In the highly competitive world of plane-making, Boeing is continuing to trail behind its long-time rival, Airbus. The year 2020 saw Airbus solidify its position as the number one plane manufacturer, with Boeing reporting a significant decline in both orders and deliveries. The company handed over a mere 84 passenger jets to airline customers, a staggering drop of almost 90% since its peak in 2018. This decline in deliveries has left Boeing cash-strapped, forcing the company to obtain debt and implement cost-cutting measures.
It is important to note that both airplane manufacturers have been negatively impacted by the COVID-19 pandemic, which has led to a significant decrease in global air travel. However, as vaccination efforts raise hopes for a recovery, Airbus has already begun preparations to ramp up production after scaling back output last year.
On the other hand, Boeing has had to heavily rely on sales of cargo and military jets to alleviate the financial strain caused by the prolonged grounding of the 737 MAX and manufacturing issues that have resulted in halted deliveries of the 787 Dreamliner. In total, Boeing delivered 157 jets in the past year, including cargo and military planes, which pales in comparison to Airbus’ impressive 566 deliveries.
Since delivering its first jetliner in 1974, Airbus has amassed orders for an astounding 7,184 planes by the end of last year, a figure that surpasses Boeing’s tally of 4,223. The biggest discrepancy between the two companies lies in the single-aisle aircraft category, particularly with the long-range version of Airbus’ A321 outselling a comparable variant of the 737 MAX, which lacks the capacity to accommodate as many passengers on longer routes such as transatlantic flights.
Boeing’s ongoing struggle against Airbus underscores the challenges it faces as it seeks to reclaim its standing in the global plane-making industry. Efforts to resolve the grounding of the 737 MAX and address manufacturing setbacks will be crucial for Boeing’s future success and competitiveness.
Boeing Faces Quality Issues with 787 Dreamliner
Boeing, the aircraft manufacturing giant, has encountered yet another setback as it grapples with quality problems associated with its 787 Dreamliner planes. As a result, numerous wide-body aircraft are accumulating at the company’s factories.
In an effort to address potential defects, Boeing has expanded its inspection procedures and is currently tackling two lapses in quality that have emerged in a new section of the planes, specifically in close proximity to the cargo door.
To ensure that its Dreamliners adhere to the highest standards of quality, Boeing is devoting considerable time to inspections. These issues primarily involve gaps in the fusion of fuselage sections. According to a reliable source, they have only been identified in a small number of undelivered planes. At present, it remains uncertain whether addressing these problems will result in further delivery delays. However, it is important to note that neither of these issues pose a safety risk.
Considering the potential fallout from these quality concerns, Boeing could potentially face compensation claims from its 787 customers due to delivery delays. Moreover, analysts at Sanford C. Bernstein & Co suggest that the company may need to allocate a charge of up to $3 billion against the long-term profits of the program. It is worth mentioning that all production will be shifted to a plant located in South Carolina starting from March. Boeing has refrained from providing any comments regarding possible charges, with quarterly results scheduled for release on January 27th.
Boeing Faces Challenges with MAX Orders
Boeing, the prominent plane maker, has encountered setbacks with its MAX orders in recent times. Last year, over 600 MAX orders were canceled, and around 800 more are now classified as doubtful due to airline finances. Although the U.S. regulators approved the planes to fly again in November, allowing for 27 deliveries in December to carriers like American Airlines GroupInc. and Avolon, the impact of cancellations persists.
The ongoing travel slump has led aircraft leasing companies to cancel MAX deals, resulting in 105 dropped orders just last month. These companies have been utilizing contractual rights to dispose of or postpone orders due to the surplus of aircraft capacity. Experts at Jefferies report that nearly one-third of the global fleet currently remains grounded, awaiting a recovery in demand.
Despite the challenges, some airlines are resuming their MAX purchases. Ryanair Holdings PLC, a leading low-cost carrier, took advantage of Boeing’s discounts and compensation offers to order an additional 75 planes last month.
Boeing’s new 777X jetliner, which is currently under construction at its original manufacturing site in the Seattle area, has experienced delays due to engineering issues and a protracted approval process from regulators.
In contrast, Airbus has managed to overcome many of its own production problems. Guillaume Faury, the Chief Executive of Airbus, informed reporters last week that the company intends to increase production of its A320 family of jets during the second half of this year.