Aircraft manufacturing is one of the most critical aviation sectors, which determines with great precision the healthiness of the aviation industry : More orders tend to promise a strong long-term situation in aviation, while more deliveries reflect the current status. Nowadays, aircraft manufacturers are limited to some strong players according to the market segment even if new market-share candidates struggle to gain orders.
2008 was characterized as very demanding, mainly due to the fluctuating oil prices and the volatile economy. Orders for new airframes slowed dramatically in 2008 but the order momentum of 2007 (which continued a bit during the first months of 2008) and the Farnborough event led to a bunch of orders, thus manufacturers still have large and diversified backlogs to rely on. The situation is not expected to improve, due to the expanded global economic downturn. More specifically, many airlines already review their orders for new airframes as they see that demand collapses along with their economic liquidity. This will surely affect the huge manufacturers’ backlogs, with requests for late deliveries or cancellations leading to new slots for deliveries becoming available.
On the other hand, manufacturers face even more challenges to satisfy their customers. The first systems for mobile connectivity on air are available but more and more airlines require connectivity for their passengers. Besides that, the need for more environmental friendly airframes is imperative.
In the large aircraft section, Airbus once again managed to outreach Boeing in terms of orders and deliveries with the American manufacturer having to face the IAM strike and the severe delays of the Dreamliner’s programme. The European consortium appears to have finally overcome the A380 problems with deliveries being carried out normally, although minor technical problems still show up. Not everything is perfect though, because Airbus has to present a final design shape for the A350XWB for which has already ensured 483 orders. Despite their problems, both rivals gained large numbers of orders in 2008 favored by the increasing number (and size) of LCC carriers, which demand more and more single-aisle aircrafts.
Of course, all manufacturers should reconsider their predictions for aircraft demand in the following years, taking into account the global economic crisis and its impact on airlines. Demand for aircrafts is proportional to passenger demand and all predictions are for falling passenger numbers, while the situation may get worse due to the swain flu outbreak. Both Boeing and Airbus predicted that Asia-Pacific area’s demand for aircrafts (more than 100 seats) would be the largest, but now IATA reports that the area leads the fall in passenger demand.
The regional jet segment
One can split this segment to the jets below 50 seats, a segment that is fading in favor of either the turboprops or the regional jets with more than 50 seats. The economic crisis in conjunction with the rising price of fuel made flights(which last only a few hours) with small regional jets unaffordable for airlines because of the high cost per passenger mile. In this category CRJ200 and ERJ135/145 are the losers in favor of either their “larger brothers” or turboprops. Only Embraer appears to have a small backlog for the ERJ145 with a significant number of options.
REGIONAL JETS BELOW 50 SEATS
| Till 31/01/2009 | Orders | Deliveries | Backlog |
| CRJ-100 | 226 | 226 | 0 |
| CRJ-200 | 709 | 709 | 0 |
| CRJ-400 | 86 | 86 | 0 |
| Till 31/03/2009 | Orders | Deliveries | Backlog | Options |
| ERJ-135 | 108 | 108 | 0 | |
| ERJ-140 | 74 | 74 | 0 | |
| ERJ-145 | 733 | 694 | 39 | 50 |
On the other hand, the regional jet market (between 70 and 110 seats) enjoys great flush due to the improved economics and performance of the aircrafts offered. Embraer is the undeniable winner in this segment, which with its family of regional jets, has ensured a large backlog and a nearly thrice number of options for its customers. Bombardier, after successfully completing the CRJ1000 first flight (a direct competitor for the EMB190/195) is now restarting the CSeries programme with regional jets with 110-130 seats(standard), competing not only the well-established E-jets but also the smaller large jets of Boeing and Airbus. Bombardier claims that its mainline market jets are fuel efficient and environmentally focused and have already found their launch customers.
REGIONAL JETS ABOVE 50 SEATS
| Till 31/01/2009 | Orders | Deliveries | Backlog |
| CRJ-700 | 322 | 276 | 46 |
| CRJ-900 | 252 | 197 | 55 |
| CRJ-1000 | 45 | 0 | 45 |
| Till 31/03/2009 | Orders | Deliveries | Backlog | Options |
| ERJ-170 | 193 | 153 | 40 | 84 |
| ERJ-175 | 135 | 117 | 18 | 173 |
| ERJ-190 | 436 | 218 | 218 | 459 |
| ERJ-195 | 111 | 33 | 78 | 76 |
In order to face the crisis Embraer cut about 4000 jobs in February, as it slashed its 2009 delivery forecast by 28 aircrafts. The significant majority of the engineering workforce will be kept engaged in programs for development of new products and technologies, which will be kept unchanged.
