Not a single manufacturer managed to meet the annual targets last year. Airbus aimed to deliver 720 aircraft, but in reality managed to deliver “only” 661. Boeing fell short of the goal of seven hundred delivered aircraft by even 220 pieces. Production in the factories of both companies was mainly affected by disrupted supply chains, a lack of parts and qualified workers.
“Boeing reported weaker-than-expected results. This is mainly due to problems with the production and deliveries of the 737 MAX aircraft, but also the 787 Dreamliner. Above all, the resumption of MAX production is not without problems, the production line is facing a whole series of production interruptions and unexpected costs. Technical problems also appeared with the 787 Dreamliner type, which is why the profitability of the production of this type was weaker,” says aviation industry expert Petr Kováč from EY.
Although Boeing is managing to increase sales, it received almost three hundred more orders for commercial aircraft last year – 808 in total – but even that was not enough for Airbus’ 820 orders. The European colossus defeats Boeing mainly in the segment of smaller single-aisle aircraft, which, according to the majority opinion in the industry, belongs to the future – in contrast to the dying giants such as the Airbus A380 or Boeing 747.
That there is a lot of interest in the market for aircraft is illustrated by the recently announced orders for the airline company Air India. It announced a contract for the purchase of 470 aircraft, the largest commercial order of any airline in history. The Boeing he goes for according to CNN for the third largest order in history, will deliver 220 Airbus 250 aircraft to Air India’s hangars.
Even with this order, Boeing continues to make a comeback after suffering an extremely significant reputational loss when two of its best-selling 737 MAX planes suffered catastrophic accidents and subsequent groundings.
The market continues to have a robust surplus of demand for aircraft over the capacities of the two main manufacturers. Boeing has a backlog of 4,500 aircraft worth $404 billion, of which $330 billion is for its commercial aircraft division. Airbus even lists over seven thousand aircraft in the pending orders item. The workload of the factories is guaranteed by both players for many years to come.
Both giants are therefore focusing on increasing production, which appears to be by far the biggest problem. Boeing has almost doubled the recent target of the number of monthly produced smaller machines to fifty, Airbus intends to produce even 75 aircraft per month in this segment. He mainly wants to increase the production of the key A320neo model. But both manufacturers face massive supply chain disruptions. The number of engines is limited, bottlenecks are, among other things, castings and forgings. It will therefore take several years to restore standard production.
The lack of experienced and qualified labor is also one of the biggest “brakes” to the acceleration of production. “It’s a gigantic problem in North America. If you find an honest supplier, they will tell you that they need probably a fifth more manpower,” he quotes web barrons By Ron Epstein, an analyst at BofA Securities. Before the onset of the pandemic, 308,000 Americans worked in aircraft manufacturing, compared to 34,000 fewer than last spring. Workers in factories have been increasing since then, but at an insufficient pace.
Due to the delayed deliveries of the ordered new generation aircraft and the shortage of aircraft, the airlines are getting into trouble. It is therefore returning to service aircraft that were retired as inefficient during the pandemic – for example, the four-engine Airbus A380 and A340.
“Due to lower capacities and great interest in travel, ticket prices have risen significantly. Airlines focus primarily on the routes whose operations generate the most profits and postpone the renewal of less profitable routes. This is reflected in the fact that, compared to the time before the pandemic, the range of routes is still narrowed and a large part of the routes operate with a lower frequency of flights,” says Tomáš Hampl, head of the Airways.cz website. In addition to the planes, the airlines also lack the necessary number of pilots and flight staff, and the airport does not find adequate numbers of staff to check in passengers.
“After the end of the pandemic, due to the decline in passenger business, carriers are also focusing more on holiday lines to tourist destinations. This increases the number of lines that are operated only seasonally,” adds Hampl.
The results of the future rivalry between Airbus and Boeing will depend mainly on the ability of both giants to renew standard production, notes Kováč. “The important moment that Boeing is waiting for is the resumption of deliveries of 737 MAX machines to China. Supplies were suspended for four years. The delivery of already manufactured aircraft would at least empty Boeing’s warehouses,” adds Kováč. In the future, according to him, it can be expected that Boeing will fully return to the competition between the two dominant manufacturers.
In addition to China and India, the future of business in sanctioned and embargoed Russia will also be decisive. Airlines there are facing a shortage of planes and spare parts. But it remains unclear whether the market will be reopened.
