Boeing Had Negative 87 Net Plane Orders In 2019

Filed Under: Misc.

I think we all know that 2019 was a rough year for Boeing, though it’s interesting to be able to do a side-by-side comparison of Airbus and Boeing aircraft orders, deliveries, etc.

Boeing aircraft orders & deliveries in 2019

Boeing has reported the details of their aircraft orders for 2019. While this shouldn’t come as much of a surprise due to the 737 MAX, the numbers are really bad. The company has reported the worst net orders in decades, and the fewest plane deliveries in 11 years.

Just how bad was 2019 for Boeing?

  • Boeing delivered 380 planes in 2019, a decrease of 53% compared to 2018
  • Boeing’s gross orders were 246, a decrease of 77% compared to 2018
  • Boeing’s net orders after cancelations and conversions were 54 planes, compared to 893 the previous year
  • Boeing’s net total orders after accounting adjustments representing jets ordered in previous years but now unlikely to be delivered were negative 87 planes
  • Therefore Boeing’s 2019 book-to-bill ratio (measuring orders against deliveries) came to a negative 0.23

Airbus aircraft orders & deliveries in 2019

Just a few days earlier Airbus revealed their 2019 results, so how did they do by comparison?

  • Airbus delivered 863 planes in 2019, an increase of 8% compared to 2018
  • Airbus’ gross orders were 1,131
  • Airbus’ net orders after cancelations and conversions were 768 planes, compared to 747 the previous year

Bottom line

There’s nothing really surprising here, though the numbers really do reinforce how bad 2019 was for Boeing, especially in comparison to Airbus. Not only were deliveries way down, but orders were way down as well. While they still have a considerable backlog of deliveries, the momentum isn’t there at the moment.

The company will be releasing fourth quarter results on January 29, so I can’t help but wonder just how bad it will be for the company.

It’s believed that Boeing has been losing about $1 billion a month because of the 737 MAX grounding, and the company had $3 billion negative free cash flow in the third quarter of 2019. Of course all of this is only part of Boeing’s problems — they’re also having issues with the 777X, and given the overall situation, new orders have been weak.

Do these numbers from Boeing surprise you?

Comments
  1. The new Boeing CEO is on record stating that priority #1 is to get the 737Max back in the sky.
    This illustrates Boeing hasn’t learnt a thing.

    Anyway the numbers are not surprising. Apart from the problems arising from the design flaw in the 737 Max, Airbus planes are by far more comfortable to fly that the comparable Boeings. Boeings simply make way too much noise inside the cabin resulting from cabin pressurization system.
    Just did 10 flights on narrow bodies and once again it became very clear how much better the A319/20/21 is compared to 737’s.

  2. Not to mention the quality issues that have been identified on 787’s leaving the US plants.
    Another issue that needs attention.

  3. I would think a new CEO’s priority is gaining respect back for the company. Designing quality airplanes that the airlines need. Stating that the Max is the #1 priority isn’t a good idea.

  4. @Ron

    Let’s be honest with ourselves. It takes about 10-15 years to get a fresh aircraft from inception to production. What else do you think Boeing’s new CEO is going to say? What CAN he say? The 777X isn’t ready, and the 757 replacement is basically still on the drawing board. The company needs the MAX to fly. They simply don’t have the convenience of cutting their losses and moving onto a new jet in any reasonable timeframe.
    Hell. Even if they did, with the level of rot that’s infested the company at senior levels, the next new airframe design that comes out of Boeing is going to get way more scrutiny than they’ve ever seen before. And not just from regulators around the globe, but from the flying public as well (see: DC-10).

    That said – and pardon the phrasing – but Boeing’s accountants flew them too close to the sun. As you noted, it’s astonishingly telling that they’ve had QA issues (ie corner-cutting) affecting ALL of their post-McDonnell Douglas-merger airframes: 787, 737Max, and 777X.

    Truly speaks to some fundamental broken processes that will take years to shake out.

  5. @Jon

    Yes, it takes that many years to come with a new aircraft. So they should start on it asap.

    I do understand the thought to get the 737Max back in the sky as a solution to their problems is a tempting one. Unfortunately it is not a solution.

    While Boeing might be able to get the politicians leaning on FAA to clear the thing at some point, it leaves 2 problems:

    1) will people in the US fly the thing? I guess some might, others not
    2) outside the US Boeing won’t be able to manipulate regulatory clearance and I can’t see regulators in Europe, China, Russia, South America etc etc clear this thing anytime soon, and more probably never.

    As the market under 2) is much bigger than under 1), getting the misdesigned bug back in the sky is thus not a real solution for Boeing.
    Boeing seems insufficiently aware that most of their market is outside US. Look at how they spoke about Lion Air. While my experience flying Lion is not something I wish to repeat, there is no denial it is one of their most important customers.

