The commercial aviation duopoly has suffered from production shortfalls for various reasons. The net result of these shortfalls is a shortage of new airplanes and an extended industry backlog that is now over a decade in length. That is an unsustainable level, and while the duopoly augments its production, it will not be as fast as the recovery in traffic after the global pandemic. Backlogs may continue to expand, particularly for hot-selling models like the Airbus A321neo and the Boeing 787. Even Embraer's backlog is at a record. The following chart illustrates the overall backlog for the duopoly from 2000 through 2025, expressed in years of backlog on the books. In 2025, the industry remains at nearly 11 years, a much higher level than the historic trend of the 2010s, a period of fewer industry shocks and more stable economic conditions. Getting back to that level won’t be easy, as book-to-bill ratios remain higher than 1.0 in early 2026. Production needs to and will increase, but not at a rate fast enough to quickly bring down the long queue for new aircraft. [caption id="attachment_186790" align="aligncenter" width="788"] source: Airbus, Boeing, AirInsight Analysis[/caption] With decade-long backlogs, when Airbus and Boeing introduce the next generation of aircraft, a path to contractually transition between existing and future models will likely be needed. Airlines typically don’t want to be among the last recipients of older, less fuel-efficient models, but do want to be among the first to enjoy the efficiency of new models, albeit perhaps not the launch customer. Product Shortfalls Began Before the Pandemic and Continued Afterwards At Boeing, multiple impacts slowed production, including the fatal crashes of two Boeing 737 MAX aircraft in 2018 and 2019, and a subsequent nearly fatal assembly-quality incident for the MAX that engendered new FAA production limitations in 2024. Similarly, two FAA safety groundings of the 787 and subsequent FAA quality restrictions caused delays in deliveries of its best-selling wide-body. Boeing’s self-destructive errors were compounded by the global pandemic and supply-chain constraints that continue to negatively impact production rates. Boeing continues to be half a decade or more late in its three major certification programs, the 737 MAX 7, the 737 MAX 10, and the 777-9. We were expecting these airplanes in 2020, not 2026. Each has been caught up in a more rigorous certification program after it became clear that Boeing deliberately misled the FAA about the infamous MCAS system that caused the 737 MAX crashes. The FAA is “dotting every i and crossing every t” to ensure safety. All three programs anticipate certification later this year, and we hope Boeing will finally deliver on its long-overdue new aircraft. At Airbus, recovery from the global pandemic was hampered by supply chain problems that persisted for half a decade, causing it to miss its prior-year annual delivery guidance for multiple consecutive years. Airbus also suffered from Pratt & Whitney GTF engine problems that grounded a significant portion of the A320neo family and A220 fleets for extensive maintenance that can take 6 months or more to complete, potentially resulting in a 6-month aircraft-on-the-ground situation waiting for limited MRO capacity. While Pratt & Whitney has apparently turned the corner in the reliability of replacement components, MRO capacity to install the new components, which require a complete engine tear-down and rebuild, remains constrained, and a significant portion of the A320neo family, the A220 family, and, to a lesser degree, Embraer E2 jets remain impacted. Airbus indicated that supply-chain issues will likely continue to plague the company through 2027 and that they are not yet out of the woods. While Airbus has been unable to raise production rates to guidance levels in recent years, it established two additional final assembly lines in 2025 and has the capacity to significantly increase production if the supply chain delivers components on time. But interior components for Airbus models, including lavatories and seats, are impacting the A350 program in the near term. The net result is that the industry has suffered a major shortfall in new aircraft deliveries, down about 2,500 aircraft from where it would normally be if pre-pandemic trends had prevailed. Based on OEM forecasts for the next two decades, projections of how many aircraft will be needed for growth and replacement, and projected production ramp-ups, it appears that the industry will continue to fall behind in 2026, when it should instead begin to catch up and close the large production shortfall since the global pandemic. Traffic and Demand Have Recovered The good news is that passenger traffic has returned to pre-pandemic levels and appears to be returning to its normal growth curve, as shown in the chart below. Historic IATA data show a rapid recovery to pre-pandemic levels worldwide, and the return to former trend lines should be complete by 2030. [caption id="attachment_186788" align="aligncenter" width="640"] source: IATA, Airbus, Boeing[/caption] Traffic should reach the pre-pandemic trend line by 2030, given current trends. We put together this chart using historic data from IATA, along with the average traffic growth rate computed from Boeing’s Commercial Market Outlook and Airbus Global Market Forecast projections. We also used projected traffic growth based on rates over the last couple of years, showing that traffic should return to the pre-pandemic trend line around 2030. It is clear that traffic rebounded quickly in the post-pandemic environment and that travel demand continues to grow. The Aircraft Shortfall New aircraft deliveries failed to keep pace with the rebound in traffic and continue to fall short of pre-pandemic levels, particularly for narrow-body aircraft. The following chart illustrates the shortfall in deliveries for the industry, which is the area between the pre-pandemic trend line and the actual deliveries, which have fallen well short of targets. [caption id="attachment_186791" align="aligncenter" width="640"] source: Airbus, Boeing, AirInsight Analysis[/caption] Since the pandemic, Airbus has revised its guidance multiple times, falling