Boeing- An Industry Leader Declaration
This commentary is a follow-up to our previous Supply Chain Matters December commentary, Boeing Hits 2012 Delivery Target for 787 Dreamliner. We noted reports that Boeing handed over 7 of the 787 aircraft to six customers during a 25 hour period in December, the classic “hockey stick” delivery method. We questioned whether the milestone was part of an overall response to fulfilling a management mandated milestone.
The final piece of this story came this past week in The Wall Street Journal article penned by aviation industry blogger Jon Ostrower, and no doubt influenced by the Boeing PR team, with the headline, Boeing Likely Reigns as No. 1 Aircraft Maker. (paid subscription or free metered view) The article reports that by delivering 601 aircraft in 2012, Boeing has likely topped Airbus for the title of world’s largest aircraft manufacturer.
It turns out that this output exceeded Boeing’s guidance for between 585-600 aircraft deliveries for 2012, no doubt the milestone pegged for management bonus payments. Ostrower points out in his article that Airbus has also expected to lose its lead in new orders after a spectacular 2011. Boeing’s total backlog of unfilled orders increased to a record 4373 aircraft. However, both manufacturers may have to deal with lower new orders in 2013 because of changes in government backed export finance and the general state of the global economy.
Most importantly, the WSJ article notes that the global airline industry is expected to post a combined profit of $6.7 billion in 2012, 31 percent lower than the $8.8 billion recorded in 2011.
Supply Chain Matters remains of the viewpoint that while total deliveries remains a rather important metric for both Boeing and Airbus and broader aerospace supply chains, the most meaningful metric will be the performance of newly delivered aircraft in meeting airline and leasing company expectations. The aerospace industry has a business model of long-term leasing and “pay by the hour” operating performance where consistent uptime, more advanced technology laden and fuel-efficient aircraft meets customer needs for increased profitability and overall safety.
Doesn’t it seem that this broader metric and track record should be the ultimate determinant of which manufacturer is the global industry leader?
We certainly do?
Industry participant views are encouraged.