Jens Flottau, Executive Editor, Commercial Aviation, Aviation Week Network
In 2022, recovery for airlines and with them commercial aviation has taken off in earnest. Following the U.S.’ head start, European carriers saw a strong comeback from late spring, in fact demand returned faster than many had expected and could handle. But only a few months later the industry and its suppliers are facing the next crisis evolving from the cumulative effect of various factors and are concerned that times may soon be much worse than they had hoped.
The factors are: high inflation, high fuel prices, political pressure to become more environmentally sustainable fast and, of course, the war in Ukraine that is showing no signs of ending and that could even escalate into a much worse conflict. A deep recession in important European countries is all but a given, the U.S. may be hit by a milder downturn and the economic outlook for China, which still has not opened its borders for air travel and is continuing temporary COVID-19 lockdowns, is more uncertain than it has been in a long time. The concept of globalization, long a driver of international and long-haul air traffic, is being questioned as many companies are seeking supply bases closer to or at home in spite of the higher costs that may sometimes involve. But according to the Aviation Week Network commercial fleet forecast, the outlook for aircraft manufacturers, their suppliers and services providers is still positive. The forecast assumes a 3.5% compound annual fleet growth rate over the next ten years, with airlines and lessors taking delivery of around 21,700 aircraft in the period. The growth rate is above 2022 predictions (3.1%) mainly because of two factors: more aircraft are coming out of storage for airlines to cope with the V-shaped return of demand. And passenger-to-freighter conversions are extending the economic lives of aircraft that would likely have been retired earlier if they had stayed in their passenger roles. For similar reasons, a big wave of retirements is not expected quickly, though a substantial part of the in-service fleet is coming up for replacement in the second half of the decade simply because it is reaching around 25 years in service, typically an inflection point for retirement planning.
While demand for narrowbodies is already strong, there are signs that a comeback of widebodies could be nearing, too. Major lessors have placed their long-haul aircraft portfolios and with Airbus and Boeing having reduced production substantially supply is scarce. It is still unclear when all of the factors combined could lead to a broad increase in output, so far caution prevails.
In the regional market, Embraer plans to decide whether it will launch a new turboprop for up to 90 passengers, introducing competition for the ATR 72. The European manufacturer is exploring to re-engine the aircraft toward the end of the decade. De Havilland Canada has indicated that it may restart production of the Dash 8-400, another large turboprop
AIRBUS
A320neo family Airbus’ main target for the year has to be how to deliver more complex aircraft on time and in bigger numbers. The ration for the relatively easy to manufacture A320neo is declining further while hardly any A319neos are produced. Instead, the larger A321neo featuring more complex cabins is quickly gaining market share. Airbus plans to start the year at a family production rate of around 50 aircraft per month and wants to raise the level to around 65 by the end of 2023. The ramp-up is part of a longer effort to get to 75 by mid-2025, if suppliers can handle the boost. Because of the current difficulties in the supply chain Airbus has had to move the rate steps up by about six months. It will be key for the new schedule to stay intact that suppliers can recover as now expected by the middle of the year.
A220 In relative terms, the A220 program, split between Mirabel/Canada and Mobile/Alabama, is undergoing even steeper growth than the A320neo family. Current plans call for the two sites to increase output from a combined six aircraft per month to 14, with ten being built at the original site in Mirabel.
A330neo A330neo output is moving to around three aircraft per month. The program has recently gained sales momentum with orders from Condor, ITA Airways and Malaysia Airlines. In addition to returning demand for the passenger version, a new freighter variant could provide for additional work.
A350 The A350 is among the types expected to benefit the most from an eventual return in widebody demand. Airbus is moving the production rate from five aircraft per month to six in early 2023 and is looking at further growth over time. Executives concede that the program is unlikely to reach the peak rate of 10 aircraft per month reached in 2015 in the foreseeable future.
BOEING
737 MAX Of all the existing commercial aircraft programs, the 737 MAX is facing by far the most uncertainty. Its fate demands on whether the U.S. Congress extends a deadline for a more modern flight crew alerting system well into next year so that Boeing can certify the 737-7 and -10 under legacy rules. Boeing CEO David Calhoun indicated in an Aviation Week interview in mid-2022 that the company would rather cancel the program than introduce a crew alerting system that complies with the updated regulation. Without extension, Boeing could only market the 737-8 and -9 in the future and would be at risk of losing substantial orders for the -7 and -10 from Southwest and United, among others. It would also not have a large capacity narrowbody competing with the A321neo.
767 Boeing has 104 firm orders for the Boeing 767, 65 of which are for commercial freighters with the rest in the aerial tanker role. With 32 deliveries outstanding, FedEx Express is by far the most important commercial customer. There are no more passenger aircraft in Boeing’s backlog.
777/777X As Boeing tries to bridge the longer than expected transition period from the 777-300ER to the 777X, the company is benefitting from strong demand for the 777F. 82 current generation aircraft remain in the backlog, 76 of which for the freighter variant. Pakistan International Airlines has a firm order for five 777-300ERs. Boeing is pausing production of the 777X as certification slipped to late 2024 with deliveries to initial customers now planned for early 2025.
