Why Is Boeing Slowing Down All New Aircraft Plans?

This piece has been curated from a longer Aviation Week & Space Technology article.

Read the article in full Boeing Slows All-New Aircraft Plans Amid Signs Of Market Return by Sean Broderick, Michael Bruno, Guy Norris, Jens Flottau

Signs of life are returning to the commercial aerospace sector: Airlines are placing orders, profits are back, and aircraft builders and suppliers are once again arguing about how quickly production rates can be ramped up. But hanging over these positive indicators is a cloud of uncertainty about the industry’s long-term future.  

• Boeing and Airbus see improved deliveries and profits
• New Boeing narrowbody seems not to be a priority
• Supply chain skepticism may challenge production plans

The outlook for when the next generation of commercial aircraft and engines will arrive—and what they will look like—is even less clear today than before the COVID-19 crisis. Many OEMs have discussed for years about next generation programs, but at this point, figuring out how such programs will evolve requires a reading of the tea leaves.

Boeing President and CEO David Calhoun says the company’s spending is focused on supporting certification of the ongoing 737-10 and 777X programs, as well as development of the 777X freighter—the next most likely new project on the manufacturer’s agenda.

But while money continues to be spent on current and near-horizon efforts, there is no disguising the general decrease in Boeing’s overall R&D outlay. In 2020, it was around $2.5 billion, down about 20% from 2019. The downward trend is continuing in 2021, with the company spending only $996 million net on R&D in the first six months of the year, of which a mere $524 million was allotted to BCA.

Money—or the lack of it—remains an issue for Boeing’s next-generation ambitions. But the question remains: Can Boeing really afford not to launch a new program when Airbus continues to grow its single-aisle production at the suggested pace? That could take Airbus far beyond 60% market share in the segment over the next few years and make Boeing’s position untenable.

Read a deeper analysis of Boeing’s current production focus in the full article

Another factor likely will be General Electric-Safran joint venture CFM’s decision to develop the RISE Open Fan propulsion demonstrator. While Boeing continues to hammer home the message that airframe technologies, including production costs, will be critical to any go/no-go decision on a next-generation product, Boeing President and CEO for the first time is emphasizing the importance of new propulsion technology.

While GE Aviation says an all-new engine based on RISE technology research and development will not be ready until 2035, it is an open question as to whether individual elements of RISE could be applied more quickly to a next iteration of the current Leap engine to power a new Boeing aircraft toward the end of this decade.

Find out more about how the RISE program might impact Boeing's new aircraft programs

While dominating the narrowbody market, Airbus is nonetheless in a complicated situation. By the time it reaches rate 64 aircraft per month in 2023, it will essentially have had three years of much lower production than planned before the pandemic. Its target over the last 18 months was to avoid cancellations at almost any cost but to be more flexible when it came to requests for deferrals. To that end, hundreds of slots have been shifted into later years, based on agreements with airlines and lessors. Even at rate 64, that is equivalent to eight years of production—and in reality, it is significantly more because that level will not be reached for almost two more years.

One of the challenges for Airbus is that the number of open production slots until 2026 is very small. Getting additional A320neos from the production line will be difficult for any customer that does not already have confirmed slots. As a result, customers needing aircraft sooner will have to turn to lessors—in case they have unallocated capacity—or to Boeing. Neither is an attractive option for Airbus.

Of course, Airbus’ viewpoint is based on the assumption that the backlog is secure. It is anybody’s guess how secure it is, but even skeptics concede that the outlook for narrowbodies is much better than for widebodies. 

To achieve its planned growth, Airbus must also convince its supply chain that investment in more capacity is now safe. Judging by comments made by Safran CEO Olivier Andries, much remains to be ironed out on that issue: “We are listening carefully to all our customers, airline customers, leasing company customers as well.”

Like Airbus, Boeing has seen a major improvement in its financial results and is looking at beginning (more modest) growth in narrowbody production. 

Boeing now expects to deliver fewer than half of the 100 787s that have built up in inventory during the current delivery pause and a previous one that started last fall and lasted five months. A general lack of demand for new widebodies due to low international travel demand stemming from the COVID-19 pandemic means Boeing has some time to get the 787 program on track (AW&ST May 31-June 13, p. 28).

Read the article in full Boeing Slows All-New Aircraft Plans Amid Signs Of Market Return by Sean Broderick, Michael Bruno, Guy Norris, Jens Flottau