017. The 787 production rate will be reduced from 14 to 12 aircraft per month in late 2020 and is expected to be further adjusted to 10 per month in early 2021, with a return to 12 per month in 2023. The 777 program awaits the 777X’s service entry. The first flight of the 777X was completed on January 25, 2020, and first delivery is targeted for 2021.
In January, Airbus delivered two A220s, 26 A320s (1 ceo / 25 neo), one A330, and two A350s. Airbus increased the official A320 production rate to 60 aircraft per month during 2019. The company is targeting an additional raise to 63 jets per month from 2021. Airbus is also discussing a further ramp-up with its supply chain and considers increasing the rate by one or two in 2022 and the same in 2023. This could bring the A320 production rate up as high as 67 aircraft per month by 2023 – equal to 804 jets per year, putting the company within reach of the 1,000 jets per year delivery mark.
For the full year 2019, Airbus handed over 642 A320 family aircraft, of which 551 were A320neos. This compares to a total of 386 A320neo Family aircraft delivered in 2018, up from 181 and 68 in 2017 and 2016, respectively. In 2019, Airbus delivered a record 112 A350s, up from 93 and 78 in 2018 and 2017, respectively. Airbus increased the monthly A350 production rate to 10 during 2019. Airbus has been considering a further increase up to 13 A350s per month, but for 2020, the A350 is expected to stay at a monthly rate of 9-10 aircraft. Airbus expects to deliver 40 A330 jets in 2020, down from 53 in 2019.
Turning to the orders race, Boeing reported no new orders in January and zero cancellations. For the full year 2019, Boeing accumulated 243 gross orders (330 cancellations => -87 net new orders). For the full year 2018, Boeing booked 893 net new orders and 1,008 gross orders.
Airbus had a very strong month in January, booking 296 gross orders and 22 cancellations for a net of 274. The largest January booking was Air Lease Corporation’s order for 50 A220-300s, 52 A321neos, and one A350-900. Of the A321neos, 25 were “vanilla,” and 27 were A321XLRs. The order was originally announced as a Letter of Intent (LOI) at Paris Air Show in June 2019. Nearly as large was Spirit Airlines order for a mix of 100 A320neo family aircraft (47x A319 / 33x A320 / 20x A321). Spirit’s order more than doubled Airbus’ backlog of the A319neo, the smallest A320 version, to now 82 vs. 35 by the end of 2019. The order was originally announced as a Memorandum of Understanding (MoU) in October last year.
Other significant orders were China Aircraft Leasing Group’s (CALC’s) order for 40 A321neos, BOC Aviation’s order for 20 A320neos, and Air France’s order for 10 A350-900s. For the full year 2019, Airbus landed 1,131 gross orders (363 cancellations => net of 768) thereby retaking the orders crown from Boeing. In 2018, Airbus booked a total of 747 net new orders and 831 gross orders, thereby losing the 2018 orders race. Prior to this, Airbus had retained an orders lead over its rival every year since 2012.
At the end of January, Airbus reported a backlog of 7,725 jets – a new all-time backlog record – of which 6,800, or 88%, were A220 and A320ceo/neo family narrowbodies. The company’s previous all-time backlog record high of 7,577 jets was set in December 2018. By the end of January 2020, Boeing’s backlog (total unfilled orders before ASC 606 adjustment) was 5,612 aircraft (of which 4,582, or 82%, 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 nine years of shipments at the 2019 production level. In comparison, Boeing’s backlog would “only” last seven years at the 2018 level, which we use as proxy for 2019 due to the drop in 737 MAX deliveries. This year to date, Boeing’s book-to-bill ratio, calculated as net new orders divided by deliveries, is zero (no orders received). Airbus’ book-to-bill ratio is 8.84, thanks to a very strong start in the orders race. In 2019, Boeing’s book-to-bill ratio was negative, due to more cancellations than orders, while Airbus reported a book-to-bill of 0.89.
Forecast International’s Platinum Forecast System® is a breakthrough in forecasting technology that – among many other features – provides 15-year production forecasts. The author has used the Platinum Forecast System to retrieve the latest delivery forecasts and, for 2020, Forecast International’s analysts expect Boeing and Airbus to deliver 568 and 913 large commercial jets, respectively.
Boeing was expected to provide some form of guidance for 2020 on January 29 in connection with the release of its 2019 earnings report; however, the 737 MAX uncertainty will likely mean management will be cautious and avoid providing an aircraft delivery target for the year. On February 13, Airbus reported 2019 earnings and announced a target of 880 commercial aircraft deliveries in 2020, which is up 2% from 863 in 2019.
Joakim Kasper Oestergaard is Forecast International’s AeroWeb and PowerWeb Webmaster and European Editor. In 2008, he came up with the idea for what would eventually evolve into AeroWeb. Mr. Oestergaard is an expert in aerospace & defense market intelligence, fuel efficiency in civil aviation, defense spending and defense programs. He has an affiliation with Terma Aerostructures A/S in Denmark – a leading manufacturer of composite and metal aerostructures for the F-35 Lightning II. Mr. Oestergaard has a Master’s Degree in Finance and International Business from the Aarhus School of Business – Aarhus University in Denmark.