by J. Kasper Oestergaard, European Correspondent.
Boeing and Airbus each delivered 54 commercial jets in October 2016, compared to 58 and 49 during the same month last year, respectively. As of October 31, 2016, Boeing had delivered 617 commercial jets, trailing 2015’s comparable figure of 638 but in line with company expectations. Airbus, on the other hand, had delivered 516 jets, 21 deliveries ahead of last year.
In 2015, Boeing delivered 762 aircraft, ahead of Airbus’ 635, and both companies beat their 2015 delivery targets of 750-755 and ~630 aircraft, respectively. In 2014 and 2013, Boeing delivered a total of 723 and 648 jets, respectively, compared to Airbus’ 629 and 626. In late July 2016, Airbus reaffirmed its target of delivering at least 650 commercial jets in 2016, an increase of 15, or 2.4 percent, from 635 last year. Boeing, in contrast, has announced that deliveries could drop by 22, or 2.9 percent, to 740 from last year’s record of 762 deliveries.
In October 2016, Boeing delivered 34 737s, seven 777s, and 13 787s. Boeing currently plans to raise its 737 production rate from 42 per month today to 47 and 52 in 2017 and 2018, respectively. In early 2016, Boeing’s CEO, Dennis Muilenburg, announced that demand supports a further increase to 57 737s per month in 2019. Airbus is slowly ramping up deliveries of its A350 XWB and this, combined with a higher A320 production rate of 46 per month (commenced Q2 2016), means that the company is narrowing the gap in the deliveries race. In October 2016, Airbus delivered 41 A320s, six A330s, four A350s, and three A380s.
With four A350-900 deliveries in October, Airbus still has to deliver 20 of the new long-haul jets to meet its target of 50 for the year, which now seems highly unlikely. The company expects to deliver more than 100 A350s in 2018, when the production rate hits 10 per month.
In the orders race, Boeing had a strong month with 85 gross orders and seven cancellations (net of 78). Boeing’s October orders were led by Qatar Airways, which placed a much needed order for 10 777-300ERs as well as an order for 30 787-9s. Boeing also landed a key order from UPS for 14 747-8Fs, which lifted Boeing’s dwindling 747 backlog to 29 aircraft from 15. Airbus had a weak order haul in October and landed 19 gross orders (15 net new orders), including its first A319 order in 2016 – see full list of orders in table below. In 2015, Airbus booked a total of 1,036 net orders, while Boeing finished the year with 768 net new orders, or 268 fewer than Airbus. 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.
Airbus’ order backlog as of October 31, 2016, stands at 6,710 jets (of which 5,494, or 82%, are A320 family narrowbodies), ahead of Boeing’s 5,635 (of which 4,321, or 77%, are 737 narrowbody jets). The number of Airbus aircraft to be built and delivered represents a >10-year backlog (10.6 years of production). In comparison, Boeing’s backlog would “only” last 7.4 years at the 2015 production level.
It is looking increasingly likely that the massive backlogs accumulated by both manufacturers in recent years have peaked, with both companies facing their lowest order haul since 2009. Airbus is currently 159 aircraft below its all-time order book high, while Boeing is off by 178. Boeing was recently reported to target only 535 orders for 2016 in an internal company forecast – well below its original forecast of 740-745 jets. Furthermore, Boeing opted to leave list prices unchanged this year. The last time this happened was in 2001 and 2009. The prices set in July 2015 therefore continue to serve as basis for talks with customers.
It is getting increasingly likely that backlogs at both companies will decline in 2016, owing to slower GDP growth and low oil prices. According to both Airbus and Boeing, the demand for passenger aircraft is tied to growth in worldwide revenue passenger miles (RPMs), which again is highly correlated with global GDP growth. The decline in orders should not be a major source of concern for jet makers, however. Backlogs remain near all-time highs and will provide stability and growth for years to come. The main concern for both companies continues to be cost and managing extensive global supply chains.
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