ontinuing concerns about the global economy have not stifled growth in demand for new aircraft, with Airbus and Boeing together collecting about 2,500 new orders and completing more than 1,000 deliveries in 2011, writes Ian Goold. Just hours after Boeing announced plans late last year to close down its plant in Wichita, Kansas, which dates back to the 1920s when it was the Stearman Aircraft factory, the city authorities were on the phone to rival Airbus, discussing possible expansion of the European company's facility there.
20th Jan 2012
Airbus leads 2011 orders, deliveries
Continuing concerns about the global economy have not stifled growth in demand for new aircraft, with Airbus and Boeing together collecting about 2,500 new orders and completing more than 1,000 deliveries in 2011, writes Ian Goold.
Just hours after Boeing announced plans late last year to close down its plant in Wichita, Kansas, which dates back to the 1920s when it was the Stearman Aircraft factory, the city authorities were on the phone to rival Airbus, discussing possible expansion of the European company's facility there.
Airbus has some 200 engineers in the mid-US location, but does not need to introduce any more to make Boeing feel its presence: the company has increased production for ten years running and has out-sold the US manufacturer too many times to be regarded any longer as the industry's junior partner.
Airbus claimed about 55 percent of last year's sales of jetliners with more than 100 seats. It delivered 534 commercial aircraft to 88 customers – including ten new ones – and took 1,608 orders (1,419 net, after cancellations) valued at US$169 billion (US$140 billion net) at catalogue prices. The company’s 4,437-aircraft, US$588 billion backlog represents seven or eight years' production, Airbus says.
The Toulouse-based company could have concluded 2011 with even more impressive results, but its year-end statistics recognise an essentially conservative approach to logging orders. Key business came from American Airlines, which announced requirements for 130 aircraft last July – before parent company AMR Corp went into Chapter 11 bankruptcy protection in November. US business regulations mean that the order is in abeyance until being re-affirmed, or cancelled, by a court and the manufacturer's auditors ruled to exclude the deal from the 2011 order tally.
For its part, Boeing delivered 477 commercial aircraft and logged 921 orders (805 net), bolstered by several apparently last-minute sales agreements, which contributed to a backlog of 3,771 machines.
[Subhead:] Strong demand
Paradoxically strong demand during the current financial recession has spurred both manufacturers to plan substantial production-rate increases in the coming years. Between them, the two companies booked orders for over 2,500 new jetliners and again delivered more than 1,000 aircraft in a single year.
Airbus and Boeing are re-vamping their respective A320 and 737 single-aisle designs in anticipation of higher fuel costs in the short-term and a 15- to 20-year wait before new technology makes a new, clean-sheet design worthwhile.
Airbus led the way with the re-engined A320neo, launched in late 2010, triggering such a massive airline response that last July Boeing's hand was forced by American Airlines, which committed itself to acquiring a re-engined 737 MAX.
By year's end, Boeing had taken 150 firm orders, but expects this year to be as active as 2011 was for the A320neo. The re-engining decisions came just as the world was waking up to the idea that Airbus and Boeing’s market duopoly could be threatened by new entrants from Canada, China, and Russia.
Because Boeing orders were heavily weighted to its larger aircraft – 2011 was the twin-aisle, twin-engine 777’s best year for sales – the dollar disparity between the two companies' performance was much closer than aircraft-unit statistics suggest. According to Wall Street Journal analysis, the average catalogue price for Boeing orders last year was around US$145 million, compared with an Airbus average much closer to US$105 million (at least for 2011's first 11 months).
Some 91 percent of Airbus orders were for the A320 family (almost all for neo variants), with A330, A350, and A380 widebodies accounting for 138 orders (71 net). Boeing's great success came through over 200 orders for the 777, a welcome situation given its continuing problems with 787 and 747-8 deliveries. The 777’s maturity means much product development has been completed and programme profitability is high.
The big twinjet's popularity is such that Airbus was obliged in December to cancel further production of the four-engined A340, which is being replaced by the A350 XWB (standing for ‘extra-wide body’). After an initial burst of sales interest, A350 demand has slowed, with 2011 having seen more cancellations than new orders.
[Subhead:] Etihad cancels
Gulf operator Etihad Airways has become the first airline to cancel Airbus A350-1000s since last year's redesign, cutting six machines from its order, which now stands at 19. Overall, Airbus received orders for only ten A350s last year, during which some 41 were cancelled, including an A350-800.
The backlog comprises 555 aircraft: 118 A350-800s, 368 Series 900s, and 19 Model 1000s. Airbus President and Chief Executive Tom Enders says that A350 final assembly will begin next month [March], having been postponed when it “ran into some serious problems. … Without caution, and assurance of maturity, you're setting yourself up for disaster”.
For the moment, Boeing is considering its response and is generally expected to introduce a 777 mid-life improvement within a few years. "We will be in a position, if the market requires, to put in a very significant upgrade of the airplane," says the US company.