Increasing needs for point to point services with the advanced performance of regional jets, led also to other manufacturers trying to establish themselves in the regional jet market. Mitsubishi Regional Jet (MRJ) is estimated to begin production in 2012 with only one customer till now. Russian manufacturers also followed the market trend and presented two regional jets (Antonov AN148 and Sukhoi Superjet SSJ). The AN148 achieved a significant number of orders (customers from the CIS countries, Iran and Cuba) while the SSJ of Sukhoi recently achieved its first flight with customers not only from the CIS but also some western airines. ACAC of China, after experiencing some delays, completed the second test flight of the ARJ721 and has secured a considerable number of orders mostly from local based airlines.
The revival of turboprops
May be it is not random that in a world of rising fuel prices (in 2008) and a deep economy crisis(which is still in course), turboprop aircrafts’ orders have been boosted. With jet fuel prices in such high levels, regional jets no longer offer good economics for short-haul flights. So, while jets (such as Embraer’s family) still top the delivery list, the upsurge was led by turboprops. In 2002 only 26 deliveries were made by Bombardier and ATR(the main players among turboprops), while in 2008 this number exceeded 100. By the beginning of the millennium, several turboprop manufacturers -including Fokker and Saab- had either declared bankruptcy or abandoned production of turboprops, leaving Bombardier and ATR as the only major turboprop manufacturers, which took advantage of the rising demand for airframes, a demand which is not expected to fall during the following years.
Bombardier, after overcoming the landing gear issues of the Q400, saw a rising demand for the 78-seat aircraft and this led the Canadian company to increased Q400 production (followed by decrease in production rates of the smaller CRJs). Deliveries for Q-series (in general) remained unchanged in 2008 (in comparison to 2007) but there was a significant change in mix the was a transition out of the Q200/300 aircraft programs toward an exclusively Q400 program. Bombardier expects this transition to be completed in the first half of fiscal year 2010.
Recent orders for the type showed that many operators see turboprops as the right product for the coming years. Of course, this was one of the main reasons that Bombardier announced the launch of the new Q400 NextGen turboprop, the next step in Q400’s evolution towards a more economic and environmental friendly airframe. Entry into service is expected in the first half of fiscal year 2010.
TURBOPROPS
| Till 31/03/2009 | Orders | Deliveries | Backlog |
| ATR 42 | 422 | 403 | 19 |
| ATR 72 | 563 | 412 | 151 |
| Total | 985 | 815 | 170 |
| Till 31/01/2009 | Orders | Deliveries | Backlog |
| Q-100 | 299 | 299 | 0 |
| Q-200 | 105 | 105 | 0 |
| Q-300 | 267 | 261 | 6 |
| Q-400 | 347 | 233 | 114 |
| Total | 1018 | 898 | 120 |
ATR is satisfied enough from the recovery of turboprops since it delivered 55 new aircrafts in 2008, versus 44 in 2007 and 24 in 2006, thus representing a growth of some 130% in two years. ATR finished 2008 with a backlog of 169 aircraft, which represents over two and a half years of production. Among the backlog, there is a total of 39 ATR -600 series aircraft, which completed power-on and begun ground tests during the last year. The French manufacturer expects to deliver even more airframes in 2009. Its CEO, Stephane Mayer stated that “Despite the current difficult times, the demand for turboprops is here for the long term. We will continue to develop our product and our services to maintain our leading position of over 50% in the turboprop market.”
The Russian manufacturers: Disappointing results
According to the Russia’s Ministry of Industry, about 10 Russian commercial aircrafts were rolled out in 2008. Most of them were Tupolevs 204(and 214) for companies flying out of Russia and the CIS countries. The cargo version of TU204 managed to be exported to countries outside Russian area but still the programme performs poorly. On the other hand, Iliyushin faced the cancellation of 2 IL96-400 (cargo version) order and aircrafts are still undeliverable.
