Following three miserable years of contraction in Boeing’s commercial airplane business, the company in 2022 took substantial steps toward a recovery, reflected in Tuesday’s release of its final jet order and delivery figures.
That wasn’t enough though to match the 2022 performance of bitter rival Airbus, which both built more planes and won more orders.
Airbus remains the world’s No. 1 planemaker for the fourth successive year.
“I’m happy to report we’ve enjoyed four consecutive years of leadership,” said Airbus sales chief Christian Scherer in a press call Tuesday. “I look forward to making it five.”
However, in the more lucrative widebody airplane category, the two jetmakers were essentially even in production and Boeing won more orders.
That’s because Airbus suffered a couple of big order cancellations, including 63 mid-size A330neos by AirAsiaX and and 19 large A350s lost in a dispute with Qatar.
Setting aside those two losses, Scherer said Airbus actually won 8 out of the 13 widebody sales campaigns against Boeing in 2022 and added “I feel pretty good” about ongoing widebody sales efforts in the year ahead.
For Boeing, a strong surge of 203 net orders and 69 airplane deliveries in December secured a solid year-end tally in 2022.
Airplane production remains patchy because of parts delays and labor shortages at suppliers. And rework on the many jets that have piled up in its inventory over more than three years is slow and laborious.
Still, December brought Boeing’s total jet deliveries in 2022 to 480, an average of 40 jets delivered per month and up 40% on the 340 jets delivered in 2021.
And Boeing’s total 2022 net sales of 774 jets was up 62% versus 479 a year earlier.
In a statement, Boeing Commercial Airplanes Stan Deal said the company “worked hard in 2022 to stabilize 737 production, resume 787 deliveries, launch the 777-8 Freighter and, most importantly, meet our customer commitments.”
“We will stay focused on driving stability within our operations and the supply chain as we work to deliver for our customers in 2023 and beyond,” Deal added.
Airbus released its year-end order and delivery tallies soon after Boeing’s.
Against Boeing’s tally of 479, the European aerospace giant delivered 663 jets in 2022.
However, that was significantly below the Airbus target of 700 deliveries for the year. CEO Guillaume Faury on the press call cited delays in receiving parts due to the continuing impact of the COVID pandemic, the war in Ukraine, energy supply issues, inflation and constrained labor markets.
“The supply chain remains fragile,” Faury said.
And yet, Faury reiterated the ambitious Airbus target to ramp up its A320 single-aisle production to 65 jets per month next year and to 75 jets per month “mid-decade.”
Clearly, Airbus aims to continue to out-produce Boeing, which is struggling to get Max production higher than 31 jets per month.
Asked how long Airbus might continue to dominate Boeing, Scherer responded diplomatically: “I really feel good about our portfolio and about the performance of our product in the marketplace for the foreseeable future.”
Scherer bested his Boeing counterpart Ihssane Mounir in 2022 thanks largely to a giant order in July for almost 300 planes from the three major Chinese airlines.
China remains mostly closed to Boeing because of geopolitical tension between the U.S. and China.
In another blow, Xiamen Airlines, previously an all-Boeing carrier, defected to Airbus in 2022 with an order for 40 jets from the A320neo family.
Against Boeing’s net orders of 774, Airbus finished ahead in 2022 with 820 net orders.
In anticipation of Boeing’s progress in the fourth quarter, the stock market has already boosted the share price in an expectation that Boeing might finally be on the way back.
Boeing’s shares, priced at $134 in late October, were above $206 Tuesday — though that’s still less than half the peak price just before the second 737 Max crash in March 2019.
Big delivery effort
The strong December figures come as Boeing digs its way out of staggering and extended stoppages that hit its two key jet programs, the 737 Max and the widebody 787 Dreamliner.
The Federal Aviation Administration let the Max resume service in late 2020 after grounding the plane in the spring of 2019.
In that same time frame however, Boeing stopped deliveries of the 787 due to quality defects. After a brief resumption in 2021, deliveries stopped again and the FAA cleared the 787 to resume deliveries only in August.
Since then, with Boeing beset by supply chain issues due to the pandemic, deliveries of both the 787 and the Max have ramped up only slowly and unevenly.
