There is no sign of any let-up in airliner production as Airbus and Boeing continue to raise output to record levels, despite what looks likely to be a sustained fall in new aircraft orders.
Between them, the big two airframers achieved a slight rise in overall output last year from 1,397 deliveries to an industry record of 1,436 aircraft, but combined net orders declined almost a quarter.
Although Boeing saw a slight decline to 748 deliveries from 762 in 2015, it was still firmly in charge in output terms. Airbus's production increase more than offset the Boeing drop, as its production rose to 688 aircraft from 635. This means that overall output across the mainline manufacturers' plants has consistently increased every year since 2011.
Although Airbus still trailed its rival by 80 units, it has narrowed Boeing's market-share advantage from almost 55% to 52% in 2016. This was helped by the European manufacturer's busy December, during which it shipped an impressive 111 aircraft.
Airbus will disclose its detailed 2017 production plans in February, but its chief operating officer for customers John Leahy said at its annual press conference in Toulouse on 11 January that production would be "at least over 700 aircraft". Boeing is expected to match or exceed 2016's output, so combined production will be heading towards 1,500 units or more this year.
But while output is rising, the same is not true of net orders, which have fallen almost 25% to 1,399 units: Airbus's tally fell a third, while Boeing's dropped 13%.
Airbus again led the sales race with 731 net orders, giving it a 52% share, compared with 668 for Boeing. The US manufacturer booked a hundred fewer orders than in 2015 and fell short of its commercial aircraft orders goal, having set a target of about 740 for the year.
The combined sales performance equated to an industry book-to-bill ratio of just below one, with Airbus slightly above unity and Boeing slightly below. This was after adjustment for cancellations, which almost doubled in 2016, to 398, from 220 the year before. Airbus fared worse, suffering 218 order terminations – although a third of these were order swaps.
The industry net book-to-bill ratio has consistently been greater than one in recent years, and exceeded 2:1 in 2013 and 2014. Airbus has consistently been above one for the past six years, but Leahy acknowledges that the 1:1 ratio "looks like it can't be [achieved]" this year.
Flight Ascend Consultancy chief Rob Morris sees the industry heading for a sustained period with the ratio below unity, given the huge order backlogs at Airbus and Boeing.
"In 2017 – and probably into 2018 and potentially 2019 and beyond – we would expect book-to-bill to be below one as production rates increase at both manufacturers and net order volumes remain close to or even below 2016 levels. As much as anything, the lower order volumes will be a reflection of limited near- and even medium-term slot availability, meaning airlines will simply wait a few years before ordering new aircraft, thus avoiding committing to high escalation clauses which would increase their delivery pricing."
The overall year-end backlog declined for the first time since 2009, albeit only slightly, to 12,589 aircraft from 12,626 a year earlier. Airbus has maintained a lead over its rival, holding a 54% market share.
While overall net orders have varied dramatically over recent years from a low of 413 in 2009 to a high of 2,888 in 2014, Leahy emphasises that Airbus has been managing its output consistently upwards.
"People talk about the end of the cycle, but it depends what cycle you're talking about. I've got to admit, there is an orders cycle, there always has been. But the order and delivery cycle used to be matched almost one-to-one with about a two-year lag," he says.
"But if I look at deliveries now, I don't see a cycle. [Airbus has] 14 years of increasing our production. And this year it will be another increase and record, but does that mean orders are going up again? Most likely not."
Morris describes the commercial aviation industry as "enduringly cyclical", noting: "Orders reflect the demand cycle. Production volumes reflect the supply cycle. If production volumes remain stable, there must be some other supply-side cycle. It's probably economic life, as we have seen through this cycle."
Boeing has led in the delivery stakes now for the past five years, and looks set to maintain this for at least a couple more. Airbus commercial aircraft president Fabrice Bregier reaffirms earlier statements that he expects Airbus will be ahead again from 2019, although he concedes that he was not aware of his rival's latest output forecasts.
Airbus will be encouraged that it is back in front in the single-aisle market, having dropped behind in 2015, but it still trails its rival significantly in the higher-value widebody stakes. In 2016, Boeing delivered 258 twin-aisles – 80% more than Airbus – which is still in ramp-up mode on the A350 and shipped a total of 143 widebodies.
"The most important measurement of market share is deliveries, which derive revenues. In this context we estimate Boeing achieved around 56% market share of commercial jet delivery value, compared with Airbus's 44%," says Morris.
"This year Boeing is again set to beat Airbus in this particular metric with a 53%-47% split. Parity is actually reached in 2018 before we forecast Airbus finally achieves market leadership with 52% of the combined revenues."
Morris expects Boeing should be back at parity by 2020 as 777 rates increase with the introduction of the 777X. "From there onwards, the two will probably run close together," he says.
The one Airbus widebody type that looks set to be produced in low numbers for at least the near term is the A380. Just two new orders (with a net figure of zero) were secured in 2016 and Airbus is reducing output to 12 a year. Bregier envisages that this rate will be maintained for several years but is optimistic that production could then rise as customer demand is spurred by increasing airport congestion and "evolutions of the A380 family".
Source: FlightGlobal.com