Russian government’s decision to zero taxes on commercial aircrafts under 50 seats will cause another hit to the area manufacturers, as airlines will have the opportunity to import western built regional jets and turboprops (some of them already use CRJ200 and ATR).
The same situation applies in Ukraine with Antonov manufacturers being unable to honor their existing contracts. It must be noted that during 2006 and 2007 not a single aircraft was delivered by Antonov. Government sees privatization as the only solution for the survival of existing plants while orders for the AN-148 regional jet were boosted in 2008 (as previously mentioned).
The two SSJ prototypes continue with the testing flights and certification with delivery to the first customer are expected by the end of 2009. The programme till now has received 98 firm orders.
Russian manufacturers (Ilyushin, Tupolev, Yakovlev, Sukhoi) will take their chance in the short-to-medium range aircrafts market with the MS-21 family. Airbus and Boeing are not expected to develop new narrowbody aircrafts as replacements for the B737 and A320 families until 2017-2020 and as the aging Tu-154s need to be replaced, Russians believe that MS-21 will be more efficient than its western-built rivals. It will carry 130 to 170 passengers.
Large jets : A game for two
After mentioning the problems faced by Russian manufacturers, it makes sense that Boeing and Airbus are the only rivals in the large jets segment.
The IAM strike reduced Boeing’s fourth-quarter earnings by an estimated $1.2 billion, causing a loss of $56 million. Besides the strike, design changes and limited availability of engineering resources inside the company, led to the reach-forwards loss of the 747 programme with deliveries of the 747-8 freighter version to begin in 2011. The company is also seeking more customers for the 747-8 passenger version (only 28 have been ordered form the launch customer).
"We believe that we are better positioned than most companies to withstand with the ongoing pressures of this economy, and we are not hesitating to take necessary actions to preserve our financial strength and maintain our ability to invest and grow for the long term" stated Boeing Chairman, President and Chief Executive Officer Jim McNerney about the global economic turndown. Despite this statement, Boeing suffered 32 cancellations on the 787 programme, was forced to reduce 777 production rates and to postpone planned increases in 747-8 and 767 programme.
| | 01/01/2009-31/3/2009 | Backlog |
| AIRBUS | Orders | Cancellations | Deliveries | End of 2008 |
| A300/A310 | 0 | 0 | 0 | 0 |
| A320 | 14 | 14 | 101 | 2598 |
| A330/340/350 | 6 | 0 | 15 | 932 |
| A380 | 2 | 0 | 0 | 185 |
| TOTAL | 22 | 14 | 116 | 3715 |
| Net Orders | 8 |
| | 01/01/2009-21/4/2009 | BACKLOG |
| BOEING | Orders | Cancellations | Deliveries | End of March09 |
| 737 | 28 | 0 | 91 | 2203 |
| 747 | 0 | 1 | 4 | 110 |
| 767 | 0 | 0 | 3 | 67 |
| 777 | 4 | 0 | 23 | 331 |
| 787 | 8 | 32 | 0 | 878 |
| TOTAL | 40 | 33 | 121 | 3589 |
| Net Orders | 7 |
Boeing recently delivered the 777th B777 and with a backlog of 331 aircrafts is surely satisfied by its success. It is not after all a coincidence that most companies tend to replace their old B747s with the 777. In 2009, the first 777 Freighter was also delivered and most of the companies that have ordered it, will use it in harmony with their current 747 Freighter fleets. The 777 Freighter is the world’s longest-range freighter and features the lowest trip cost of any large freighter. 73 777 Freighters are on order and Boeing anticipates more, as the 777 performance (both civil and freighter version) is at high levels. The 777 monthly production will be reduced from 7 to 5 aircrafts from June 2010, in an effort to face the crisis which forces airlines to review their plans for fleet increase (or replacement).
Things seem to be very fixed at the narrow-body segment where Boeing enjoys a backlog of over 2000 aircrafts. The company recently announced the new spacious 737 Boeing Sky Interior with soft, blue-sky-like lighting overhead. The new design, inspired from the 787 drawing research, will offer not only cosmetic changes, but, according to Boeing, it will reduce by 2 percent the fuel consumption by improving airframe and engines. The latter one, arises as the main goal for the manufacturer, in order to make the 737NG more attractive, as according to the company’s forecast, new generation of single aisle jets will not be introduced until 2018. Recently, the 6000th 737 was delivered, a milestone for the company.
