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Gonzalo
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Boeing And Airbus Overwhelmed By Too Many Orders?

Thu Apr 18, 2013 5:28 pm

Recent statements from the DY CEO :

"We'd like to get more planes but it's impossible. Factories are overbooked"
"Thank god we booked our order (last year). A lot of big US airlines have ageing fleets and I just don't see how they'll manage to renew them before 2020."

Making a quick search here in A.net one can confirm that, lately, every few months or even weeks we see threads with big orders for many airlines, and considering both Airbus and Boeing have practical limitations ( limited space in their factories, limited number of people with the knowledge required by the industry, etc. ), I wonder how A & B will keep the pace with their customers. I'm aware that the aircraft orders are always placed years before the expected delivery, but the aircraft manufacturing is also subject to several threats ( strikes, shortage of some components, design flaws needing attention )

So I think it is fair to ask, would Airbus and Boeing be capable of dealing with this scenario ?? Or is it a big backlog possible in the future ? ( Implications of a serious backlog : big compensations / big cancellations, loses in customer confidence/fidelity...)


Thoughts ??

Regards.

G.

[Edited 2013-04-18 10:32:48]

[Edited 2013-04-18 10:35:14]
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Stitch
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Thu Apr 18, 2013 5:32 pm

Evidently some 737 MAX customers wanted to order more frames then they did, but lack of production slots have hampered that and they will (hopefully) have to place follow-on orders later.

With a larger production queue, the impact on Airbus' customers for the A320neo may not be as hard, but now that Airbus have exhausted most (if not all) of that lead, future customers wishing to order large tranches of A320neos (easyJet?) might find their desires dampened by reality.
 
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Aesma
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Thu Apr 18, 2013 8:03 pm

Well Airbus just started building a 4th A320 production line for a reason.
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apruzesse13
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Thu Apr 18, 2013 8:08 pm

This is today situation. But:

1)many airlines, especially Asian andlessors have built order books based on overoptimistic economic growth assumptions
and
2) an economic slowdown will translate into lower oil prices, making used aircraft competitive again with new ones

i would not be surprised to see a lot of order deferrals in not too distant future
 
nomadd22
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Thu Apr 18, 2013 8:16 pm

Too many airlines predicting too much growth and planning on getting more of that growth than they're going to get.
Boeing and Airbus will do their best to predict how many planes will actually be needed. If they guess low, older planes will stay in service longer. If they guess high, maybe competitive pricing and layoffs.
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Thu Apr 18, 2013 8:21 pm

I don't see a problem as long as fuel prices remain high. Both Boeing and Airbus are overbooked and it's not like there is a third manucfacter out there where you can go shopping for a > 150 class seater. You just have to place your order at the end of the row.

There is of course one big threat. Analysts predict that oil prices will crash. If that happens, airlines will cancel their orders and will pickup old frames out of the desert. Boeing and Airbus will then have a big problem with their massive high production rates.

[Edited 2013-04-18 13:24:58]
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Stitch
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Thu Apr 18, 2013 8:26 pm

Quoting KarelXWB (Reply 5):
There is of course one big threat. Analysts predict that oil prices will crash. If that happens, airlines will cancel their orders and will pickup old frames out of the desert. Boeing and Airbus will then have a big problem with their massive high production rates.

I wonder if Boeing and Airbus are not hedging themselves for such an event by "only" going to 42 deliveries a month?

Airbus has done quite well with their extra A320 production capacity and between TJN and MOB, they could probably push upwards of 60 airframes a year out.

And while Boeing has committed to MAX production in Renton, once they peaked that line at 42 they would have a legitimate case for opening a second line in CHS to go higher.

So Airbus and Boeing could conceivably push production even higher to sell more A320neos and 737 MAX, but neither seems to be willing to take that risk.
 
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Gonzalo
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Thu Apr 18, 2013 8:56 pm

Quoting nomadd22 (Reply 4):
Boeing and Airbus will do their best to predict how many planes will actually be needed.

Well, the numbers they published the last years are high IMHO. They talk about 33.000 new planes by 2030.

Quoting Stitch (Reply 6):
And while Boeing has committed to MAX production in Renton

How do you see Airbus and Boeing regarding how "exposed" are they to an external shock ? Boeing and Airbus are different in many aspects, but one of the most notorious differences is the nature of Airbus as a multi-national company with parts of the aircraft being manufactured in different countries, while almost all the Boeing ( civil ) products are in the orbit of Seattle. Could this Boeing issue of *all the eggs in the same basket * pose some additional risk for them ?

