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

Supply and demand?

[kubajz]

That is interesting. One would expect, if this is the case, that the manufacturers would increase prices until there are only so many interested buyers that the whole production will be sold. What am I missing?

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.

Re:Supply and demand?

[ZorinLynx]

There's competition in the airline industry (Boeing, Airbus being two big players) so they can't do that.

If Boeing raises prices, customers will to go Airbus. And vice versa.

If anything they may even LOWER prices to retain customers as waiting lists get longer. "Sure, you have to wait longer for your aircraft but you save 20% going with us over Airbus!"

Re:Supply and demand?

[magarity]

The main thing preventing significant price increases as you suggest is the threat of competition. Canadair and Embraer have more than enough expertise making good sized regional size planes to jump into the larger plane market if the prices go high enough to justify the development costs. Gulfstream, Bombardier, and Dassault are even more players who could cut in on the action for the right price increase.

Re:Supply and demand?

[TWX]

Your last point weighs heavy. If the manfuacturers try to follow a true market-will-bear price point for any given moment then they'll find that other players like Embrear might seek to develop competing widebody aircraft, or companies like BAe might fork from Airbus to resume designing and building widebodies independent of Airbus, or even various Russian or Post-Soviet Commonwealth aircraft manufacturers might seek to increase marketshare.

With all of these factors, the market-will-bear price point is probably right where it should be.

Re:Supply and demand?

[HornWumpus]

Boeing still does much better than new entrants have. See the Japanese and Chinese efforts to make their own wide bodies.

I'm surprised Tupolev isn't trying to get a bigger slice. But first they have to get competitive on fuel costs.

Nobody is turning on a dime and jumping into the market.

Re:Supply and demand?

[Richard_at_work]

Boeing 787 was around a decade from initial "what can we do" to entry into service - the Airbus A350XWB was a little more at 11 years.

Neither manufacturer has a clean sheet design in the pipeline right now, so we probably wont see a new widebody until at least the 2030s.

Re:Supply and demand?

[Richard_at_work]

Actually the article is a load of crap - Boeing is reducing 777 production right now, is in talks to end 747 production and has scrapped a production increase in the 787 (and may indeed scrap an entire production line in the next few years).

The only aircraft seeing production rate increases at the moment (that arent related to a new program coming on line, such as the A350XWB) are the A320 series and the 737 series - those sell well more than a thousand copies each year, with production lagging sales considerably.

Re:Supply and demand?

[HornWumpus]

They already have one. Of course if the buyer is connected they can get it waived.

The point is, China is already fighting a trade war and has been for decades.

Re:Supply and demand?

[Freischutz]

Boeing 787 was around a decade from initial "what can we do" to entry into service - the Airbus A350XWB was a little more at 11 years.

Neither manufacturer has a clean sheet design in the pipeline right now, so we probably wont see a new widebody until at least the 2030s.

According to this Boeing functionary I talked to it is easier to simply upgrade the tail section or the wings (or just parts of the wings and tail) and re-engine an existing aircraft design than to build a new design from scratch because that way you only have to get the new components certified. The fuselage pretty much does as good a job now as it did in the 1960s and 70s so you don't have to get that re-certified/tested/whatever only what you upgrade. That's why they are still building Boeing 737s, a design that first flew in 1967. Over the years they have upgraded various bits and pieces of the 737 until the modern aircraft have fairly little in common with the first 737s. This may seem weird, it did to me, but it's apparently a damn sight cheaper to do these bit by bit upgrades than designing a whole new aircraft to fill the same market slot. Designing building and getting a new design tested/certified/etc. only makes sense if nothing in your current inventory fits the market slot you have in mind or if the new design very significantly improves performance and therefore marketability.

Re:Supply and demand?

[Anonymous Coward]

Actually the article is a load of crap - Boeing is reducing 777 production right now, is in talks to end 747 production and has scrapped a production increase in the 787 (and may indeed scrap an entire production line in the next few years).

The only aircraft seeing production rate increases at the moment (that arent related to a new program coming on line, such as the A350XWB) are the A320 series and the 737 series - those sell well more than a thousand copies each year, with production lagging sales considerably.

Airbus is very competitive with Boeing on the 737 series and I believe both are struggling to undercut the other. Another thing that really hurts Boeing is Trump. If he implements his border taxes then their global supply chain is going to cost them big. I'm guessing they will shift to produce the aircraft outside the US entire and have foreign sales buy those. US sales might buy aircraft produced in the country, if Boeing can make it competitive but a lot of these suppliers have their own money tied up in things. It is not that easy to switch.

Either way if Boeing was doing that well then there would likely not see its employee count continuing to go down. link

Re: Supply and demand?

[Nidi62]

Don't forget Bombardier has the C-Series which is designed as a competitor to the 320/321 and 737 as well.

Re:Supply and demand?

[Cyberax]

Tupolev's Construction Bureau doesn't really exist anymore. The Russian civilian air companies were merged into United Aircraft Corporation and its currently produced airplanes are: https://en.wikipedia.org/wiki/... and https://en.wikipedia.org/wiki/...

Sukhoi Superjet is OK - it's not exactly top of the line in all parameters but it's a solid airplane, competitive in some markets. Its next model (slated for 2020) is going to be more much interesting and it probably will be able to compete with Boeing directly.

Embraer? Bombardier?

