Production rates on Airbus and Boeing airplanes are putting a strain on suppliers, Forecast International said on the first day of the Farnborough International Airshow in England.
The two dominant jetmakers, which have been increasing production rates, are considering additional increases. But how fast and how much to increase production is a tricky proposition for the companies, Forecast International said.
“The potential for bottlenecks among suppliers means that Airbus and Boeing need to tread cautiously when it comes to future production increases,” Raymond Jaworowski, Forecast International senior aerospace analyst, said in a statement.
The forecasting firm projects demand for 14,655 large commercial airliners in the 10 years from 2012 to 2021.
And Boeing is projecting a market for 34,000 airplanes worth $4.5 trillion over the next 20 years.
During ongoing global economic sluggishness and uncertainty, a number of suppliers may be unable or unwilling to support continual production increases, Forecast International said.
In the meantime, Airbus and Boeing are pushing their large suppliers to buy smaller ones because of those fears, according to a report from the Financial Times. The companies, which together manufactured more than 1,000 jetliners last year, are worried that weak suppliers could jeopardize their plans.
Boeing’s backlog totals more than 4,000 airplanes, equating to almost seven years of production at current rates.
In the first half of 2014, Boeing will be producing 30 percent more airplanes than it does today.
Another major concern is the health of the airline industry, Forecast International said.
Air traffic is growing and the industry as a whole is profitable. But many individual airlines are having financial difficulties, including some carriers that have hundreds of orders for airplanes on the books.
Boeing Commercial Airplanes president and CEO Ray Conner said the company is making significant progress on new airplane programs.
“We’re seeing levels of demonstrated performance that give us confidence in our ability to increase production rates and deliver on our promises to customers,” Conner said in a statement. “We’re also working closely with or suppliers to make sure they’re able to increase capacity and make the necessary investments to go up in rate with us.”
Boeing and Airbus have launched the development of new versions of their narrow-body airliners, the Boeing 737 MAX and Airbus A320neo series, which will have new engines.
Boeing and Airbus both have incentives to keep production rates high, said Forecast International. They hold large numbers of unfilled orders, but that also means long waiting times for customers.
A lack of early delivery slots could tempt potential buyers to look seriously at new aircraft that are emerging, such as Bombardier’s CSeries, the COMAC C919 and the Irkut MC-21, it said.
To make sure production can be ramped up, Boeing and Airbus are focusing on suppliers at Farnborough.
Airbus’ head of aircraft programs, Tom Williams, told the Financial Times that it was encouraging suppliers to “bulk up” through partnerships or acquisitions “so that they get big enough and have a strong balance sheet.”
In 1997, Boeing ran into trouble when it increased production and its factories and supply chain struggled to keep up.
Also at Farnborough:
Military aircraft seem to be the focus of Hawker Beechcraft at the show.
The company announced that it has entered low-rate initial production of its Beechcraft AT-6 light attack aircraft in Wichita.
Low-rate production is in response to “significant indications” of interest around the world for the AT-6, which is based on the T-6 trainer.
“Hawker Beechcraft has been meeting the needs of the U.S. Department of Defense and military nations around the world with trainer and special mission aircraft for more than 50 years,” Derek Hess, vice president of light attack programs for Hawker Beechcraft Defense Co., said in a statement.
The company is also using the Farnborough air show to gauge the market for its twin-engine Baron G58 ISR, a plane equipped with intelligence, surveillance and reconnaissance sensors, including an electro-optical/infrared camera and data link.
Hawker Beechcraft is displaying a mock-up of the plane.
The company received a follow-on order from the Federal Aviation Administration for two Beechcraft King Air C90GTx turboprops with an option for one additional airplane. The FAA will use the new planes to further support its Flight Standards Service program.
The company is seeing increased demand for special-mission aircraft in international markets, it said.
Over the past five years, markets outside the U.S. accounted for 68 percent of the company’s special-mission aircraft sales.
Spirit AeroSystems signed a spare-parts agreement with China Airlines for aftermarket support, providing thrust reverser, fuselage and wing component spare parts to the airlines’ fleet of Boeing aircraft.
The company also signed a memo of understanding with Sigma Aeronautics as part of its strategy to develop its supply chain capabilities in the United Kingdom. Sigma is based in Northern Ireland.
Boeing announced that it received an agreement from Air Lease Corp for 75 737 MAX aircraft, which it valued at $7.2 billion, and obtained a firm order for 23 737 MAX airplanes with an option for four more from Virgin Australia.
With the order, Virgin Australia becomes the first Australian airline to finalize an order for the plane, which is an upgraded 737 with new engines.
Airbus announced an enhanced version of its A330 airliner. The company is increasing the maximum takeoff weight, allowing it to fly farther and carry more payload. It also will have increased fuel efficiency due to aerodynamic refinements and engine enhancement. Entry into service is scheduled for mid-2015.
Bombardier Aerospace announced that it received a conditional order from an unidentified customer for five CS100 and 10 CS300 jetliners, valued at about $1.02 billion. It’s Bombardier’s 12th customer for the CSeries aircraft.
The company also converted a conditional order for six CRJ900 NextGen regional jets from China Express Airlines to a firm order, valued at $264 million.