Rgds.
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Thu Apr 18, 2013 9:25 pm

An interesting position. Excess demand, but not enough supply.

I suppose this could be evidenced by AA's split order. I wonder if Boeing or Airbus had singularly been able to fill AA's needs if that split would have happened. Probably not..

It certainly seems like we could use a 3rd or 4th major airframe manufacturer, but the barriers to entry are too high.
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bonusonus
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Thu Apr 18, 2013 11:15 pm

Seems like a good opportunity for the CSeries, Comac, etc.

CSeries is closest though, just needs to prove its specs.
 
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Gonzalo
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Fri Apr 19, 2013 1:21 am

Quoting ghifty (Reply 8):
It certainly seems like we could use a 3rd or 4th major airframe manufacturer, but the barriers to entry are too high.

I remember long time ago I asked about the chance of Embraer building something larger than the E-190's and the answer was basically no. They feel comfortable with their business and you need a "giant" investment to allow the design/development/construction of larger planes. Probably ( others like BBD, Sukhoi ) are in the same position...

Rgds.
G.

[Edited 2013-04-18 18:23:44]

Here is the thread about Embraer , it was only 7 months ago, not so "long time ago"....
Will Embraer Ever Build A Plane Larger Than E190? (by Gonzalo Sep 3 2012 in Civil Aviation)#28


[Edited 2013-04-18 18:28:01]
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Fri Apr 19, 2013 2:14 am

Quoting Gonzalo (Reply 7):
while almost all the Boeing ( civil ) products are in the orbit of Seattle.

Final Assembly, sure. But most of the planes' parts come from somewhere else.

Just look at where some of the 737 parts come from

Fuselage, engine nacelles and pylons - Spirit AeroSystems (formerly Boeing), Wichita.
Slats and flaps - Spirit AeroSystems (formerly Boeing), Tulsa.
Doors - Vought, Stuart, FL.
Spoilers - Goodrich, Charlotte, NC.
Vertical fin - Xi'an Aircraft Industry, China.
Horizontal stabiliser - Korea Aerospace Industries.
Ailerons - Asian Composites Manufacturing, Malaysia.
Rudder - Bombardier, Belfast.
Tail section (aluminium extrusions for) - Alcoa / Shanghai Aircraft Manufacturing, China.
Main landing gear doors - Aerospace Industrial Development Corp, Taiwan.
Inboard Flap - Mitsubishi, Japan.
Elevator - Fuji, Japan.
Winglets - Kawasaki, Japan.
Fwd entry door & Overwing exits - Chengdu Aircraft, China.
Wing-to-body fairing panels and tail cone - BHA Aero Composite Parts Co. Ltd, China.

from http://www.b737.org.uk/production.htm
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Fri Apr 19, 2013 2:27 am

Quoting bonusonus (Reply 9):
CSeries is closest though, just needs to prove its specs.

Theoretically, yes. Reality, no.

Quoting Gonzalo (Reply 10):
I remember long time ago I asked about the chance of Embraer building something larger than the E-190's and the answer was basically no.

Yes, EMB definitively answered that question in January with the announcement of the GTF powered next gen Ejets
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Fri Apr 19, 2013 3:20 am

Quoting apruzesse13 (Reply 3):
i would not be surprised to see a lot of order deferrals in not too distant future

Or cancellations. I don't think the lines will stop, but it's odds on that not all of those planes are going to be delivered.
 
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Fri Apr 19, 2013 5:39 am

There are going to be a lot of secondhand airdraft soon. Once upon a time these went to third world countries who couldn't afford shiny new aircraft. These days Its Delta who are picking them up.
 
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Fri Apr 19, 2013 5:43 am

Boeing should build a 777 line in Dubai. Problem Solved.
Ditto with Airbus and the A380.
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Fri Apr 19, 2013 6:55 am

Quoting TWA772LR (Reply 15):
Boeing should build a 777 line in Dubai. Problem Solved.
Ditto with Airbus and the A380.

Any reason why it should be Dubai? That country has basically no engineering tradition. If you think about Emirates, the delivery flight is no big deal...
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Fri Apr 19, 2013 7:27 am

I remember the gloomy predictions at the start of the Global Financial Crisis - the common 'wisdom' at the time was that both Airbus and Boeing would lose 25-33% of their backlog through cancellations. Not even close.

If Airbus and Boeing can't cope with their large backlogs, I don't see anyone else providing relief for the airlines.
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Fri Apr 19, 2013 8:51 am

17 replies to this thread... and nobody has mentioned the obvious solution of a free economy?

