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OPINION: Market looks rosy, but beware the unknown

If Boeing intended to antagonise Airbus ahead of the annual order tussle, it chose to tweak the European airframer’s most sensitive nerve.

“Deliveries matter,” Boeing marketing vice-president Randy Tinseth wrote as the manufacturer disclosed that it had handed over 763 aircraft last year. “It’s the true measure of success.”

Tinseth’s point is that orders are essentially just promises, whereas pushing a fully-functioning aircraft off the assembly line delivers real revenues. And Boeing has out-delivered its rival for the past six years.

Even when Airbus has ended the year with higher deliveries, this has arguably been less about overtaking Boeing than being undertaken by the US airframer: steady growth versus a fluctuating production cycle.

Airbus let its irritation over the situation slip when outgoing commercial aircraft president Fabrice Brégier boldly asserted that the European manufacturer would outperform Boeing against both metrics in 2020.

But while Airbus might fret over the perception of being second-best, its drive for higher production rates – particularly on its single-aisle lines – is nevertheless a risky exercise, already highlighted by A320neo engine supply problems which, for a second year running, forced it into a frantic end-of-year catch-up.

Airbus points to its weighty single-aisle backlog to justify its production hike, a backlog piled higher in December when, in just one month, the airframer logged 5% of all the A320 orders ever recorded, taking total firm A320 commitments to within striking distance of those for the ubiquitous Boeing 737.

But the backlog, while outwardly impressive, remains an unavoidable source of future uncertainty, especially when the lead times for deliveries stretch to several years, even at a 60-per-month production rate.

Tinseth observes that last year’s performance had confounded concerns over a slowdown, and that 2017 had been a “better year than anyone could have predicted”. Which sounds reassuring until you realise that it simply illustrates the point about uncertainty.

Flight Ascend Consultancy’s Rob Morris suggests that the robust order figures might be evidence of “hysteria” brought on by prolonged exposure to a buoyant market. “The sun cannot continue to shine forever,” he says.

Which is almost inevitable. What is far less certain is whether, when the sun finally disappears, it is likely to be behind a patch of light cloud or a raging ­thunderstorm.

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