The world’s premier air show wrapped up last week and notched another lacklustre haul of commercial aircraft orders. The Farnborough air show in the UK ended with more than 300 orders, well short of the banner year in 2018, when orders reached 1,100.
This result doesn’t reflect weak aerospace demand, however. The global aerospace industry is booming.
The low order count is all about the difficulties Boeing Company and Airbus have faced in raising production. Airlines are waiting for new, more fuel-efficient aircraft that they ordered years ago.
In the case of Boeing, the backlog has grown to more than 6,100 aircraft worth $576 billion as of the end of March. That number will likely grow when Boeing reports earnings. Additional orders are nice, but to truly unlock cash flow, Boeing needs to ramp up production, which it is trying to do.
But just as Boeing is poised to start delivering more planes, airlines are facing another headache, this one caused by engine producers.
Pratt & Whitney, a unit of RTX Corp, is still working through replacement of a faulty engine part that grounded hundreds of planes. Also, the latest engines from both Pratt and GE Aerospace require maintenance much more often than originally advertised. In response, both are introducing ‘durability’ kits intended to fix the problem, though installation across fleets will take time and effort.
“The lack of durability that we’ve seen in the quality of the new engine technology isn’t anywhere close to the pre-existing technologies that we had previously,” Ed Bastian, CEO of Delta Air Lines Inc, said earlier this month during an earnings conference call. The engine makers will likely be the bottleneck on the production ramp-up rather than the assembly capacity of Boeing and Airbus, he added.
Boeing, which was rocked by two fatal crashes of its 737 Max aircraft, is increasing its output under the steady hand of CEO Kelly Ortberg, who took over the flailing planemaker in August 2024.
So far, Ortberg has put the company on its best footing since the first crash in 2018, an accident that kicked off a series of calamities that revealed how dysfunctional Boeing had become.
The good news for airlines is that Boeing is getting closer to certification of the 737 Max 10, the largest version of the Max family, and the 777-9, the newest generation of its largest wide-body aircraft. The Max 10 could be authorized to fly as early as September. Airlines are eager to take delivery of the plane because it holds more passengers and burns less fuel.
Boeing is making 47 of its workhorse 737 Max aircraft each month and has a goal to reach 63. Production of the wide-body 787 will rise to 10 a month later this year from eight, and Boeing expects to increase that rate in 2027, Ortberg said in an interview with Bloomberg at the air show.
“We’re turning the corner. I tell my team we haven’t quite finished turning the corner,” Ortberg said. “Our story is really on executing that backlog.”
Ortberg made clear that the company isn’t in a hurry to design and build a new, clean-sheet aircraft. After all, the Max 10 and the 777-9 were supposed to begin deliveries in 2020.
Airlines aren’t even contemplating a future aircraft until they start receiving those delayed planes. Any new aircraft design will require an improvement in engine technology to provide the 15% to 20% fuel-efficiency increase that entices airlines to buy new planes.
Besides, Boeing needs to focus on a smooth launch of these new aircraft. Certification of the Max 10 will allow Boeing to begin to chip away at the 1,500 of those planes already in the order book.
Ryanair Holdings, an Ireland-based budget air carrier, ordered 300 Max 10s in 2023 because the plane uses 20% less fuel and carries 20% more passengers. The first 15 planes of that order should be delivered in the first half of next year, and the rest will come by 2034, said Ryanair’s CEO Michael O’Leary.
“It leaves us in very good shape, long term, for cost efficiency or cost-efficient growth, and we believe profitable growth,” O’Leary said of the new aircraft during an earnings conference call earlier this month.
O’Leary added: “Engines are going to be a real challenge—or certainly engine-maintenance costs are going to be a real challenge—for the next five or 10 years.” Ryanair, like other airlines, is opening shops to do the maintenance, repair and overhaul work in-house.
As Boeing begins to deliver the aircraft it promised long ago, the focus on the Max crashes, management turnover and constrained production will fade for airlines. From here on, we can expect their ire to shift to the engine makers like Pratt and GE Aerospace. ©Bloomberg
The author is a Bloomberg Opinion columnist writing about the industrial and transportation sectors.