Why don't Airbus and Boeing price their planes higher so they earn more per frame and keep the backlog shorter? The added advantage for the airline would be sooner availability for new orders. Win-win.
Instead Boeing gives their planes to Ryanair for free and to others at huge discounts. I'm confused.

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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Fri Apr 19, 2013 10:52 am

Quoting TWA772LR (Reply 15):
Ditto with Airbus and the A380.

Disagree with the A380, it's the most complex plane in the world you need a massive amount of investment logistics,jigs and huge assembly building.

Not to talk the skills and experience needed from the people building it.

I think you would need to invest like a billon or more for a second assembly line.
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Fri Apr 19, 2013 11:22 am

Quoting Birdwatching (Reply 18):
17 replies to this thread... and nobody has mentioned the obvious solution of a free economy?

Why don't Airbus and Boeing price their planes higher so they earn more per frame and keep the backlog shorter? The added advantage for the airline would be sooner availability for new orders. Win-win.
Instead Boeing gives their planes to Ryanair for free and to others at huge discounts. I'm confused.

Soren

It's called competition. And, collusion between Airbus and Boeing to raise prices would be illegal. Higher prices would also encourage other manufacturers to get in the business. There isn't any serious competition now because no other company can match Boeing or Airbus for quality and pricing.
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Fri Apr 19, 2013 12:40 pm

I can't help but think that this trend of huge orders is a big bubble. In addition to what other have already said about airlines grossly over estimating the growth, I think there are also other myopic outlooks that are influencing this trend
- Big orders leading to bigger discounts. Take 500 of each type, get 50% off list price.
- Financing easily available. EXIM banks from OEM countries are ready to bankroll the order for other macro economic goals.

So order big now to reserve the slots. There is very little downside to the airline. If things go planned they are well set in terms with a very young, efficient and cheap fleet. If things do not go as planned, walk away. The airline might lose a deposit but then may be will just enter Ch 11 and come out clean again.

It's ultimately the tax payers who are going to be on the hook.
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Fri Apr 19, 2013 12:46 pm

it's my lay-person's opinion, but i do think the world could use a third major airline manufacturer. what are the chances that either russia or china find a way to fill this void?
 
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Fri Apr 19, 2013 12:55 pm

Quoting tockeyhockey (Reply 22):
what are the chances that either russia or china find a way to fill this void?

Low, IMHO. China more likely in my view, but not by much. I can see a Chinese plane capturing a significant portion of the home market, but not being a global player.
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Fri Apr 19, 2013 1:24 pm

I predict 28,000 narrowbodies will be required over the next 20 years. Even the current Boeing and Airbus line expansions will not be enough.

Quoting Gonzalo (Thread starter):
A lot of big US airlines have ageing fleets and I just don't see how they'll manage to renew them before 2020."

The C-series!   

Or greater production from Boeing and Airbus.

Quoting Stitch (Reply 1):
vidently some 737 MAX customers wanted to order more frames then they did, but lack of production slots have hampered that and they will (hopefully) have to place follow-on orders later.
Quoting KarelXWB (Reply 5):
Analysts predict that oil prices will crash.

Define crash. Fracking doesn't work below $50/bbl, so there is a floor. Also, with a billion individuals predicted to enter the middle class over the next 15 years... I see long term oil going up. Not a lot, but up.

Quoting Birdwatching (Reply 18):

17 replies to this thread... and nobody has mentioned the obvious solution of a free economy?

Why don't Airbus and Boeing price their planes higher so they earn more per frame and keep the backlog shorter?

The price sensitivity is unusually steep. And if the middle class grows anywhere close to prediction, where are the other 8,000 airframes coming from?

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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Fri Apr 19, 2013 1:24 pm

Quoting apruzesse13 (Reply 3):
i would not be surprised to see a lot of order deferrals in not too distant future

If you look at the comments in the OP that caused the thread, there would appear to be a long queue of airlines waiting to pick up any deferral slots that come available........

Quoting Stitch (Reply 6):
I wonder if Boeing and Airbus are not hedging themselves for such an event by "only" going to 42 deliveries a month?

for me I think A+B would drive supply somewhat higher if they could, but the bottlenecks exist right down the supply chain.

Quoting tockeyhockey (Reply 22):
i do think the world could use a third major airline manufacturer. what are the chances that either russia or china find a way to fill this void?

For the foreseeable future though, this third competitor would largely be drawing on the same supply chain that already can't cope with A+B's demands.

