Airbus, Boeing Report Diminished Deliveries
- Airbus noted that although traffic had begun to recover slightly, new viral outbreaks and ever-changing travel restrictions have resulted in airlines paring back. The inability to forecast the future is one reason why the airframer, which first withdrew its full-year financial guidance in March, still won’t offer any for the balance of the year or the first quarter of next year.
Airbus delivered 341 aircraft in the first nine months of the year, or 40% fewer than the same period last year. These include 282 A320-family aircraft. In September, it delivered 57 aircraft. Airbus is keeping a wary eye on Brexit and fears the disruption from Britain leaving the E.U. with no exit deal. Airbus manufactures wings and other components at facilities in the U.K. “The outlook for global air traffic recovery has deteriorated, indicating that the crisis is far from over,” CEO Guillaume Faury said during the company’s nine-month earnings presentation.
And the company is seeing a bifurcated recovery. Airlines with large domestic markets and little international exposure are faring better than those, like “national carriers,” which have much of their exposure on overseas routes, he said. The company has 135 aircraft that are built but awaiting delivery. The majority of these do have customers, but the airframer is in negotiations to defer deliveries.
Still, Faury admitted that it had “low double-digit” white tail aircraft that do not now have customers and must be re-marketed. Airbus is holding the production rate of its A320-family aircraft to 40 per month but this rate could rise in the second half of next year if demand begins to return.
- Boeing, after grappling with the grounding of its best-selling aircraft, now faces a commercial aviation market that won’t recover for at least three years, CEO David Calhoun said Wednesday on the company’s third-quarter earnings call. This is slightly more optimistic than IATA’s forecast, which holds that the industry won’t return to 2019 traffic levels until 2024.
But Boeing is encouraged by the recovery in China, where domestic traffic is approaching last year’s levels. Domestic passenger traffic in the U.S., however, is only 49% of last year’s levels, while international traffic is only 12%. Still, the company sees glimmers of hope in airlines re-fleeting to retire older, less efficient aircraft, Calhoun said. Boeing earlier this year said it would reduce staffing by 10% and has already reduced its workforce by almost 20k employees. The company has had two rounds of voluntary separation and one round of involuntary layoffs. It now expects another 7k employees to leave the company through a combination of voluntary separation and layoffs by the end of the year. Boeing’s total headcount is expected to be about 130k employees by year’s end.
The company is adjusting to its diminished market by moderating its aircraft-production rates. The B737 family will return to its rate of 31 aircraft per month by 2022. Production of B787 aircraft is expected to fall from 10 per month now to six per month next year, and B777-family aircraft will go from five per month this year to two per month next year. The company also consolidated B787 production at its South Carolina facility. Boeing expects the B777X to enter service in 2022, pending regulatory review.
It’s encouraged by the regulatory review of the grounded B737 MAX, Calhoun said. The FAA has said it could re-certify the aircraft by year’s end, and American is already scheduling the type for December flights. Boeing has 450 B737 MAXs in storage awaiting delivery to airlines. The company may have to put an unspecified number of those aircraft back on the market, due to order cancellations and deferrals, Calhoun said. The company has updated its flight-control software and is awaiting regulatory clearance. Calhoun admitted that the B737 MAX’s grounding has cost the company market share in the critical narrowbody segment. “When you don’t produce an aircraft for a year and the other guy [Airbus] does, you take a big hit with respect to [market] share,” he said. He further admitted that the A321 fills a niche that Boeing does not.
The company will return to work on the NMA mid-market aircraft concept, but he did not specify a time. Boeing, for the record, delivered 28 commercial aircraft in the quarter, compared with 62 for the same period last year.