For its part, Airbus is continuing to recruit for new development programmes and accelerating aircraft production. In 2011, 4,500 new employees were hired, increasing the workforce to 55,000, and Airbus hopes to add a further 4,000-plus this year.
“[Our] record order intake is the result of our strategic decision [to launch the] A320neo,” says Enders. “With this innovation, we [set] a new industry standard, appreciated by customers and followed by the competition.”
Airbus appears undaunted by concerns over customers' financing needed to support the current record level of production and is dismissive of fears about European banks reducing their lending activity.
“[Last year] was tough for the world economy, but [airline] traffic is growing and the number of middle class [travellers], by which I mean people with disposable incomes for things like air travel, will triple in the next 20 years,” argues John Leahy, Airbus’s chief operating officer (customers).
The European manufacturer’s Chinese joint venture with Tianjin Tariff-free Zone and Aviation Industry Corporation of China can now assemble three A320s a month, and by the end of 2012 is expected to have produced over 100 aircraft from its final-assembly line, says Airbus China president Laurence Barron.
Airbus is stressing the need for the company's suppliers to improve efficiency if they are to retain their partnership. For example, while Airbus has promised to create up to 600 UK jobs this year, Enders has confirmed that British parts provider GKN recently lost a contract because Korea Aerospace Industries made a lower bid for the work.
[Subhead:] Competitive tender
“That was simply because of competitiveness. We're running a very competitive tender here,” says Enders. “This company needs to reduce costs. We need to internationalise the company further. It is not a signal that we are withdrawing from the UK. That is nonsense.” Airbus plans to add 500-600 jobs in the UK this year, probably at Filton and Broughton.
“This past year was one of the most exciting and important years in Boeing's history,” according to Boeing Commercial Airplanes President and Chief Executive Jim Albaugh. The US company says the 737 MAX launch “spurred historic deals that resulted in more than 1,000 orders and commitments from 15 customers”. Increased demand means the manufacturer plans to increase 737 production to 38 a month, 777 assembly to 8.3 per month, and 787 monthly completion to ten.
Boeing could introduce a third 737assembly line at Renton for the 737 MAX, according to programme vice-president and general manager Beverly Wyse. A third line capable of 21 aircraft a month could see Renton turn out 60 737s a month. Despite Airbus caution in listing orders from American Airlines, Boeing's backlog includes the carrier's 100-aircraft order for 737-800s.
Only a late order in December from Air France-KLM for 25 787-9s (plus 25 options) allowed Boeing to show positive net bookings last year for the single-aisle twinjet, following 32 cancellations. Boeing's 2011 gross orders for 45 787s came in the year's last six weeks, with the other 20 including six transferred to a new customer from a previous order. Of the total 860 787s on order to date, 555 are -8 variants and 305 are larger -9s.
Boeing's deliveries last year increased by 15 compared with 2010, but the manufacturer missed its target of 15-20 new 747-8 and 787 deliveries. Only 12 were shipped, including just three 787s, against an anticipated “four to six”. Three 787s slipped to January to permit final aircraft checks before handover to the customer. These latest 787 delays saw All Nippon Airways put off the inauguration of international services to Frankfurt until January.
[Subhead:] Labour agreement
Boeing ticked several boxes on its ‘to do’ list in one fell swoop in December, when it reached agreement with production workers that extended a 2012 labour contract and selected the 737 MAX assembly site, which in turn resolved a federal labour dispute arising from the company’s decision to assemble 787s in South Carolina. Each element could have distracted Boeing from its 2012 plan to increase production and continue product development.
Now, its goal in 2012 is “to ensure that 787 production is stable and reliable as we deliver an increasing number of airplanes across all our programmes”, Albaugh says, adding: “I have no doubt that 2012 will be the Year of the 737 MAX.”
After shipping 534 jetliners in 2011, Airbus expects next year to complete 570 deliveries – of which 40 percent are bound for airlines in Asia or the Middle East. Leahy expects Airbus orders to decline to 600-650 this year and concedes that Boeing could win the order race for the first time in six years. This could come about as a result of pent-up demand from Boeing's existing customers for the 737 MAX, which came on to the market a year later than the A320neo.
Enders concludes: "With a solid backlog and an excellent cash position we are well prepared for the future. However, the continuous ramp-up to unprecedented production rates in all programmes will demand a strong focus on the supply chain and our own delivery capabilities."
Airbus and Boeing orders – 2011
Model Gross orders Net orders Deliveries
A318 2 –5 2
A319 31 23 47
A320* 1,327 1,219 306
A321 110 109 66
A330-200 26 24 40
A330-200F 7 –5 4
A330-300 66 66 43
A350-900 10 –19 –
A380 29 19 26
Total 1,608 1,419 534
Model Gross orders Net orders Deliveries
737 625 551 372
747 7 -1 9
767 42 42 20
777 202 200 73
787 45 13 3
Total 921 805 477
Source: Airbus, Boeing