Wherever it comes from, capacity across the industry will be constrained by the ability of the supply chains to invest in capacity. IMO ....  

Rgds
 
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Fri Apr 19, 2013 1:30 pm

Quoting scbriml (Reply 23):
Quoting tockeyhockey (Reply 22):what are the chances that either russia or china find a way to fill this void?
Low, IMHO. China more likely in my view, but not by much. I can see a Chinese plane capturing a significant portion of the home market, but not being a global player.

China's COMAC is not really able to compete outside their home market yet, IMO. They just lack experience. But they'll learn, and the next generation COMAC should be a competitor to Airbus and Boeing.

Russia has the Irkut MS-21 in development. It will probably - like COMAC - first be for the home market, and perhaps some states with very good connections with Russia and a government controlled airline. But Russia did have experience with building big planes. Granted, the Ilyushin widebodies and Antonov freighters are a couple of generations behind now, but I can see them coming back. I hope so. Biggest challenge will be engine technology (the MS-21 will have P&W's GTF), but I'm pretty sure they can still build aeroplanes.
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Fri Apr 19, 2013 4:41 pm

Quoting Gonzalo (Reply 7):
the most notorious differences is the nature of Airbus as a multi-national company with parts of the aircraft being manufactured in different countries, while almost all the Boeing ( civil ) products are in the orbit of Seattle.
Quoting greaser (Reply 11):
Final Assembly, sure. But most of the planes' parts come from somewhere else.

And here is a point that is being missed. Even if Boeing and Airbus ramped up production to 60+ planes a month, they would still be at the mercy of their suppliers. If the suppliers can't supply quality parts fast enough, it doesn't matter how fast Boeing or Airbus try to assemble them, or how many production lines they operate. There was a good article last year by CBS MarketWatch (http://www.marketwatch.com/story/suppliers-woes-could-impact-airbus-boeing-output-2012-03-22) that talks about how the pressure on suppliers is making Boeing and Airbus more cautious about ramping up production.
 
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Fri Apr 19, 2013 4:53 pm

Boeing 737 production isn't maxed out yet.. I am not sure they have the third line running yet (I'm not counting the P-8 line as a commercial line even though it could be used.) There is still room to put a 4th line in the Renton complex so the max is around 48-60 per month on a 20 day work week.. a few more on a 6 day work week
 
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Fri Apr 19, 2013 5:39 pm

I really don't see why Russia is also shrugged off so quickly. Russia has a massive tradition of building aeroplanes, some which competed head on with planes built in the west (albeit in the field of military aviation).

The stigma with Russia is that in the west their aircraft are seen as "unsafe". Which leads me to my next point, how much of that image is down to bad pilot training, bad maintenance, bad regulations, and how much is actually due to the aircraft itself? Sure its true that when someone orders and airplane they expect a certain level of support from the manufacturers that the Russians are not famous to provide, but that being said I don't see why we would not see a serious competitor to Airbus or Boeing one of these days.

On that note, how is the SSJ doing? Is it reliable, are the airlines happy with it? Is it cost effective?
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Fri Apr 19, 2013 5:54 pm

Quoting 3rdGen (Reply 29):
Russia has a massive tradition of building aeroplanes, some which competed head on with planes built in the west

It would be more accurate to describe it as a Soviet tradition since Antonov, at least, is not Russian.

The reality is though, they never actually competed directly with Western types. Almost their entire production was consumed by Soviet block nations who had little to no choice, or communist countries like China, Cuba, etc. Since the collapse of the Soviet bloc, the aviation industry has been starved of the funding that flowed freely in the communist era and they've struggled to build anything meaningful.

I simply cannot see them ever being competitive in the global commercial market.
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Fri Apr 19, 2013 5:54 pm

Quoting scbriml (Reply 23):
Low, IMHO. China more likely in my view, but not by much. I can see a Chinese plane capturing a significant portion of the home market, but not being a global player.

I agree in the short-term. China built aircraft will be mostly for home market. But, give it a couple more decades, and I can see them coming and competing with Boeing and Airbus. Look at the huge amount of products coming out of China being bought by people all around the world. 20 years ago, we would be saying the same about other products, like cars. At first, Chinese cars were for the home market, then China started building Western designed vehicles in Chinese factories (hint: like Airbus line in China), and finally, building their own design and selling them overseas at lower prices than the competition (for instance, Great Wall Motors is being seen more and more here in Australia).