  6. @Jon – maybe instead of remunerating the CEO on how quickly he can get the Max back up in the air, they can announce a thorough review on the processes so that something like the Max won’t happen again. Heck they can also announce that any previous bonuses paid to ex-executives responsible for the lax environment will be subject to a civil suit and there will be a crawback of bonuses. They did that for the banks didn’t they?

  7. In case anyone cares, looks like (according to a recent Forbes article anyway…I haven’t validated any of this) their commercial division, which is one of four divisions, will produce around $45.6 billion in revenues for 2019. That’s ~50% of Boeing’s revenue.

    For their defense division, it’s around $27 billion for 2019 (~30% of revenue). And of course, the biggest chunk is from US government. Around 20% of DoD weapon procurement budget goes just to Boeing. And they’re the second largest defense contractor behind Lockheed.

    Across all divisions, about 31% of total revenue comes from the US government. So yeah, Boeing isn’t going anywhere. The only worst case scenario that enters my brain if the commercial division keeps taking hits is it gets spun off to deal with its issues, and the rest of Boeing keeps chugging along.

  8. I’m still wondering who is going to fly the 7M8 if it ever flies again and I hope it doesn’t.

    Then there will be a question of how many people are rushing to board a 777X. I won’t be doing that until it’s been around and incident free for at least five years.

  9. Love me a FCF data point.

    @ Jay. Revenue is not something to ignore and an important headline measure. The point is valid, but more important than revenues regarding not failing is it’s impact on the entire US GDP numbers. You can have a high revenue business and still cut or reduce it as it’s high cost as well, so no margin.

  10. @Jon

    It should take nowhere near 10-15 years to develop a new plane these days with all the IT design tools available now that weren’t in the past.

    I read on this very blog and elsewhere that it would have only taken one additional year to design and build and get approval of a proper new 737 Max design over the time to design etc the ‘upgrade’ of the 737 to the MAX which remember they knew would be unstable from the start hence the need for MCAS.

  11. As a former Group leader in final assembly back in the McDonnell Douglas days in Long Beach, CA. I can say with first hand knowledge, I am not surprised by anything I have read about the
    737max.

    The seeds for the disaster were planted decades ago. At McDonnell Douglas those who
    who were concerned about the quality of the product were demoted, fired, or laid off.

    You really do reap what you sow.

  12. All of Boeing’s issues started when they moved their HQ to Chicago and opened the non-union plant in South Carolina that does poor quality work.

  13. Typical American Corporate greed. All they want is more money. Damn their passengers. Why aren’t the executives in jail. They killed 300+ innocent people. Prison time required.

  14. Back before super computers, Boeing designed and produced the 747 in about 3 years. It would take about 5-7 years. At the end of the day no one will care what plane they are on. Even Airbus has/will have issues. An airplane is millions of parts all of which need to meet specs and do their job.

  15. Boeing is part of a worldwide duopoly selling a necessary part (airplanes) of a service (flying) that is growing much faster than the world economy, and will continue to do so for many years to come — with no low-cost Chinese competition. I see two possibilities: (1) the MAX liability will force the company into bankruptcy; or (2) the company will fly very high. Given the cushion provided by military contracting, I’m guessing (2).

  16. When will Uncle Sam sanction Airbus in order to nobble it while Boeing licks its wounds? Huawei reprised? National security?

  17. The idea that Boeing can afford to ditch the 737 MAX program is perhaps the stupidest assertion I have ever read. I decided to do a little math based off of the little public information availible:

    The development cost of the 737 MAX program was 1.8 billion dollars. Boeing have sold 387, all at a list price of between 100 million-134 million. But airplanes seldom sell for list price, in fact they sell far below list price. Let’s assume that each 737 MAX sold for around 50 million based off of this article from 2009 showing that American paid roughly half price for 737 NGs:

    https://blog.seattlepi.com/aerospace/2009/07/01/how-much-is-a-shiny-new-boeing-737-worth-not-72-million/

    The result is that Boeing has made 19.5 Billion dollars on the program from airlines. Do you think airlines are going to let that money go if Boeing cancels the MAX program? Absolutely not. They will want every penny back, PLUS additional compensation. Boeing also has 400 737 MAX’s sitting around in Arizona, Renton, Seattle and Everett. None have been delivered, so none have made Boeing any money. I have no access to data with regards to how much it costs to build a 737 MAX, but I am going to assume it is around 10 million dollars. 787*50 million is roughly 19.3 billion dollars. Every penny sent straight to the scrapyard.

