- Both Airbus and Boeing
have significant operations in China right now,
but given recent geopolitical events, could this actually be
about to change? And also, could that create more trouble
for Airbus than for Boeing for a change? - Beijing's goals
for its aerospace industry is to dominate the global space
and drive its competitors out of business. - Stay tuned. (delightful tune) In the last few months, we have seen some really interesting news
come out from China regarding the shape
of its aviation industry. For example, in September of 2022,
the Comac 919 finally got its type certification
from China's aviation authority after quite a few delays. And very soon after the certification,
China Eastern Airlines took delivery of the very first C919 early
back in December of 2022. But as I've explained in previous videos,
this first version of the C919 is actually using quite a lot
of foreign parts in it, ranging from avionics, hydraulics,
landing gear and of course, its engines, which are a variant
of the CFM LEAP engine which is used in both the Airbus A320neo
and the 737 MAX families. Until recently, most analysts
didn't expect China to develop its own engines for the C919,
at least before the end of this decade. But some recent developments
seems to suggest that China's engines might be much closer than that. In March this year, "The Air Current"
reported that a test version of the Chinese CJ1000A engine
that aims to replace the LEAP has actually been tested in flight
using a Y-20 military cargo aircraft. And by the way, it also seems that China
might have brought to service a newer version
of that Y-20 cargo aircraft with yet another Chinese-made engine
on top of that. That one is a different
and much more powerful engine than the one that would be used
on the C919. And all of this suggests
that Chinese engine development is accelerating
even faster than expected. Now building their own engines
is the single biggest step that China has taken towards creating
their own fully homegrown C919. But it still leaves
all of the other foreign parts who are still left in that aircraft. Building and certifying new parts
to replace those will likely take much more time. But that will depend in part
on whether or not China wants to actually sell the C919
to foreign markets or not. Now the reason I'm bringing up the C919
is because its progress has an effect on how well Airbus and Boeing will fare
in China during the coming years. But even if its Chinese engines
are ready earlier than expected, the C919 will not be
in a position to allow China to fully replace Boeing and Airbus,
or even one of them actually, as analysts like "Leeham News" have explained
in their excellent articles on the subject which you can check out
in the description. The reason that they can't is that China
simply needs too many single aisle jets during this and the next decade for it to completely turn away
from Western aircraft manufacturers. They just cannot churn out
enough aircraft themselves to do that. And the way that the C919's
long-awaited delivery has gone seems to actually verify this. The first C919
was delivered to its operator on the second week of December, 2022,
like I mentioned before. But as of right now,
Comac still hasn't delivered a second aircraft, and more to the point,
this first aircraft appears to have made maybe a few flights
in January and February, possibly even with passengers
in some of them. We don't really know that. But as of right now, this aircraft
seems to be sitting in storage. And if that's the case,
then knowing how Airbus and Boeing are actually doing in China
becomes much more interesting. But for the last few years,
this has been a very one-sided affair. Boeing hasn't recorded
any new sales to airlines in China for quite some time now,
and deliveries of already purchased jets have almost stopped completely,
with the exception being widebody freighters, mainly the 777F. But in some better news for Boeing,
up to 11 airlines in China are now said to be
restarting operations with the 737 MAX. And because of that, some analysts
are actually expecting Boeing to finally start delivering
some of its already built 737 MAXes for its Chinese customers. Airbus, on the other hand,
scored a huge sale of nearly 300 jets to China last summer. Usually, Chinese operators
would balance large orders like that between Boeing and Airbus. But this time, Boeing clearly
didn't expect any matching order because they immediately expressed
their frustration saying that geopolitical differences
continue to constrain US aircraft exports. But it is in aircraft production
where things between Boeing and Airbus are now starting to get really interesting because, and it's actually not often
that I've been able to say this lately, some recent developments
might actually be swinging the balance back towards Boeing,
and I'll explain why after this. I sometimes wonder why I get sudden urges
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of MyHeritage services. Now let's continue the video. Now both Boeing and Airbus have been struggling
with supplier-related shortages lately. Despite their plans to produce as many
as 75 single aisle aircraft per month by the middle of the decade,
Airbus actually delivered fewer aircraft than Boeing did
in the first three months of 2023. But everyone expects that
these supply chain issues will gradually start to ease,
which should once again, give the edge back to Airbus,
