Surprise : Instead of going up, the backlog fell in July.
Every now and again this industry springs a big surprise. July was a Farnborough
month and at the air show orders for literally hundreds of aircraft were announced. Not everything announced at one of these
big air shows goes on the order books in the same month. Some take time to be fully finalised. But the expectation was that
the large commercial jet backlog would get a boost and probably quite a large boost. Instead, the backlog dropped by 72 aircraft.
What happened was
that very little actually went on to the order books in July. Month-end figures show that Airbus took an order for eight A350-900s
and that Boeing took orders for 15 737 MAX jets, five 777 freighters and 10 787-9 Dreamliners in July. That was it. Airbus
delivered 77 aircraft during the month and Boeing delivered 39. Boeing had a record First Half in terms of production but
in July the company delivered the lowest number of single-aisles in a single month since January 2012. The point here though
is that more aircraft were delivered in July than were ordered.
The result was that the single-aisle backlog dropped by 70
aircraft and the widebody backlog dropped by two. This is not quite, perhaps, what the industry expected.
The explanation is
that while large numbers of firm orders and commitments were announced in July, just because an order is described as firm
does not necessarily mean that it has been fully signed for and the deposit paid and banked. So what we can expect to see
is a steady stream of July’s firm orders going on the books over the next few months, and another stream of commitments
being converted to firm orders which also go on the books later in the year. This may seem a little confusing. What also happened
in July is that some customers who had placed an order earlier in the year but were not identified at the time were identified
in July so it appeared that there was a new order when in fact it was already on the books.
Something else that happened in July is
that despite more deliveries than orders, the Airbus backlog went up by nearly 300 aircraft. At the end of June, Airbus had
97 fewer aircraft on backlog than at the start of the year but by the end of July the European manufacturer had 199 more aircraft
on backlog than at the start of the year. There is a simple explanation for this – Airbus renamed the CSeries the A220
and took over what had been the CSeries backlog. Bombardier did take an order for 30 CSeries jets in May but that doesn’t
show on Airbus’ order table simply because Airbus didn’t sell those aircraft. Similarly, Airbus didn’t deliver
any A220s before July 1 so they don’t show on the manufacturer’s deliver tables either, but the two A220s that
were delivered in July do appear because they are Airbus deliveries.
The slightly lower backlog at the end of
July is hardly cause for concern though instead of now having a larger backlog than at the start of this year, due to the
impact of a major air show, there are fewer aircraft on backlog. The single-aisle backlog is currently lower than at the start
of this year but the widebody backlog is slightly larger. When it comes to the number of engines on firm order, both the single-aisle
and the widebody engine order books are up on the figures at the start of the year. The long period of widebody engine order
book decline that went on for months seems to have come to an end.
Unlike the aircraft manufacturers, the engine manufacturers
did rather well with orders in July. A total of 568 large civil jet engines were ordered during the month which is the largest
number ordered in a single month so far this year. The number of engines on firm order went up during the month and there
are now 26,224 engines on firm order. This is a new industry high made up of 21,678 single-aisle aircraft engines (also an
industry high) and 4,546 widebody aircraft engines.
The July engine order intake was made up of 524 single-aisle
engines and 44 widebody engines taking the total order intake so far this year to 2,346 engines. This is a very large number
though it is around 500 fewer than the intake by the end of July last year.
Delivery numbers are up: The problem for both the aircraft and the engine manufacturers
now is not so much about adding to their order books but rather more about how to deliver the huge number of air transports
and engines that they already have on their books.
What is very encouraging to see is that by the end of July
there was a new delivery record for the first seven months of a year. There were 809 aircraft deliveries by the end of July
which is 17 more than by the end of July 2015 when the previous Jan-July record was set. So it is the first time that more
than 800 aircraft have been delivered in the first seven months of a year. The total is made up of 614 single-aisle aircraft,
a new high for the Jan-July period, and 195 widebody aircraft which is the lowest for the period since 2013. The widebody
total was brought down by far fewer Boeing widebody deliveries this year. But both Airbus and Boeing have been churning out
single-aisle aircraft and both companies have delivered record numbers of single-aisles for the Jan-July period.
A record number of
aircraft deliveries translates into a record number of new engine installs. So far this year there have been 1,640 engine
installs. The number of installs in July was a new record for the month of July. But this new Jan-July engine install record
is very much a function of a larger number of single-aisle engine installs. By the end of July there had been 1,228 single-aisle
engine installs and 412 widebody engine installs. The single-aisle figure is 90 engines larger than the previous record set
in Jan-July 2015 but the widebody figure is the lowest number for the Jan-July period since 2013.
There is no doubt that this year will be
another record production year but the way things are going it very much looks as though this will be a function of much larger
single-aisle aircraft and engine deliveries than last year, and fewer widebody aircraft and widebody engine deliveries.
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