Boeing and Airbus Can't Make Enough Airplanes To Keep Up With Demand (axios.com)

From a report on Axios: Aerospace manufacturers like Boeing and Airbus cannot produce airplanes fast enough to meet demand despite what the Wall Street Journal calls "one of the industry's steepest production increases since World War II." The run up in demand is partially the result of fast-growing airline industries in the Middle East and China. Manufacturers will need to increase production by 30% to meet current orders, and such booming demand is one sign of a healthier global economy.

Comments

Re:Supply and demand?

[HornWumpus]

Long leed times and a historic boom/bust cycle. Large airplanes are contracted years ahead of time. Keeping the line running is paramount. Start/stop is a company and/or model killer.

India, China, Fracking ...

[140Mandak262Jamuna]

Last time oil hit almost 150$ a barrel, and stayed well above 100$ for a longtime after that, all the airlines were squeezed dry. Southwest alone prospered it had locked in oil at 60$ a barrel for several years and it was riding high. It was making so much profit on oil desk, it was rumored SEC is going to classify it as a energy trader and not a transporter. Some airlines were prohibited by the regulators to buy options and were forced buy in the spot market. Airlines have learnt their lesson well. When the oil crashed below 40$ most of them have locked in oil at low prices. So they are sort of protected from oil shocks.

And China and India are booming. The largest airplane order was from Indica, a domestic airline from India. 410 orders for Airbus 320. Airbus with their government funding is able to give them very long lease terms and guaranteed buy back price. Boeing needs to raise cash on commercial paper, Airbus does so on government underwritten bonds. But that is a different story.

Confluence of these factors, and a general belief that oil is never going to exceed 100$ ever again is fueling the optimism and large airplane orders. Oil producers trying to kick their oil dependence are trying to become transportation centers. Now a days it is impossible to beat the fares offered by Emirates, Qatar, Kuwait, Etihad to India/China from USA. So even the oil states are investing in airplanes.

They believe the moment oil goes above 60, fracking becomes profitable again. At 80, the fracking will flood the market with over supply and oil will slideback.