Sluggish widebody demand exacerbated by several market-specific headwinds point to potential production-rate cuts for several Airbus and Boeing programs, a Bloomberg Intelligence analysis contends. 

“The [Boeing] 787 is the closest to a cut and needs a book-to-bill of 1 in 2020, since airframers are typically comfortable with about three years of backlog,” Bloomberg analyst George Ferguson wrote in an analyst note. 

Boeing has a backlog of 328 787s, Aviation Week Fleet Data Services show, and has a planned production-rate cut, from 14/month to 12/month, in place for late 2020. 

Widebody demand has been sluggish across the board, with Boeing and Airbus combining for 146 net firm widebody orders in 2019, compared to 419 deliveries, for a book-to-bill of just above 0.3. Airbus was hit hard by the removal of 70 A380s. Going forward, Boeing’s problems are more acute than its European rival thanks largely to the trade rift between the U.S. and China that is holding up sales to Chinese airlines.

“China hasn’t been buying any airplanes from Boeing recently, and China is a big buyer of the 787,” Air Lease Corp. president and CEO John Plueger said at a recent investor conference. “Without China in the marketplace we have today, it’s hard to see rate 12 being sustainable ... It wouldn’t be a surprise if we saw it go to rate 10.” 

Boeing cited the China-U.S. trade imbroglio when it confirmed the 787 rate-cut plan in October 2019, adding that it expected to see widebody demand rebound enough to consider upping production in about two years. 

The 777 program’s monthly rate was adjusted to 3 from 3.5 as part of the bridge to the 777X, and some 777 freighters are being moved up in the production queue to help accommodate for delays in the 777X program. Boeing’s notional plans are to ramp up rate once the 777X is in service, but Ferguson said several factors could force the U.S. manufacturer to re-examine its strategy. 

“Without an increase in orders, throttling back to five a month seems difficult, even with more than six years of backlog,” he wrote. “This figure includes 54% from Middle East carriers (126 from Emirates) that we suspect are rethinking aircraft size and retirement age.” 

The A330’s backlog appears solid, at 331, thanks in part to a just-revealed order for 40 A330-900neos that Airbus booked in December 2019 and its production rate of 4/month that has been in place for a year. But large exposure to AirAsiaX and Iran Air, which have a combined 35% of the backlog, is cause for concern, Ferguson said. 

“AirAsia X is managing weak profitability and hasn’t taken an airplane in four years,” he said. “Iran Air can’t take deliveries due to renewed U.S. sanctions.” 

Airbus reported having a backlog of 579 A350s at the end of 2019, equivalent to nearly five years of production at the current 10/month rate. Chief risks include a combined 18 orders with Hong Kong’s Cathay Pacific and Hong Kong Airlines. That is less exposure than the 777, however, which has a combined 27 orders on the books from the two carriers.