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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Fri Apr 19, 2013 6:12 pm

Quoting CXfirst (Reply 31):
Chinese cars were for the home market, then China started building Western designed vehicles in Chinese factories (hint: like Airbus line in China), and finally, building their own design and selling them overseas at lower prices than the competition (for instance, Great Wall Motors is being seen more and more here in Australia).

Off topic, but I drove some GW models that my company rented a few months ago.... atrocious vehicles....low quality equipment, uncomfortable.... I definitely wouldn't buy a Chinese car in the foreseeable future.

Quoting 3rdGen (Reply 29):
I really don't see why Russia is also shrugged off so quickly.

Maybe because all the models we know for passenger service like the Tupolevs or Illiushyns are very strong planes but also a real disgrace in terms of fuel economy, AND maintenance ( are the parts suppliers reliable enough.... ? ). Even with more fuel efficient engines those planes have "some" overweight problems compared to the new ( western made ) "composite" aircraft . Sukhoi could be walking in the right direction with the SSJ ( although is a small model ), I guess we should wait some time and see how the SSJ performs ( and the crash in Indonesia fades in our memory ).

Rgds.
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Fri Apr 19, 2013 7:04 pm

The second we have another financial crisis, Boeing and Airbus are going to be struggling to find customers for the 40+ planes a month. That’s the risk. They might have huge backlogs, but airplane production slots aren’t assigned until about 1 year before delivery. There was a significant number of airlines deferring deliveries in 2009, and Boeing and Airbus were struggling to find customers despite huge backlogs.

I personally believe there is a bubble developing. We saw a bubble develop and collapse in India. I see it happening again in Asia. The huge growth forcasted by Air Asia, Lion Air and IndiGo, yet I wonder if their balance sheets are good enough to continue their fast growth and finance all these airplanes. There is a lot of risk with all this massive growth, and there have to be banks and free capital available. If capital dries up, then those airplane orders are at risk.

Quoting Stitch (Reply 6):

And while Boeing has committed to MAX production in Renton, once they peaked that line at 42 they would have a legitimate case for opening a second line in CHS to go higher.

There are already 3 737 production lines in Renton. I wouldn’t be surprised if they figured out how to go higher. They can use the P8A line, or even move P8A production to Boeing Field if they really wanted to. I don’t think they are going to move 737 production to Charleston after what they negotiated with the IAM. Both Washington Unions accepted the contracts that Boeing offered last time around, so I think production will stay in Washington and can continue to grow for the 737.
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Fri Apr 19, 2013 7:38 pm

We should bring the outlook for the industry into this discussion:
Boeing expects 23,240 new narrowbodies over 20 years (When has the CMO not underpredicted aircraft deliveries? I expect 28,000.)

http://www.boeing.com/boeing/commercial/cmo/

Boeing and Airbus are *not* building aircraft fast enough for the expanding global middle class.

Quoting astuteman (Reply 25):
For the foreseeable future though, this third competitor would largely be drawing on the same supply chain that already can't cope with A+B's demands.

Which part of the supply chain? My employer is ramping up for Bombardier, Mitsubishi, Embraer defecting to Pratt, LEAP-X, all the PurePower Engines, and the MS-21. The big bottleneck was engines and Pratt has signed contracts promising a *quick* ramp rate. Avionics? That is just lead time.

For other items, the work has been distributed. Some is new factories with Spirit. If Spirit could build 737 bodies elsewhere, I think the ramp rate could be accelerated.

The biggest bottleneck, to my understanding, was engine casings. Pratt has written a check to clear that path...

Most of the other vendors just need time. Two years (at most) of lead time. The issue is they DEMAND three years of production at the new rate and Airbus and Boeing will not sign those checks. I've seen the requests at my employer and we push back on assuming the risk (too small of a company). If Boeing, GE or Pratt won't guarantee part sales, we can only increase production so much.

Also, with the LEAP and PW1000G, old part lines are about to 'hit a wall.' No one is manning up CFM or V2500 production unless they won similar parts (similar machine tools) for the LEAP or PW1000G lines. But the companies that did will orders... (like my employer), they're quite ready!    The issue is the number of companies (e.g., our competitors) who will have to ramp down production soon. They are having trouble retaining staff much less hiring skilled labor.

But all the new demand means Boeing, Airbus, Pratt, and GE are *not* getting the terms they expected for the NEO and MAX either... We've said no. Been told we lost the parts, happily sent the engineers to design parts for Bombardier, Embraer, Irkut, and others... Only to have the first four listed companies come back to order on *much* better terms for us.    So much of the problem is the *risk* the big companies are willing to take (or not take).

