As we near the end of 2024, it’s clear that aircraft deliveries (and production) will be lower in 2024 than in 2023.
For Boeing, just as MAX production was gaining momentum and rising through the mid-30s per month, the door plug failure happened. The FAA capped production and mandated revisions to Boeing’s production system. MAX build rates fell until they stopped altogether during a 53-day strike in September to November followed by an approximately 30-day pause in production to implement production changes. Boeing announced major investments in the 787 production line this week that should eventually help them get the production rate up to 10 on that program. But the investment has a two-year timeline.
On the Airbus side, deliveries (and production) were sluggish through Q1, prompting the airplane manufacturer to reduce full year delivery guidance from 800 to 770 aircraft. Through November, they have delivered 643 aircraft, buoyed by strong delivery performance in October (62 planes) and November (84), rates well above the monthly average (55) for the first 9 months of the year. Still, they will need to ship 92 planes in December to meet 2023’s delivery mark, and 127 to meet their guidance of 770 aircraft for the year.
2025 Outlook
With the strike behind them, Boeing will begin in earnest on a long overdue rework of their production system. We are encouraged by the steps taken so far – Kelly Ortburg seems to be asking the right questions and focusing on the right things. But this is a multi-year process. And don’t forget, they are implementing a new production system across the enterprise (not just MAX lines). Look for more senior management changes next year as Ortburg continues to build his own team. Spirit integration and divestiture will be a challenge. And the new production system will have to be rolled out at the Spirit facilities as well. As production improvements slowly take effect, deliveries will improve but very slowly initially.
Airbus is determinedly trying to at least produce more in 2024 than in 2023. They do not appear to be gaining the momentum necessary to achieve significant rate increases. It is not clear to us how close they are to overcoming the hold-ups so our initial outlook is that there will be marginal rate increases by Airbus in 2025. Look for low deliveries in January and probably February. They’ve posted delivery surges in December the past 3 years with the predictable result there’s little to ship in the first half of Q1.
