Airbus and Boeing sitting on fleets of undelivered jets amid COVID-19

Airbus and Boeing, two of the world's leading commercial jet manufacturers are sitting on large fleets of undelivered commercial jets as airline flying takes a sharp downturn due to COVID-19. They still hold 199 undelivered aircraft months into a pandemic that has significantly reduced the demand for airline travel and airlines' requests for new aircraft.

The produced and undelivered aircraft foreshadow a slower come-back for the commercial aviation industry than was previously expected, and these accumulating number of planes and low quarterly numbers have led to reduced production rates.

As of October 1, the companies reported 622 jets that completed their first flight still sat undelivered in their possession, according to Cirium fleets data.

This number is down slightly from 628 they held in July, but the slow rate at which these companies clear out their inventory reflects the airline industry's slow and crippled recovery won't be accelerating anytime soon.

The Boeing 737 MAX accounts for a large number of the undelivered aircraft.

Boeing already suffered a blow in 2019 after issues with its 737 MAX flight controls led to two deadly airline crashes.  Boeing continuing producing the jet amid a regulatory worldwide grounding that kept it from delivering these jets before the pandemic.  

The American manufacturer reported 478 undelivered aircraft on October 1, up from July's 462. The 737 MAX accounts for 423 of the undelivered aircraft.

This new jump in grounded aircraft reflects undelivered 787s, of which it now has 44. It also has also has the 423 737 Max, two 747-8 Freighters, one 767-300F and eight 777s.

Airbus is sitting on 10 A220s amid the airline downturn.

Airbus's inventory stood at 144 jets on October 1, down from 166 and the end of July. This undelivered fleet includes 10 A220s, 89 A320-family series jets, 14 A330s, 26 A350s and five A380s, according to Cirium data.

Historically, aircraft production rates and delivery rates have have so closely mirrored each other that these figures were nearly synonymous, said Alex Kruts, managing director at aerospace and defense advisory Patriot Industrial Partners.

In August, Airbus delivered 39 new jets and Boeing 13, both numbers significantly lower than their current production.

But with the coronavirus impacts on the industry, the demand for new jets has taken a sharp downturn. The manufacturers also said travel restrictions hindered their ability to deliver these new jets even in the even an airline requested it.

Does this impact the long-term outlook for aircraft parts and dismantling as well?

Here are the trends we're aware of so far. Boeing has found despite the crisis, some airlines could still be interested in ordering the Boeing 737 MAX at lower prices, viewing it as a long-life asset at a crisis price.

Aircraft part distributors have seen a similar trend. A few dedicated distributors we have seen offered high-quality at low prices even before the pandemic, but now with a reduced demand for airliners and commercial aircraft parts, they are the ones being sought out by major companies to make up for the lower prices at which they must sell their aircraft.

Here are a few of the distributors we've seen succeed throughout the ups and downs of the past year:

aerospace-adhesive.com

aerospace-bearing.com

aerospace-hardware.parts

aircraft-instruments.com

aerospace-supplies.com

Boeing Moves 787 Production to South Carolina to Cut Costs

Following the failure of the Boeing 737 MAX and the onset of coronavirus, Boeing faces some challenging blows to its commercial aircraft production.

The latest of which: moving production of its 787 Dreamliner jet completely to North Charleston, South Carolina instead of building the wide-body jet in two different facilities. The large aircraft manufacturer confirmed on Thursday that it will end 787 production at its plant in Everett, Washington, by mid-2021.

This move has been long-rumored, but was only now officially announced, and it not only comes as a blow to the Washington aerospace industry but suggests a lower expectations for a rise in 787 production to return to pre-COVID-19 levels anytime soon.

Boeing 787 Dreamliner

Last year, Boing increased the production of its 787 family to meet high demand. The small and medium wide-body jets were being built at a rate of 14 per month in 2019, up from 12 per month the previous year. 

This was the highest production rate for a wide-body jets in history, and to keep up Boeing experimented with building the Dreamliner in two different facilities: at its main wide-body plant in Washington headquarters, and in its newer factory in South Carolina.

The sharp downturn in long-haul commercial travel due to the pandemic quickly made this production rate unsustainable for an industry that has now grounded hundreds of aircraft. In fact, Boeing has fleets of mint-condition commercial aircraft sitting undelivered on the tarmac due impacts of the COVID-19 pandemic.

As a result, Boeing has sharply decreased its 787 Dreamliner production plans. It has already reduced output from 14 aircraft per month to 10 per month, and it plants to cut back to only 6 per month in 2021.

This decision came after Boeing's second quarter earnings report, in which CEO David Calhoun said the company would "prudently evaluate the most efficient way to product the 787 to include the studying the feasibility of consolidating our 787 production into one location" in response to the decline in production.

While earlier in the pandemic Boeing management seemed optimistic that business would go back to normal within a few years, this decision to consolidate all 787 production to South Carolina speaks otherwise.

The North Charleston plant is the more economic choice of the two plants, but it can only build seven or eight 787 Dreamliners per months with its current infrastructure. If production rates were to increase, it would require significant investments to hire new workers, tooling, and factory space that already exists in Everett.

Next year, the plant will be down to building just five or six aircraft per month. We can only assume that the move to North Charleston foreshadows production rates will stay below eight 787s per month for years to come, because Boeing would not justify a major shift to underutilize one of its largest plants if this was not the case.

Some distributors have seen a similar curve in the demand for commercial parts as the production ramped up and slowed down because of COVID-19 impacts, but an aircraft parts boom from dismantling grounded planes may boost the industry.

For now, providers of commercial aircraft parts can expect to make many more shipments to North Charleston than Everett.