Despite this progress, all eyes are on the 787 Dreamliner project. Boeing suffers problems that Airbus experienced, when trying to get A380 to the air. The very delayed programme holds off deliveries to airlines, most of which tend to think the possibilities of cancellations or ways of compensation. Boeing failed to have ready the 787 for Le Bourget 2009 Show and by the time these lines are being written, the prototype is at the stage of final assembly, while its first flight is scheduled for sometime in the second quarter of 2009. Despite these problems, the Dreamliner’s orders exceed 850 airframes, which make the programme a huge success, even before its first flight but also a big bet for Boeing, which was forced to change the shape of the 787 many times toward the initial plan.
| | 2008 | 2007 |
| AIRBUS | Orders | Deliveries | Orders | Deliveries |
| A300/A310 | 0 | 0 | 0 | 6 |
| A320 | 472 | 386 | 914 | 367 |
| A330/340/350 | 301 | 85 | 511 | 79 |
| A380 | 9 | 12 | 33 | 1 |
| TOTAL | 782 | 483 | 1458 | 453 |
| | 2008 | 2007 |
| BOEING | Orders | Deliveries | Orders | Deliveries |
| 737 | 488 | 290 | 850 | 330 |
| 747 | 4 | 14 | 25 | 16 |
| 767 | 29 | 10 | 36 | 12 |
| 777 | 54 | 61 | 143 | 83 |
| 787 | 94 | 0 | 369 | 0 |
| TOTAL | 669 | 375 | 1423 | 441 |
Across the Atlantic, Airbus shares same thoughts with Boeing as far as the single-aisle aircraft is concerned. The A320 family has undoubtedly many years ahead with a backlog exceeding 2500 aircrafts and with even more orders appearing. The European Manufacturer (just like Boeing) has no plans to replace the A320 with a more modern family till the next 7-9 years. The interesting part with A320 is that many companies choose to replace their oldest airframes (the first even delivered) with new ones also from the A320 family. Recently, Airbus delivered the 500th A321.
After this evidence, it is not random that Airbus’ assembly line in China, is developing quickly and the first A320 will be delivered in June. The European company has already agreed with Xian Aircraft Industry as far as wing equipping programme and now A320 Family wings for aircraft to be assembled at the Final Assembly Line in China (FALC) will now be fully completed and tested in Tianjin, China. Today, the wingbox structures assembled by XAC in China are completed at Airbus' site at Broughton, before being transported to the Final Assembly Line in China. The European company is also examining the possibility of assigning A350 work to the Tianjin factory. Facing the crisis, the A320 family monthly production rate will be reduced from 36 to 34 aircraft from October 2009 onwards.
The A330/A340 production rate is paused at the current level of 8.5 aircrafts per month. The A330 seems to sell many airframes and gains even more orders with backlog exceeding 900 aircrafts. The A330 orders increased rapidly during the last years(including the order for the A330 tankers from USAF) and exceeded by far those of A340s in contrast to the first years of the project. At this point it must be noted that many orders for A330s come with an equal (or at least approximate) number of A350s.
The A380 programme is now developing normally after the initial problems of its launching and the wiring harnesses need for redesigning. The ‘Wave 2’ A380 production allows more and more customers to take delivery of the biggest airliner in the world and at the beginning of 2009, Airbus had the first official contact for a whole-economy configuration aircraft.
Airbus strongly overlooks at not repeating the A380 history, this time with the A350XWB, which already has a huge backlog with deliveries extended in more than 10 years from now. "Set for first delivery in 2013, the A350 XWB will shape efficiency for the aviation industry." stated Tom Enders, Airbus President and CEO but till now no final plans haven gone public about the airframe shape. Clearly, the A350 was a response of Airbus to the challenge of the more economic 787 which was a serious threat for A330. The 787 total orders still outmatch those of A350, but during last years the A350 is pulling in orders while Boeing struggles with manufacturing problems. Besides that, Airbus built a high-tech factory at Toulouse claiming it is very environmental friendly and efficient.
Right now, with Boeing facing the A380-like problems, it seems like the momentum is with Airbus, but that could all change in a few years. Again.
» Dato' Tony Fernandes, CEO – AirAsia Berhad