[Frederic54]

Cannot they make some? Ok I know they are smaller, but the Bombardier CS300 has 135 seats, not that bad

Re:Embraer? Bombardier?

[brambus]

Aircraft aren't like cars, you can't just hop from one to the next. There are certifications, training, simulators, supply chain, support infrastructure, etc. etc. It's why low-cost carriers are total monocultures in terms of aircraft they use. Ryanair *only* flies the 737NG. Easyjet *only* flies the A320 family.

Not good

[PPH]

From what I saw at my time with Boeing, they don't do well when they are under pressure. Things get rushed, forgotten or hastily slapped together. There was an anonymous thread a few weeks ago on an aircraft discussion board as to whether it was OK to use hardware store grade fasteners on aircraft structures. I shuddered. Because I've seen it come close to that when they ran out of approved parts.

Boeing (also known as the Lazy-B) builds good stuff when it's done at a leisure pace. But try to accelerate things and they go to hell pretty quickly.

Re:Not good

[PPH]

It's hardly Boeing

I've also worked for outfits that do a very good job scaling processes up. They think ahead. Boeing's problem (when I was there) was tradition. They still had people who remembered the way things were done on the Superfortress. And things were not going to change until they were gone.

20 years ago, I worked in a building in Renton. One corner of that building was a computer room that housed an ancient (even at that time) mainframe. They did batch processing for some engineering functions, with everyone getting weekly paper printouts as output. As time went by, the facilities were sold off (a shopping center is there now). And that building has been demolished .... except for the corner where that mainframe sits. It's still there, sitting in an otherwise empty field. Because the old farts won't port the process to anything newer and refuse to work with anything other then weekly paper printouts. Surrounding processes can't go faster than they do without generating piles of interim revision notices (which are a nightmare to reconcile).

Ukraine to the rescue

[mi]

Unbeknown to many, Ukraine has some very advanced aircraft technology. Its "Mria" aircraft remains the largest cargo airplane in the world. And it is not just the size — recently it was used to bring a replacement engine to a Boeing...

They are partnering with Saudis now to develop their know-how into mass-production...

Re:Ukraine to the rescue

[mi]

You do realise that the An-225 is an appallingly low tech aircraft, all it has going for it is its size.

What else do you need for a cargo plane other than the size — and the lift, which it also has aplenty? The long distance, maybe, and the ability to operate in various weather conditions? It has got all that too...

And the Ukraine

There is no "the" in front of the country name. The Germany? The France?

as its prime buyer was Russia

Yes, and that's why they are now reorienting towards the Saudis as I already mentioned. And the Chinese. In other words, both of the markets mentioned in the write-up.

Re:Ukraine to the rescue

[stoatwblr]

There's only one AN225, but they're considering completing the other airframe and maybe building a third, thanks to increased heavy lifting requirements.

AN124 lifting capacity is heavily oversubscribed and the vast majority of business is outside the old eastern blocs. Virtually all of that goes through a freight handling contractor in England.

It's worth noting that both the AN124 and 225 are operating in a market completely separated from Airbus and Boeing. Not even the 747-F can take the kinds of loads that these aircraft can handle - and the only thing they really need for modernisation is better engines and glass cockpits, both of which are on the agenda (Antonov don't want to be dependent on russian engines for number of reasons including reliabilty and fuel consumption. Imagine a Trent-1000 or GEnx engined AN225, because that's the kind of thing that can happen in non-serial aircraft production, where the maker is also the operator)

Re:Ukraine to the rescue

[mi]

It's worth noting that both the AN124 and 225 are operating in a market completely separated from Airbus and Boeing.

There is a different meaning to the word "separation". Firms like FedEx and UPS may be happy to use a giant plane like Mria for their own busy routes — still need the same crew, but can take a lot more load. A single such AN can replace a number of Boeings and/or Airbuses, which could be used for human travelers.

If only Antonov actually managed to move to actually building those planes, rather than merely designing them. Hopefully, the Saudi and the Chinese investments — as well as the reduced/eliminated Russian influence — will help.

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.

Re:I worked in IT for about twenty years before...

[Pascoea]

Most of them make well into six figures despite the fact many of them don't even have high school diplomas

Most craftsmen don't need post-secondary education. Craftsmen learn by doing, not by studying. Look in any of the skilled trades, carpenters, boilermakers, electricians, pipefitters, very very few of them have anything past high school, and there are a large number that don't have high school diplomas. You just don't need that type of education to do that type of work.

This is the fault of unions.

I'm not sure I follow your logic though. You are saying they are going bankrupt because of the unions? While saying they are making well into 6 figures? That sounds like a money management issue rather than a union issue.

Boeing simply can't afford to work them more than forty hours,

Why the hell would you want them working more than 40 hours? Since when is that a sign laziness? I don't want a guy working 6-10's assembling my air planes. People get burned out working that many hours.

Tell that to the fired employees

[sdinfoserv]

That's complete Bullsh*t.
I live in Seattle. Boeing announced it will be cutting jobs in 2017 due to " fierce competition with rival Airbus and a drop in new orders".
They will be cutting the number of planes produced per month.
http://www.bizjournals.com/sea...

Re:Thanks Trump!

[slashrio]

I'm really getting sick of this 'Trump this, Trump that' shit!
I'm now so irritated by all that off-topic Trump pushing/bashing that as soon as my eyes meet the word 'Trump', I close the whole thread and continue with the next one, so good luck with your comments on Trump and your other frustrations, losers...