short of its projected production rates. Boeing, after quality issues in early 2024, has been under FAA production rate limitations that can only be raised by meeting key performance indicators, with 737 MAX rate increases of 5 aircraft per month reviewed every 6 months. As a result, even with twice-annual increases, Boeing remains constrained from achieving pre-pandemic production levels before late 2027. The duopoly's lack of deliveries has resulted in a major aircraft shortfall in the industry, particularly in the narrow-body category. Boeing is currently constrained by its regulators to a current production level of 42 737 MAX aircraft per month, with expectations to move to 47, 52, and 57 per month at six-month intervals if quality metrics remain on target. As this is critical to Boeing and a focus for senior management, we expect the company to meet those thresholds. But it also means that Boeing won’t return to pre-pandemic production rates until late 2027 at the earliest, and likely 2028. Airbus announced ambitious growth targets of up to 75 A320neo family aircraft per month at its Toulouse, Hamburg, Tianjin, and Mobile assembly lines. New lines in Tianjin and Mobile should significantly increase capacity once operating at full throughput. Even so, catching up to pre-pandemic production trends may take a decade. This is several years behind the recovery in traffic growth, which has recovered pre-pandemic levels in five years and should rejoin the trend line by 2030. The shortfall is about 2,500 airplanes, roughly equal to the combined annual production of Airbus and Boeing. That has had a major impact on the marketplace, as many airplanes cannot be delivered quickly as the industry ramps up production rates. The result has been an increase in aircraft size to increase capacity when production is constrained. Backlogs and Delivery Skylines are Still Growing If you want a new airplane, the old adage is that you move to the back of the line and hope for cancellations on earlier deliveries. The OEMs often held a couple of slots for potential new customers and could always backfill earlier deliveries if those slots weren’t filled. This year, we have customers reportedly paying a “premium” to obtain near-term delivery slots. As a result, industry backlogs have grown substantially, with year-end 2025 backlogs of 8,754 aircraft at Airbus and 6,262 aircraft at Boeing. On average, if an airline wants new lift today, it will need to wait 10.7 years in a queue. Of course, the queue differs by aircraft type. The popularity of different models results in different backlog levels. For year-end 2025 in the narrow-body segment, the Boeing 737 MAX had risen to 11.0 years and the Airbus narrow-bodies to 10.8 years. For wide-bodies, the Boeing twin-aisle backlog was 13.3 years, while the Airbus twin-aisle backlog was 11.2 years. Clearly, all OEMs need to significantly increase production rates to keep up with demand. Engine Reliability Issues Unfortunately, the Pratt & Whitney GTF required a major maintenance action to address reliability issues, resulting in the grounding of many GTF-powered A320neo family aircraft, A220 aircraft, and Embraer E2 jets, as an engine teardown and reassembly are required for the reliability fixes. This resulted in a significant portion of the fleet being grounded from 2023 to the present, with about 1/3rd of the A320neo family fleet either in maintenance or storage during the fourth quarter of 2025, and about a fifth of the E2 and A220 jets experiencing the same issues. These aircraft are exceptionally fuel-efficient, and the vast majority of groundings are due to maintenance issues. The good news is that the groundings appear to have peaked - but the bad news is that full completion of repairs for the entire fleet won’t be finished until 2027, meaning we have another year of capacity shortfalls for these popular latest-generation narrow-bodies. The implications are significant, as engine MRO facilities remain fully booked and spare engines have seen short-term lease pricing rise substantially due to high demand and low availability. This dislocation, which emerged from materials issues at Pratt & Whitney, adds to the supply chain stress facing the industry and removes capacity at a time when the industry is struggling to keep up with demand. While pushing the frontiers of fuel-efficient technology, all three major engine OEMs have experienced reliability issues, including Rolls-Royce and CFM, but to a much lesser degree than Pratt & Whitney. Older Aircraft and MRO The impacts of production shortfalls, combined with aircraft being down for engine maintenance, are creating additional issues, as airlines have been forced to keep older aircraft flying to maintain their flight schedules. IATA statistics show that the average aircraft age rose from about 13.0 years in 2019 to 14.8 years in early 2025. Older aircraft require additional maintenance as they age, and a lack of MRO capacity for engine overhauls can be a constraint, even for older models without engine reliability issues. Airlines need to decide whether it is worthwhile to spend millions on airframe or engine maintenance for aircraft that they were planning to replace earlier, and whether interim maintenance can be adequately recovered in the used market once those aircraft are replaced. As new aircraft production increases and aircraft down for engine maintenance return to active service, the supply-demand balance will change, impacting residual values for operators. That makes for a tough decision - whether to cut routes or continue them with sub-optimal aircraft and economics. The Bottom Line With backlogs exceeding a decade, airline fleet planning has become a long-term strategic exercise. Predicting the future is always difficult, and the airline industry is susceptible to shocks, whether 9-11, an economic recession, or a global pandemic. Airlines need to make long-term decisions in the short term, knowing that things will likely change by the time the newly ordered airplanes are ready. Running an airline, offering a perishable commodity product with exceptionally high capital costs and fixed costs, has always been difficult. Adding another 3-4 years to the planning horizon makes it even tougher.
