The world’s two largest commercial jet makers struck deals to sell billions of dollars worth of planes at this week’s airshow in Singapore, but supply chain disruptions mean they may struggle to deliver on time.
Meeting delivery targets is crucial for cash flow at Airbus Group and Boeing Co. because most payments are due upon completion. The two manufacturers have already been behind in their current orders as they struggle to ramp up production of Boeing’s 737 Max and work down inventories of the 787 Dreamliner. But as delays pile up, lessors are urging the manufacturers to invoke a clause in their contracts that says “excusable delay” should production slow or aircraft not be delivered on time.
During Thursday’s Toulouse-based company earnings call, Airbus Chief Executive Guillaume Faury acknowledged that “we are still in a tough situation.” For 2023, the airframer plans to deliver just 720 commercial planes, down from the 700 it delivered last year. That includes 127 narrowbody jets, such as the A321neo, against which Boeing has no direct competitor, which is delivery slot limited.
The rest will be widebody aircraft, including the A350-1000, which is currently at a five-year delay because of engine shortages and quality lapses. And the delivery lag will likely persist for some years, said Willie Walsh, head of the global airline industry body IATA.
He pointed to the need for a new generation of pilots, maintenance technicians, and cabin crew. The industry will need 649,000 pilots, 690,000 maintenance staff, and 938,000 cabin crew by 2029 to meet long-term growth in demand for air travel, he said.
The problems are compounded by an ongoing rift between the U.S. and China, slowing shipments to Boeing’s biggest market. A longer-term trade war could further strain the supplier base, from microchips vital to avionics to companies that make small metal brackets for cockpit panels.
Those problems also hurt airlines as they adjust to the disruptions and seek alternatives for long-haul flights, such as using more efficient smaller jets or renting older models until their new ones arrive. Primera Air and British Airways have postponed their deliveries of A321neos, for example, and are using older jets on trans-Atlantic routes. Boeing has pushed back the delivery dates of its own 737 Max jets for several customers, and airlines like Delta Airlines are canceling some of their planned flights. And that could dampen demand at the next major airshow in Asia. In that event, the two makers must convince buyers that the delays are no longer excusable and can’t be repeated. Otherwise, the gulf between them could grow wider. The Boeing-Airbus rivalry is usually close but has widened this year as the U.S. maker continues to trail its European rival in orders and deliveries. The gap is expected to widen further in the fourth quarter.