At least for *small* (sub 20 kg) parts, there is enough casting available. Vendors who wouldn't sign 20 year deals two years ago will today.   Big parts... are a bottleneck (mostly engine related). Pratt has bought new capacity (e.g., casings and rotors). So that will open up potential.

Quoting frigatebird (Reply 26):
China's COMAC is not really able to compete outside their home market yet, IMO.

Where are they competing? The ARJ-21 is 5 years late and is now facing another 1 to 2 year delay and could face more... The C919, from my impression, is not a well managed program. At this point, nothing more than my opinion, but they do not have the definition they require for this point in the program. That means delays. And rushing... which produces more delays.

Quoting frigatebird (Reply 26):
Russia has the Irkut MS-21 in development.

Which they have hired Shorts Brothers to help ensure the program moves forward. I'm not as impressed with their oversight as say Embraer, but they are far better than most competitors in knowing what they need from component vendors.

Quoting 3rdGen (Reply 29):
On that note, how is the SSJ doing? Is it reliable, are the airlines happy with it? Is it cost effective?

The SSJ is not doing well. The MS-21 is a much better managed program... Don't judge the MS-21 100% on the SSJ, the MS-21 has structured the program in ways that allow western engineers and managers to have *far* more say in the design. Its not that the Russians do not have good engineers; Irkut is simply trying to make a World class airplane.

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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Fri Apr 19, 2013 7:38 pm

Quoting Roseflyer (Reply 33):
The second we have another financial crisis, Boeing and Airbus are going to be struggling to find customers for the 40+ planes a month.

One advantage of a huge backlog is that for every customer that doesn't want to take a plane there's another that's desperate for them. Even at the height of the GFC neither Airbus nor Boeing failed to find customers for every plane they built each month and production rates didn't fall. They may have had to work hard to manage this, but they did.
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roseflyer
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Fri Apr 19, 2013 8:20 pm

Quoting scbriml (Reply 35):

One advantage of a huge backlog is that for every customer that doesn't want to take a plane there's another that's desperate for them. Even at the height of the GFC neither Airbus nor Boeing failed to find customers for every plane they built each month and production rates didn't fall. They may have had to work hard to manage this, but they did.

It was a challenge, but they did find customers for the 737NG and A320. There were a few airplanes built with no customer, but they were refurbished and sold. Boeing wasn't so lucky on the 777 and the production rate went down despite a rather lengthy backlog.
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Fri Apr 19, 2013 9:40 pm

Quoting Roseflyer (Reply 33):
They can use the P8A line, or even move P8A production to Boeing Field if they really wanted to.

The P8A line is ITAR controlled. So only for US and a few trusted allies. I doubt it would be more than another 4 per month.

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Aircellist
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Sat Apr 20, 2013 3:04 am

Quoting kanban (Reply 28):
a 20 day work week

That's the heck of a long week  
"When I find out I was wrong, I change my mind. What do you do?" -attributed to John Maynard Keynes
 
StickShaker
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Sat Apr 20, 2013 11:33 am

Quoting lightsaber (Reply 34):
Boeing and Airbus are *not* building aircraft fast enough for the expanding global middle class.

     


This is what is driving most of these massive orders - the change in world demographics. There are approximately 1.8 billion people who will enter the ranks of middle class consumers in the next 20 years - mostly in the Asian region.

Quoting Roseflyer (Reply 33):
I personally believe there is a bubble developing. We saw a bubble develop and collapse in India. I see it happening again in Asia.

There could well be a few ups and downs but with a demographic of that size developing the market has to expand.


Regards,
StickShaker
 
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par13del
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Sat Apr 20, 2013 11:50 am

Quoting scbriml (Reply 23):
Low, IMHO. China more likely in my view, but not by much. I can see a Chinese plane capturing a significant portion of the home market, but not being a global player.

In today's environment what makes a nation a global player, the amount of a/c they order, build or the rest of the world?
If we take all the orders China has for Boeing and Airbus a/c and have them purchase a/c designed and built in China however long it takes, does the amount make them a global player?
Their domestic market is huge and growing, just as they are building up their Military Industrial Production they can do the same for civil a/c, neither Boeing nor Airbus want that so they are doing their best to accomodate and load share with them, but China certainely has a large enough domestic market to make setting up a government subsidized industry worth it economically and politically.
 
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Sat Apr 20, 2013 12:02 pm

Quoting par13del (Reply 40):
a government subsidized industry

You think Airbus & Boeing will sit idly and not complain to the WTO.
 