    I know what you are thinking: “Well, airlines could just order the NSA, they will sure be happy to pick it up”. There is absolutely no way Boeing can develop the NSA in less than 5 years. Don’t forget how much money the program is going to cost to develop. And since the 737, Boeing’s main cash revenue, is gone, Boeing won’t have much money to develop the NSA. Guestimating from the 787 development cost, being EXTREMELY optimistic, I would guess NSA development cost would be at least 15 billion dollars. Add that to the debt pile. Also, the FAA is going to be in no hurry to certify the NSA, seeing as the last time they rushed the process, hundreds died. In all the time it will take Boeing to develop the NSA, the airlines aren’t going to sit on their hands and wait: There are a lot of 737 NGs needing replacement. You know what product can replace them? Bombardier C-Series and A320NEOs of course! Airlines aren’t going to do Boeing a favor: Airbus will likely provide great pricing, and airlines will have a brand new type in their fleet. And just like that, most of the 737NG replacement market (The main market for the 737 MAX and NSA by the way) is gone.

    Well, it’s here: The Boeing 797 NSA. Now Boeing can take back some market share, since Airbus will have been doing nothing in the last five years.

    Oh right. Airbus WILL be doing something if Boeing is developing an NSA. Maybe we will see an A220-500 and A220-700 stretch for the lower range market, and a rewinged A320 and A321 for the mid to long range market. Speaking of which: There goes the market case for an NMA assuming the A320 is still efficient enough. But why go down the path Boeing went on? Why not make a new aircraft entirely. And just like that, Airbus is now competitive with Boeing, and what has already become a drastically shrunk market for Boeing just shrunk in half.

    Did I mention that the 737 is where most of BCAs profits are? So in the 5 years Boeing has had no narrowbody aircraft, their stock price would have been in freefall. Which means less money to fund NMA.

    Lets do some math now: 19.3 billion dollars spent physically building the aircraft. 19.5 Billion refunded to airlines. 15 Billion spent on developing a new aircraft. Boeing has now lost 34 BILLION DOLLARS. This does not factor loss of stock price, loss of investors, loss of consumer trust, reimbursement costs, and loss of market size.

    At the moment, assuming the 737 MAX flies again this year, Boeing are set to loose 9.2 billion.

    https://qz.com/1734220/the-737-max-has-cost-boeing-9-2-billion-and-counting/

    Both outcomes are pretty dire, but which seems more attractive to you?

  18. @Speedbird
    I’d been playing with similar numbers. If I were Boeing I’d be looking at some radical corporate re-engineering: maybe chapter 11 might be looking attractive right now (and screw all the suppliers who’d then have to shoulder the cost of Boeing’s screw-up).

  19. After few days of waiting to read some insights, funny no one mentioned anything about Jet Airways.

    Boeing did have an awful year but to have negative orders is not entirely because of Boeing. It was Jet Airways’ fall that put the orders negative.

    And to give credits to accountants for “accounting adjustments” that left Boeing with negative orders. Without them painting the correct picture, Boeing would still have 54 positive orders.
    Guess how -87 turned from +54. Because Jet Airways never cancelled their orders, even 9W is under insolvency and will almost never operate again.
    But no cancellation means over 100 planes is still an order up until today. I’m quite sure no one at 9W will even bother to cancel them either.

    Funny how all of this would go unnoticed to many if 737MAX never messed up the numbers.

  20. Ever since Boeing management had a merger with the old McDonald Douglas manager, Boeing has gone to shit.
    I doesn’t take much lateral thinking or observing to put the problems at bowing on a very similar course to MacDonald Douglas.
    The management drive is now for profits and revenue maximisation. Safety is no longer high on the list.
    Ever since the inception of the 787, the rot has been festering in Boeing.
    The FAA are an equal partner in the rot, poor oversight of the manufacturing Turner from the inception of design until the airline operational use of an aeroplane.
    There’s a huge list of issues that have been pushed to one side, the 787 battery, the fact that a number of onboard battery fires resulted in a poor seemingly temporary adjustment which has become temporary due to a lack of interest.
    Remember that the original designer of the battery told Boeing the chemical composition of the battery should never be allowed with such a combination in a product of any type, let alone an aircraft battery.
    The seemingly lack of concern for public safety is a significant issue, but the comprehensive drive of financial profit as the most important factor of such a manufacturer is an appalling misuse of corporate trust and a considerable professional misconduct in what can only be classified as a fraudulent misuse of their governance and an act of betrayal to the FAA as the overseeing body.
    How this appalling behaviour has been allowed to continue brings the whole reputation of the FAA as regulator and of Boeing as the designer and manufacturer into serious doubt. There has been a fragrant breach of standards permitted at Boeing, a fragrant breach of oversight by the FAA and now what can only be seen as a criminal act by both parties to cover up a poor design, which by the FAA. admissions, will lead to a further loss of life. This whole saga is outrageous.
    The public deserve much better.

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