Just before the Christmas break, Boeing internally announced a slowdown to 787 production in South Carolina because of delays in receiving parts from Spirit AeroSystems.
Industry observers and investors have been awaiting signs of a more robust recovery. The blockbuster delivery effort in December, including 53 Maxes and 10 787s, will be greeted as a positive signal.
Many of the 2022 deliveries came from the large inventory of parked jets that had accumulated during the delivery stoppages.
Boeing mechanics have been doing extensive rework to get more of those out of long-term storage. At the same time, inside the Max assembly plant in Renton and the 787 assembly plant in South Carolina, Boeing has been trying to slowly ramp up new jet production.
Wall Street analyst David Strauss of Barclays estimated last week that about 40% of the 375 Max deliveries this year, or about 150 aircraft, have come from storage.
Many of the more than 250 Maxes still in storage may need more rework than some of the jets delivered earlier out of inventory because they have been parked longer. Strauss told investors that “almost all of the aircraft that remain to deliver from storage have now been parked for three to four years.”
The rework on the 787s to fix the quality defects is even more laborious, taking up to four or five months on each aircraft. About 100 jets built and undelivered remain to be reworked.
While the Max and 787 wounds were self-inflicted, Boeing shares with Airbus the supply chain problems left over from the pandemic.
Indeed, Airbus may be facing more of a supply chain challenge. It’s production is spread across the, not only at major facilities in France, Germany, Spain and the U.K. — where the proximity of the Ukraine war is an extra threat — but also in Tianjin, China, and Mobile, Ala.
Airbus is expanding in Mobile, where it is building a new final assembly line exclusively for the hot-selling A321.
“Continuing the ramp up while protecting our supply chain is our key priority,” said Faury. “Nevertheless, I maintain my assessment that 2023 will be difficult on the supply side.”
Strong jet sales
While production and delivery may remain uneven for some time, and will be carefully monitored by analysts and investors this years, Boeing’s sales in 2022 were much more clearly a success.
Global air travel figures continues to recover from the pandemic downturn. November data from the International Air Transport Association (IATA), shows air traffic up to 75% of pre-COVID levels. And with China now opening up to air travel, that should accelerate.
So in 2022 airlines with cash, including United Airlines and Alaska Air, prepared for growth ahead by ordering new jets.
While Airbus may have sold more planes in 2022, Boeing is maintaining its lead in the market for more expensive widebody jets.
As international long-haul travel came back, Boeing bagged net orders for 213 widebody aircraft, consisting of 114 Dreamliners, 33 large 777X freighters, 35 current model 777 freighters, and 31 midsize 767s (10 freighters and 21 Air Force tanker jets).
Becasue of the Qatar and AirAsiaX cancellations Airbus ended 2022 with a net loss of -55 total widebody aircraft orders.
Clearly, Boeing continues to dominate the freighter market. The 777X freighter model was launched only in January 2022. In addition to those 33 new orders from Qatar, Cargolux, Lufthansa and others, airlines with standing orders for 777X passenger planes converted those to the cargo version to bring the 777X freighter order book above 50.
In addition to the 774 net orders, Boeing in 2022 restored to its official backlog a net total of 34 earlier orders that previously became too doubtful to count as firm because of contractual or financial issues with the customer. Those issues are now resolved.
With that adjustment, Boeing’s official backlog now stands at 4,578 jets, including 3,628 Maxes.
Boeing’s sales successes in 2022 included gross orders for 697 Maxes, including from new customers ANA of Japan; IAG, the parent company of British Airways; and Delta.
The 787 won 139 gross orders, including large orders from United, Lufthansa of Germany and China Airlines of Taiwan.
Some of the year’s gross orders were renegotiations of prior contracts for which deliveries had been delayed due to either Boeing’s setbacks on the Max and the 787, or to the pandemic. As a result, the net order tally was reduced by just over 200 cancellations of previous orders.
In 2023, Boeing will monitor its airline customer base warily in case higher costs and labor shortages may cause some pullback in the industry.
Among Boeing’s deliveries of the Max in December, its biggest customer was Southwest, which took 18 of the aircraft.
After the airline’s chaotic collapse between Christmas and New Year, it will incur an estimated $825 million in losses, a payout that could slow the pace of its planned fleet growth in the year ahead.