well, at least initially. To be very clear here,
both Boeing and Airbus are keen to increase
their aircraft production, but as things stand right now, Airbus has more assembly lines
for its A320s than Boeing does for their MAXes. On the other hand though,
Airbus really needs these assembly lines because in a way,
the European manufacturer has now become a victim
of their own success and this is why. For any airline,
placing a new aircraft order is something that they will have to plan
many years ahead. Now there is nothing really new in this. Obviously,
aircraft are complicated machines with millions of parts, many of which,
like the engines for example, are long lead time components, meaning that they take
a long time to produce. But sometimes waiting times for new jets
can go up even further than the time it takes
to actually produce them. And that's especially true
when a manufacturer introduces a new type, causing the airlines to scramble to get those new, more efficient jets
into their fleets. So, since Boeing and Airbus
both introduced re-engined versions of the 737 and the Airbus A320,
more or less at the same time, this exact thing happened. And huge queues
of prospective customers were created, causing the waiting times
to get much longer. But waiting times for the Airbus A320neos
are at the moment, considerably longer
than for the 737 MAXes. And that's, simply put,
because Airbus has been outselling Boeing. Right now, Airbus has a backlog
of over 6,000 A320neo family aircraft. And the backlog for the 737 MAXes
sits at just around 4,200 jets. So, if you're an airline and you want
to place orders for brand new A320s today, you likely won't be able
to get them delivered before the end of this decade. And that's especially true
if you want something special like the longer range A321XLR, since that's more complicated
and time-consuming to make. Now as you might expect,
these super long delivery times are now actually starting
to cost Airbus some sales. Airlines that are, you know, on the fence
a little bit about which aircraft type they want to order
might well pick the 737 MAX simply because Boeing can deliver them
years earlier than Airbus can. And this is the real reason
why Airbus really wants to push monthly production rates
up as high as possible. But interestingly, Boeing seems keen to chase Airbus
as best as they possibly can. Currently, Boeing makes
around 31 737s per month but are pushing their suppliers
to increase this rate to 42 per month by the end of 2023,
47 by the middle of 2024, and 52 737 MAXes per month
by January, 2025. In order to make this possible,
Boeing are increasing the number of production lines
that they have for the 737 MAX. At the moment,
Boeing have three 737 assembly lines at their Renton production facility,
but for a while now, only two of these lines
have actually been active. According to "The Air Current," each of these lines
are theoretically capable of producing 21 737s per month,
so they could easily handle 52 aircraft. But to ease some constraints
and unpredictable bottlenecks, Boeing are opening a fourth line
in Everett, a site that up until now has been used to produce widebodies. So, what is Airbus doing to boost
its production of the A320 then because they are the ones
with the real problem here? Well, this is where we get back to China. Right now, Airbus has a total of nine
final assembly lines for the A320 family. Two of these are in France,
four are in Germany, two in Alabama in the United States,
and one in Tianjin in China. But in April, Airbus announced
that they're opening a second A320 final assembly line
in their Chinese plant, while at the same time,
boosting the existing line's capacity from four to six aircraft per month. And at the same time as this is happening
in China and in the US, both Airbus and Boeing
are also being pressured by India, who really wants one
or better yet, both of them to set up aircraft assembly lines there as well. And there might well be some
very good market-related reasons why both of these manufacturers
would want to consider that. According to the United Nations,
India are set to overtake China as the country with the largest population
in only a few years. And in the post-pandemic environment,
the country's aviation industry is experiencing an unprecedented boom. We all got a pretty good clue
about what this could mean when in February,
the newly privatized Air India made the biggest aircraft order in history for nearly 500 single and twin aisle jets
from both Airbus and Boeing. And that huge number doesn't even include
the likely big number of aircraft, mainly Airbuses,
that will also come from lessors, again, because of the lack
of Airbus delivery slots. And that's not even the end of it. Because IndiGo, which is currently
India's largest airline and already has orders
for 500 aircraft from Airbus, is reportedly in talks with both Airbus
and Boeing for 500 more. And the fact that they are even talking
with Boeing is pretty amazing in itself because IndiGo is currently
an all Airbus airline and changing that will come with its own challenges. Again, there is a huge possibility
that these talks could have to do with IndiGo's wishes
for more quick deliveries than what Airbus can currently handle. But there could also be other reasons. Indigo might, for example,
also be looking into buying widebodies as it's expanding
its long haul operations. What all of this means