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par13del
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Sat Apr 20, 2013 12:39 pm

Quoting carpethead (Reply 41):
You think Airbus & Boeing will sit idly and not complain to the WTO.

You think China cares????? what did the world do when Airbus was created, did they have any input, when Boeing merged with MDD was the world allowed to participate or just the EU and the USA who made up the world, when the EU and the USA made their agreement of not offering financing for their local carriers was the rest of the world allowed to participate, now the local carriers are complaining that foreign airlines and beating them because they can purchase new a/c quicker and cheaper. Issue was that as far as the EU and the USA were concerned, the only airlines and markets of any consequence were in the EU or the USA, duh.

The WTO existed for some of the above and not for others, however, the WTO supposedly was not created to force countires development only through the dictates of the EU or USA industries. China is large enough, independent enough, and its resources and wealth are in demand enough that they can do as was done before them, which is to use their current "power" to establish their nation as an industrial power before deciding that they are now on the same level that they can now decide to use the WTO to ensure no one else follows their lead.
Follow the nuclear weapons trend, same principle, I'm sure once Iran is done they will be willing to sign the non-proliferation treaty.
 
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KarelXWB
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Sat Apr 20, 2013 1:04 pm

Quoting Stitch (Reply 6):
I wonder if Boeing and Airbus are not hedging themselves for such an event by "only" going to 42 deliveries a month?

I agree that a backlog of 8 years is (almost) ridiculous, it could work against them if it keeps rising. I believe the rate will go up but not at this moment because:

1) It will create more A320ceo and 737 NG slots and it will be difficult to sell them
2) The Neo and Max are not yet available
3) The current supply chain can't handle it

Airbus is looking to increase the production rate to 44 frames per month after the Neo enters the market. Creating new FAL buildings is not the biggest problem but according to Fabrice Brégier (Airbus CEO) the supply chain is "already shaking on its feets" to hold the current rate of 42 per month.

Quote:
He says the supply chain is already having a hard time trying to handle the current ramp-up to 42 from 40. Once that is achieved this fall, production is to stabilize at that level for several years and through the transition from the current A320 version to the A320NEO in 2016. Once the transition is completed, Bregier sees “big potential for more” output. The first A320NEO will be delivered from Hamburg, followed by deliveries from Toulouse and subsequently the final assembly lines in Tianjin, China, and Mobile, Ala.

(source: AviationWeek, September 2012)

Tom Williams also believes the rate must go beyond 44 units per month:

Quote:
But long-term rates are likely to go up. Demand for the re-engined NEO has been so strong that building even 44 aircraft in 2017 or 2018 “is not enough,” says Tom Williams, Airbus executive VP-programs. Because of this, Airbus is already instructing suppliers to prepare for increased production.

(source: AviationWeek, May 2012)

Eventually, I believe they will find a solution for the supply chain.

Quoting Stitch (Reply 6):
And while Boeing has committed to MAX production in Renton, once they peaked that line at 42 they would have a legitimate case for opening a second line in CHS to go higher.

I believe Renton can hold 4 737 lines but I'm not sure if they need all 4 of them to support the rate of 42 units per month. If not, they could go beyond 42 per month in Renton.

But, FAL buildings are not the biggest problem. The supply chain however is a bit more challenging.

Quoting Stitch (Reply 6):
So Airbus and Boeing could conceivably push production even higher to sell more A320neos and 737 MAX, but neither seems to be willing to take that risk.

At least Airbus is studying the possibility to increase the rate beyond 42 units per month, but it wont happen before the the Neo enters the market.

[Edited 2013-04-20 06:12:39]
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par13del
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Sat Apr 20, 2013 1:20 pm

Quoting KarelXWB (Reply 43):
3) The current supply chain can't handle it

In both Airbus and Boeing cases, what's the un-employment rates in the nations of the supply chain, what are the job prospects for college students coming out of college in the next 3 years, Boeing is laying off engineers and machinist because new projects are not coming online soon enough, the holy grail right now is backlog.

The aviation industry has the ability to affect the employment rates and fortunes of a number countries for the next 10 years, from building more factories, putting more efficient a/c into service and retiring older a/c much sooner, it does appear as if the money is there from the client side to put themselves in debt, now whether the financing we are seeing is actually smoke and mirrors the experts will have to weigh in.
 
