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Boeing and Airbus Scaling Back Production - 12/18/15

After five years of rapid growth in aircraft orders, twenty fifteen has been a year of decline, raising speculation that Boeing and Airbus may be forced to scale back production plans for coming years.  As reported by Reuters, with three weeks left in twenty fifteen, Boeing and Airbus have collectively booked fewer than sixteen hundred aircraft orders, a sharp decline from nearly twenty nine hundred orders in twenty fourteen. 

The slowing global economy may be partly responsible.  Airlines may not be nearly as confident regarding their respective futures.  Because both Boeing and Airbus possess eight to ten years of backlog, planes ordered today won’t be delivered until twenty-twenty three or later. 

There is a growing risk of significant order cancelations, particularly from China, Russia and Brazil.  Airbus has booked a bit more than one thousand orders this year versus roughly six hundred for Boeing.  That means that Europe-based Airbus has commanded about sixty four percent of orders. 

Many recent sales have been driven by newer models.  Airbus’ single aisle A320neo is due out by the end of the year with the first going to Germany’s Lufthansa.  Earlier this month, Boeing rolled out its new seven thirty-seven MAX, which is due to enter service in twenty seventeen.

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.