is that both Airbus and Boeing have very good reasons to try and keep their customers
in India very happy. But does this mean
that they could actually consider setting up production facilities there? Well, here things start to be
a little bit more complicated. Airbus already has
an aircraft assembly line in India for military turboprops. They're assembling 40
C295 cargo aircraft there following a couple of orders
from India's military and Coast Guard. And they also have more production
and maintenance facilities already available in the country. Boeing, on the other hand, in March
announced that they will be setting up a conversion facility in India to turn
passenger carrying 737s into freighters. And what makes this really interesting
is that up until now, Boeing has been making
these freighter conversions in China. Boeing are also doing
other things in India, including recruiting engineers
and building aero structures for two helicopter types,
the Apache and the Chinook. Crucially, these plants
produce structural parts for helicopters that Boeing sells worldwide,
including inside of the United States. But what about airliner production then? Well, with China's pursuit
of manufacturing independence plus worsening international relations,
many analysts expect a gradual withdrawal of key Western industries from China. And India seems quite keen
to play a role there, beyond the needs
of its own expanding market. But it is very hard to imagine
Airbus pulling out of China anytime soon. The opening of that second
A320 final assembly line, plus some recent statements
from the French president, seemed to suggest that Airbus remains
committed to its partnerships in China. Obviously, Airbus needs
every production line in its disposal for the reason that I mentioned earlier,
if they are to try to have any chance of hitting their production targets
for this decade and beyond. And by the way, there's also a possibility that somewhere
in the back of Airbus's mind they're thinking
that there might be a need for A321neo factory-built freighters
in the future. This is a long story in itself
with a lot of question marks that probably deserves its own video. But if that were to happen,
it would only add to the production demands
for the A320neo family. So, could Boeing
have a chance here then? Could they move into India,
increasing their production capacity? Well, here we are facing
a completely different problem. You see, Boeing
has a lot of aircraft parts made in different sites around the world. That's why they have the Dreamlifters,
those enormous 747 conversions who transport wings
and fuselage components between sites in Italy,
Japan, and the United States. But Boeing doesn't assemble any aircraft
outside of the United States. But then again, this might already
be about to change. Well, at least sort of. Because in 2021,
Boeing announced their plans to assemble the new MQ-28 Ghost Bat,
better known as the Loyal Wingman, in a facility at the beautifully named
city of Toowoomba in Australia. - It is the first time
that Boeing is setting up this type of facility
outside of North America. - But this is likely
just a singular exception to the rule because Boeing is currently
developing this aircraft in cooperation with Australia's military,
who are funding much of the project. It would be much, much harder
for Boeing to convince its unions that there is a need
to open a final assembly line for an already existing aircraft at a site outside of the United States,
especially now. Remember, Boeing has just stopped
production of the 747, creating a giant empty space
where its assembly line used to be. And Boeing also moved
all production of the 787 away from that same plant. They are using some of that space
to check 787s and the rest of it for the new 737 line
that I mentioned before. The only way that I could see
that Boeing could possibly be able to convince its unions
to agree to a move abroad is if they were to launch
a new aircraft type to be made at home very soon. But as you have seen
in my previous videos, that sadly doesn't seem very likely. The questionable upside here for Boeing
is that from now on, they probably have less to lose
if international politics makes business with China
even more difficult. After the Chinese balloon
overflew the United States this January, the US threatened to sanction
Chinese aviation companies that were believed
to have played a role in the incident. This obviously didn't do Boeing
any favors in China, especially since they were hoping to restart
MAX deliveries at the same time. But the stakes for Airbus,
if these sanctions gets any worse, and if China starts
to become more isolated, could obviously be much higher
since they are already committed to their production lines in China. In the short term,
Airbus definitely looks like it will have
the larger production capacity out of the two manufacturers. But that doesn't mean that its production
will also remain more stable than Boeing's which, I admit, it's a strange thing to say after Boeing's production troubles
during the past few years. What we will ultimately
have to wait to find out is which of these two manufacturers will actually be able to up their game
in India the fastest, or if they even will do that. But what do you think?
Let me know in the comments below. Check out this video next
or binge on this playlist. And if you want to support
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and I'll see you next time, bye-bye.
