1Q24 Duopoly Deliveries Review

The Duopoly numbers are in, and here's the score. Starting with single-aisles. Airbus had a good quarter, and Boeing did not. [caption id="attachment_82767" align="aligncenter" width="580"] OEMs; AirInsight[/caption] JP Morgan notes: "Of the 66 MAXs delivered in Q1, 25 went to Chinese carriers and Air India, which meant they likely came from the 140 inventoried planes from the 2019-20 grounding that still remained at Dec 31. (Total inventory was 200.)" The deliveries suggest a monthly rate of 22. But if we remove the inventory drawdown, then it is far lower, closer to 15. This crimp in rate is very damaging to Boeing. By the way, that damage does not help Airbus. The only beneficiaries of the Boeing rate crimps are the MRO shops. Trying to secure a slot is becoming more difficult. Airbus deliveries are also slower than the market wants and needs. That means MRO shops are also working on Airbus models that should have been retired but can't be. Bank of America's view on Airbus: "In our view, 2024 deliveries are going in the right direction, and we see scope for significant operating leverage through the second half of the year as commercial volumes accelerate and hiring headwinds ease through the year." Like Boeing, Airbus suffers from supply chain issues and has to deal with the fallout from P&W's GTF. What does a single-aisle shop visit cost? The table below is a guide shared by an airline. [caption id="attachment_82768" align="aligncenter" width="145"] AirInsight[/caption] These are costs operators were not expecting because new deliveries were anticipated. New deliveries come with a maintenance holiday and warranties, so the MRO hits hurt. Airlines like Delta that ordered off-cycle and are now taking deliveries of the new A321s benefit substantially. Based on conversations at this week's MRO event in Chicago, the MRO squeeze will be here for some time. The OEM rates are mostly talk because they do not have the staffing, and the problem goes down and across the supply chain. Adjust expectations accordingly. Twin Aisles [caption id="attachment_82769" align="aligncenter" width="580"] OEMs; AirInsight[/caption] Here, we see a far more balanced output. Boeing benefits from the tanker business from the world's largest tanker customer. Airbus' tanker business is spread out but far smaller in volume. The freighter business, which Boeing also benefits from, is not included in the charts. Airbus has won orders for new freighters, but the program is still in development. Boeing should have shown better freighter deliveries but has run into engine sourcing issues from GE. Boeing's best-selling freighter, the 767, will age out by 2027 and needs replacing. The ICAO rules on its engine emissions hit a hard stop in 2027. Will Boeing consider using GE Nx engines going forward? The 767 is an amazing aircraft that has become the backbone of the global freighter fleet. Summary Airbus customers get deliveries at better rates than Boeing customers. This drives CMVs and second-hand values. Only MRO operators benefit from delivery constraints. Airlines owning their MROs are doing better. Boeing benefits more from the military and freighter business than Airbus. However, Airbus is now so far ahead in single-aisles, delivering and offering the most in-demand model that the supply chain favors Airbus over Boeing.

No results