What goes up…

The below article first appeared as a Comment in the 14 January issue of Flight International.

Latest buoyant order and output figures from Airbus and Boeing might spark one of two sentiments: let the good times roll, as demand from all corners of the world continues beyond the horizon; or here surely is a bubble of inflated expectations poised to burst.
In truth, the prospect for the market is likely to be neither. On the one hand, a recent flurry of pent-up ­orders from some of the big beasts of aviation, and a lack – now the Boeing 777X has been launched – of any major new programmes in the pipeline, suggest that the sales frenzy of 2013 could well be a decade peak.
On the other, there is little indication of the appetite for air travel being sated in highly-populated and ­growingly-affluent areas of the world. With US and ­European economies on the mend, and airlines in both regions taking steps towards consolidation and replacing ageing fleets, we could also start to see more chequebooks being dusted off in these legacy markets too.
So where does this leave the supply side? For Airbus and Boeing, surging demand is a nice problem to have. But it is a problem all the same. With a book to bill ratio of more than two to one in 2013, the pair are boosting their backlogs to record levels. Unless sales fall ­dramatically and soon, the airframers will have to ­decide whether to keep production steady or risk ­stepping up output – no easy task given factory capacity, staffing resources and stretched supply chains.   
Another concern is the robustness of the orderbook. Cancellation levels are low for both airframers. But this is a brave new world for Airbus and Boeing. With so many orders from airlines that few had heard of 10 years ago, sales teams will be putting as much effort into checking how strongly customers’ business plans or ­financial guarantees stack up as securing a signature.
And, as humankind cruises from a credit crunch that threatened to sink the global economy, there is always the next Big Crisis to anticipate – an oil shortage sparked by a Middle East war, another major terror ­attack in the heart of the USA, a pandemic, extreme weather… alien invasion. One thing is sadly certain, we can expect the unexpected some time this decade.
But in all this, spare a thought for Bombardier. While Airbus and Boeing ponder how to deal with backlogs in their thousands, their would-be competitor starts 2014 hoping to have certificated the CSeries and taken 300 orders by the end of the year, with no guarantee it will do either. What the Canadian manufacturer would do for its big rivals’ problems.


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