There are 51 days left in this year, and the duopoly is struggling. Deliveries are not meeting required rates.
Here’s a chart we post daily on LinkedIn as the year-end approaches. Keep an eye out for it if you want to track this along with us. It was popular last year, so we’re doing it again.
The key numbers are highlighted. Both OEMs must significantly speed up deliveries to meet their targets. Airbus needs to speed up by 130%! Boeing must accelerate by 56%. Those are steep inclines to face.
Both OEMs can point to their supply chains as culprits. That’s fair, up to a point.
The bigger question is how the OEMs can increase delivery rates at all. We’ve heard Airbus talk about rate 75 for a long time – recently, we saw even higher numbers into the future. Boeing, to their credit, has signaled slowing down to ensure quality escapes don’t occur.
The supply chain probably cannot do more. We looked at this twice this week already, here and here. What choices are there to expand the supply chain? Vertical integration is popular again. But also has limits. Boeing is laying off people again – an odd choice given the new line at Everett and growing demand and backlog.
The duopoly can expand their supply chains, but there’s huge risk. Spirit Aero being brought back in-house shows how much the OEMs are avoiding risk. And it’s not just the duopoly; Embraer has been doing this too. Airbus recently spoke of third and fourth backup suppliers. It’s all about de-risking.
Meanwhile, airlines gnash their teeth over delayed deliveries. They end up extending the life of older aircraft to keep capacity as intact as possible. Which doesn’t help fuel burn in these days of expensive jet fuel. Older aircraft values remain higher than expected, much to the joy of lessors. And MRO shops are booked solid way into the future. Well, at least somebody’s making money.
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