Boeing crisis is a threat to the whole aviation industry

There’s no quick fix to the industry’s over-reliance on the two major manufacturers.

Airbus, which has a 62 per cent market share in the key narrow-bodied segment of the commercial market, is already struggling to keep up with demand despite ramping up its production.

Last year Airbus delivered 735 aircraft, up from 663 in 2022, against Boeing’s 528. Airbus has a record backlog of 8598 jets and the highest gross orders (2319) in aviation history.

Boeing’s backlog of 6216, which is swelling daily, is more than 6200 jets. It is likely that its order book will fall and its backlog of orders will grow further because of its current predicament.

Even though Airbus plans to deliver about 800 aircraft to customers this year it doesn’t have the capacity to pick up anything meaningful of the slack created by Boeing’s reduced production.

Boeing had planned to lift its own production to around 600 planes a year by 2025 but has suspended all forecasts after the January incident, when a fuselage panel blew off an Alaska Airlines 737 Max 9 full of passengers.

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Airbus, which earned about $US6.2 billion last year, is already investing in a successor to its very successful A320neo. It has said the new plane will be 20 per cent more fuel-efficient.

Boeing, having lost more than $US7 billion over the past two years, will likely fall further behind in terms of cutting-edge technologies because of the constraints on its ability invest and the authorities’ – and it’s own – restrictions on its production.

Boeing has slowed manufacturing rates as it grapples with quality control issues that pre-date the crashes of the two Max 8s.

A lot of Boeing watchers blame the 1997 acquisition of McDonnell Douglas for a shift in Boeing’s culture from one of engineering excellence and prioritisation of safety to the prioritisation of profits.

Like many aircraft manufacturers, in recent decades Boeing has outsourced much of its production to focus on assembly. Airbus also relies on third-party suppliers – including Sprint Aerosystems, which was spun off from Boeing in 2005 and which makes Boeing’s fuselages – although perhaps to a lesser extent.

Its quality control issues were compounded by the pandemic. Where Airbus kept control of most of its workforce, Boeing let much of its go and has had trouble rehiring experienced workers as demand for its planes has rebounded.

Boeing has been in talks to buy back Sprint to regain direct control over the quality of production of a key source of some of its recent issues, which include the Alaskan Air incident, misdrilled holes on its 737 Max planes, loose bolts, tools found under cabin floors and, more recently, a “technical event” on a LATAM Airlines’ flight from Australia to New Zealand than injured 50 passengers.

Boeing has to sort out its quality control issues, not just to ensure its own survival, but because they will restrict the growth of the aviation industry and will increase airfares for customers if they aren’t resolved quickly, with economies-wide effects.

Beyond Airbus and Boeing there’s little relief in prospect for capacity-constrained airlines.

The industry will – and is being – impaired by the problems within Boeing.

Embraer could possibly expand into larger aircraft but that would be a big and risky step up for the Brazilian company. When, in the last decade, Canada’s Bombardier tried to enter the smaller end of the markets dominated by Airbus and Boeing it was a disaster than ended with Bombardier largely exiting the mainstream commercial aviation markets.

China’s COMAC, whose C919 narrow-bodied jet flew commercially for the first time last year, might be a competitor, particularly in its home market, to Airbus and Boeing in the long term.

Its engine, avionics, control systems, brakes, wheels, tyres, landing gear and cabin system are, however, all made by US and European suppliers and it doesn’t have the ubiquitous international network of parts and service centres that the two dominant manufacturers have developed over many decades and which would be very difficult and costly to replicate in anything other than the very long term.

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Airline CEOs are adamant that Boeing prioritise improving its quality control over any attempt to accelerate production. They don’t want unsafe planes or, as is happening today, passengers choosing not to fly on their Boeing aircraft. They want the next CEO to have a strong engineering background for that reason.

The candidates for that role will be few. There are few industries more complex or so reliant on such a complex ecosystem of suppliers and customers as aviation. The pressure, internal and external, on Boeing to make the right choice will be intense and the success, or failure, of the chosen one will influence the future shape of the entire industry.