Airbus turns down orders as backlog extends

Airbus is unable to meet the demand for its popular narrow-body aircraft.  The company has been forced to turn down aircraft orders because  of the size of its backlog and full delivery skyline.  In an interview at the Farnborough Air Show, Airbus CEO Guillaume Faury said “today we have to refuse orders because we are not able to deliver in the time frame that is requested.  So if there’s a bit of softening of the market, that’s no problem for us.”

Airbus has been forced by supply-chain difficulties to curtail its planned growth, exacerbating the problem in delivering aircraft to new customers.  Today, Airbus is essentially sold out on most of its aircraft programs with only a few delivery slots available before the end of the decade, and new A321s are sold out until 2030, making it a 6-7 year wait for deliveries.  

Faury indicated that supply-chain difficulties won’t be solved overnight, and that delays may take several years to abate, and that the company is trying to find the right balance between supply and demand.  “We have thousands of suppliers, and when you have just a couple of them, a few of them that are late on the ramp-up, that’s slowing down everybody.”

As a result, Airbus has been unable to fully exploit the weaknesses plaguing Boeing in recent years as it cannot expand production enough to meet the unprecedented demand for Airbus products.  That is good news for Boeing, which is the only viable alternative when Airbus can’t accept additional orders because it has a full delivery skyline.

With FlyDubai looking for a major order, and other carriers seeking aircraft in an environment in which airlines want to ensure they have places in the delivery skyline, there is a fear of missing out at airlines.  Today, we are seeing the first signs of reduced yields at airlines, but the demand for more fuel efficient and sustainable aircraft remains strong.  With no downturn in sight and airline traffic returning to pre-pandemic levels, demand for aircraft should continue.

The race to ramp-up may determine the winner in the duopoly, with Airbus having the near term advantage.  But without resolution to supply chain constraints, it may be difficult to achieve the 20 year production forecasts released by both OEMs earlier this week.

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Ernest Arvai

President AirInsight Group LLC

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