Boeing is driving the Duopoly’s recovery

Over the weekend, we passed the midpoint for February and the 1Q25. This makes today a good time to check on the duopoly, as it is the most influential force in commercial aviation. Its health drives the entire industry. We are pleased to report that the duopoly continues to see improving health. Deliveries Deliveries are the most critical metric for the industry. For airlines to operate, they need reliable deliveries that comply with their network planning. That network planning is based on what the OEMs have told them to expect. A recent example is last week's news about Air India not taking up its Boeing options because it lacks confidence in deliveries. Airbus won more business instead. Despite this hiccup, Boeing is clearly recovering its mojo and accelerating into 2025. The table below lists YTD deliveries. Two items are highlighted. Airbus continues to see success with its A321, which, as noted before, is its lynchpin model. Until Boeing responds to the A321, it will suffer a significant disadvantage. Boeing's key program is the MAX 8. The path to full recovery requires Boeing to clear out its parked inventory, primarily of MAX 8s. That work is moving apace. [caption id="attachment_89794" align="aligncenter" width="328"] AirInsight[/caption] Delivery Context The following chart illustrates these numbers in context—the MAX 8 leads in deliveries by a wide margin. But that is because Boeing is clearing out its inventory. As we noted last week, this process is not just the start of recovery; it is the foundation of a positive upcycle for the entire MAX program. The chart focuses on single-aisles because that's where the most action is. [caption id="attachment_89795" align="aligncenter" width="640"] AirInsight[/caption] Boeing's new MAX production remains limited to 38/month for now. As the ghost factories close and the field experts return to Renton, we expect production capacity to grow as these skills are deployed. Boeing will be able to hit its KPIs and have the necessary evidence to increase the FAA limit. Supply Chain Impact Before addressing the supply chain, we should note that the stabilizing duopoly is in the interest of both parties in the duopoly. They win or lose together. The supply chain needs a stable duopoly for its survival. A chief concern for supply chain firms is skills. The dearth of the right kind of skills causes havoc. News of the possible collapse of Eviation is good news for Seattle area supply chain firms. As before, one firm's loss can become another's win. The challenge is how quickly the supply chain can work through its own reset. The news of a change at Boeing in how it treats its supply chain cannot be overstated. In the commercial aviation silo, the concept of everyone winning or losing together is being re-learned. Beyond the duopoly How about the OEMs outside the duopoly? Embraer and COMAC also benefit from a stable supply chain. These smaller firms operate in the long shadow of the duopoly. If the duopoly is stable, the supply chain settles into rates it can rely on. That means airlines and lessors can plan more effectively. This, in turn, acts as the proverbial tide lifting all boats. Embraer and COMAC win along with everyone else.

No results