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kanban
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Sat Apr 20, 2013 3:25 pm

Quoting Aircellist (Reply 38):
That's the heck of a long week  

sorry, 20 day work month...
 
planemaker
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Sun Apr 21, 2013 3:09 pm

Quoting par13del (Reply 44):
now whether the financing we are seeing is actually smoke and mirrors the experts will have to weigh in.

As StickShaker noted, there are approx. 1.8 billion who are suppose to enter the ranks of middle class consumers in the next 20 years (what exactly that "middle class" could look like is open to debate). HOWEVER, we are entering an unprecedented period that no one knows what will happen. Most are naturally still looking at the rear view mirror to predict the future and the view isn't holding true. Just this past week we have the Bank of Japan joining other central banks in a money printing spree that "should" make the price of gold begin to takeoff. Instead we have the opposite.... a huge, unexpected drop in gold prices. The truth is that NO ONE knows how things are going to pan out... especially 10-20 years from now.
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
CXfirst
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Sun Apr 21, 2013 5:33 pm

Quoting Gonzalo (Reply 32):
Off topic, but I drove some GW models that my company rented a few months ago.... atrocious vehicles....low quality equipment, uncomfortable.... I definitely wouldn't buy a Chinese car in the foreseeable future.

Yes, I agree, but couldn't you see someone like Ryanair ordering the equivilant aircraft. It might be lower quality and uncomfortable, but if it is cheap enough....

-CXfirst
 
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lightsaber
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Mon Apr 22, 2013 2:00 pm

Quoting StickShaker (Reply 39):
There could well be a few ups and downs but with a demographic of that size developing the market has to expand.

And there will be a down... but demographics shall push up demand.

Quoting KarelXWB (Reply 43):
3) The current supply chain can't handle it

Let's be careful on that. The supply chain *can* handle it with the right lead time and terms. The issue is Boeing and Airbus are trying to push more risk and order variability onto vendors than they will accept. For Example, vendors are *lining up* for Bombardier, Embraer, and Irkut's expanded production. It has to do with how much debt the vendors must take on to develop new components *and* expand production. For the *low* profits Boeing and Airbus are giving vendors, there is no incentive for them to ramp up faster... so they aren't.

This is just the business case. Bombardier has been able to get vendors to commit, with *HUGE* penalties for failure, for a ramp to 250 C-series/year while only promising to buy a lesser number of parts. How? Who funds what development and the profit. High profit business finds a way to expand rapidly.

Some is also the ramp down clauses Boeing and Airbus demand. Business needs 3 years of production to justify a ramp up in production. Bombardier, Embraer, and Irkut will have to promise that ramp to achieve their expansions. Boeing and Airbus could... But that puts too much risk (Billions of dollars) onto their plate. Since that won't be the case 2 years after EIS, we'll see a change.

First they must manage the current engines to the next generation engines. That is switching vendors in many areas.

Quoting CXfirst (Reply 47):
but couldn't you see someone like Ryanair ordering the equivilant aircraft. It might be lower quality and uncomfortable, but if it is cheap enough....

FR is high utilization. If the new airframe isn't reliable enough, they won't touch it. MOL will make noise, but he'll be conservative in his purchases. Low quality means flight delays and cancellations and that can quickly cost more than the airframe.

Quoting planemaker (Reply 46):
The truth is that NO ONE knows how things are going to pan out... especially 10-20 years from now.

But we know *every* Boeing current market outlook has been pessimistic on the total airframes. Growth in the long run (20 years for each CMO) has always been higher than estimate. We know if Boeing and Airbus do not meet demand, someone else will. We also know that if demand shrinks, it will be at the cost of the older 'gas guzzler' airframes as fuel will not drop below $50/bbl without shutting down fracking (sharp drop in supply).

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planemaker
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RE: Boeing And Airbus Overwhelmed By Too Many Orders?

Tue Apr 23, 2013 1:45 am

Quoting lightsaber (Reply 48):
But we know *every* Boeing current market outlook has been pessimistic on the total airframes.

Yes, but to use a common phrase, "that was then". Boeing is using the economic "status quo" in their predictions when they don't really know how the global economy will turn out in 10 years... let alone 20.

Quoting lightsaber (Reply 48):
We know if Boeing and Airbus do not meet demand, someone else will.

Not at all necessarily. Program cost and time to market, not to mention incumbency is a very high barrier to market penetration.

Quoting lightsaber (Reply 48):
We also know that if demand shrinks, it will be at the cost of the older 'gas guzzler' airframes as fuel will not drop below $50/bbl without shutting down fracking (sharp drop in supply).

There are many things that can upend the CMO predictions... and only one of them is the supply/price of oil.
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