Backlog A Chink In The Airbus Armour

Its been stated the sweet spot for a maker of popular air frames is for the one who can deliver within a airlines planning and expansion needs. It is therefore important not to make a customer wait more than five years for financial planning purposes. The outer limit for purchase risk is usually about five years. The backlog pole position becomes important to any major framer of popular airplane models.



A quick formula would be taking backlog and dividing by the optimal production pace per year. The Airbus guidance is 120 A-350's a year by 2018. Boeing will make 14 787 a month by 2018 or 168 units for the year. Using these expected productivity pacing of 10 and 14 units per month respectively, an expectation can be made how far out is the back log.

Airbus' 744 unit A-350 backlog with 120 units a year delivery pace  suggest a back log for newly placed orders at 6.2 years before its order book delivers a newly placed order.

Boeing's 683 unit 787 backlog with with a 168 unit delivery pace projected for 2018, only has a 4.0 year backlog which is easily within an airlines five year plan if it placed an order today. 

However, the backlog production position is a fluid and dynamic placement. There are airlines who delay or cancel an order. The backlog position may shift monthly opening up a build position sooner for  those needing a delivery quickly. That too becomes a separate airline risk of when it could expect a delivery if it finds itself at the back of the order line, and it needs its aircraft closer to front of the line.

The Airbus 6.2 year backlog as compared with the Boeing 4.0 year backlog gives Boeing more flexibility for giving its new orders a closer look at timely deliveries for its airline customer. Receiving an airplane after 6.2 years from an order date implies a greater risk is taken by an airline when it awaits its order for a longer period of time.

The chart below provides a glimpse of a customer's relative position if it ordered today it could expect more flexibility when buying the 787 respective to the A-350. This is a big incentive to order Boeing's 787.

Boeing is able to grow its backlog to 1,044 unit backlog and keep pace with the Airbus backlog of 744 units from a production perspective. At this time the customer could safely order the Boeing 787 up to 361 more units before it becomes even with Airbus backlog when comparing both framers production capability, since Boeing will produce 14 787 units to the Airbus guidance of 10 A-350 units per month.