Yesterday Boeing released their 2015 O&D numbers. Let’s look at the numbers. First a chart to show the scale of O&D changes between 2014 and 2015. We excluded the BBJ numbers from the chart but have them in the tables – but they are small and have little impact on the big picture.
- There was a substantial decline in MAX orders; as the table below with the numbers shows.
- 737-800 orders became more important as -700 orders withered.
- 737-900ER orders were up ( from the Delta deal no doubt), but remain anemic compared to A321 orders
- 747-8 still looks weak – what happens next?
- 777 classic orders are growing softer
- 777X orders were off a lot after the blockbuster 2014 Dubai show launch
- 787 orders reflect interest in the -10 and jump in -9 orders while the -8 also added some. Note that the 787 program is now significantly more important to Boeing than it was even a year ago.
- 737-700 continues to see less action as orders have dried up. What this means for the MAX 7 is, in our view, an open question.
- 737-800 reflects increased production rates and remains the bread and butter for Boeing.
- 737-900 numbers were up a bit but are outpaced by the -800 by over five to one.
- 747-8 deliveries continue as the backlog is worked through. The order pipeline is very soft.
- 777 classic numbers show the LR and 300ER are seeing softening that has been commented by many. The F saw better deliveries but weak freight traffic means this aircraft trades in a market that has yet to recover. Pressure on the classic line is growing as the bridge remains unfilled.
- 777X has no deliveries but we can see how crucial the 777 program is to Boeing and therefore deserves a mention. Boeing is aggressively trying to fill the bridge. With very little news on the X, we eagerly wait to see how Boeing is de-risking the program to limit any hiccup potential. If the bridge stays unfilled and the X runs into delays then things get messy in a hurry. But if the X can be accelerated and backs into the bridge, Boeing is golden. The 777 program is twenty years old and is a well understood program. But the X comes with a number of new technologies which means a learning curve, which even for a seasoned team, means some risk.
- 787 numbers show large interest in the -9 model which reflects the lessons learned from the -8. The flight test and production demonstrated Boeing’s ability to overcome the earlier stumbles. We expect to see the same with the -10.
Overall Boeing has done a great job of getting deliveries out the door. This applies especially to the 737-800 and the 787 programs. On the 787 program deliveries, note these have been especially growing for the more expensive -9. With two plants delivering 787s we expect to see better numbers again in 2016.
The Bottom Line
- Boeing’s order book, while lower in 2015, remains slightly above a 1:1 book to billed ratio, but well below the 2:1 experienced in 2014. Things are slowing in terms of orders.
- Boeing continues to build aircraft at a record pace, and its product line will focus on the MAX, 777X and 787 by the end of the decade. With the 787 program now solid and two derivative programs coming on line that should be smooth transitions, Boeing appears to be on track for continued strong performance in the near term.