Boeing and Airbus' new competitive market landscape

In Boeing's recently released investor briefing statement, Boeing plans toincrease production of the 737 MAX to 50 units/month by 2025. So far, Boeinghas remained silent on future production rate plans, emphasizing only that the737 is currently being produced at a rate of 31 units/month. According toCirium data, Boeing's current production rate is closer to 20 units/month,indicating that Boeing's supply chain delivery delays are far more serious thanannounced.

For its part, Airbus is still insisting on increasing production of itsA320 series to 75 units/month by 2025, despite the fact that it faces the sameproblems as Boeing in terms of supply chain issues, which has led to a slowdownin its production rate ramp-up. As a result, Airbus expects to reach aproduction rate of 65 units/month in early 2024 and 75 units/month in 2025.Airbus currently has a reserve order of 6,146 units, which would normally take 12years to complete production at the current production rate of 45 units/month,and only 7 years if the production rate is increased to 75 units/month.Similarly, Boeing's current reserve order is 3,554 units. At a production rateof 31 units/month, it would take 11 years to complete production; at aproduction rate of 50 units/month, it would be reduced to 7 years.

With the continuation of theduopoly, the market typically assumes that the two major manufacturers willeach have a 50% market share of single-aisle aircraft. Boeing's recentstatement said that the market share of reserve orders will reach 50% each inthe future. However, it is clear that for some time, the situation will not beas Boeing would like. Currently, the ratio of Airbus and Boeing reserve ordersis roughly 60:40.

A321neo is the main product of Airbus, currently has 3,677 reserve orders,accounting for about 60% of the total reserve orders of the A320 series. TheBoeing 737 MAX 10 model, which can compete with it, has only 784 reserveorders, accounting for about 18% of the total reserve orders of the 737 MAXseries. Airbus is very favorable in terms of market share. And now, theproduction rate mentioned in Boeing's statement seems to have tacitly assumedthat the market share ratio with Airbus will be 40:60 at least in 2025. Howeverthe factual situation may be worse than Boeing expected, because Airbus willproduce A220 at the rate of 14 aircraft/month in 2025, which may cause Boeing'ssingle-aisle market share to drop further to about 36%.

In addition, Boeing's industry position may be further complicated by theissue of forensics. Boeing said in an investor presentation that 737 MAX 7certification will be delayed until 2023 and the 737 MAX 10 will be delayeduntil 2024. Boeing also said that it does not intend to develop any newcommercial aircraft in the next decade. As a result, Airbus' single-aisleproduct line will be in a very strong position for at least this decade.

Although Airbus has more than 60% of the single-aisle market share andappears to be the dominant player in the single-aisle market, it remains to beseen how long this status quo can be maintained.