AIR Airbus SE

By Doug Cameron and Robert Wall 

Boeing Co. and Airbus SE failed to deliver all the jets they had once planned to make in 2018, showing how production problems are holding back the two top plane makers as demand for airliners soars.

Boeing Co. on Tuesday said it delivered 806 jetliners for the year. That was a record, but fell shy of the 810 to 815 jets the company aimed to deliver. Shortages of fuselages, engines and other parts have slowed Boeing's output since last summer. The plane maker last missed delivery guidance in 2011.

Airbus said Tuesday that it delivered 800 planes in 2018, also a company record. That met its revised goal after the company in October scaled back its production plans for the year by around 20 aircraft because of supplier problems and internal production setbacks. It just barely met the lowered guidance of 800 planes.

Shares in both companies rose Tuesday on the news that the production shortfall wasn't more severe. Boeing's shares rose around 3% on Tuesday and Airbus shares closed 3.7% higher.

Together, the two aerospace giants delivered a combined 1,608 planes in 2018, compared with 1,481 a year earlier. That's up sharply from 1,000 deliveries in 2011, reflecting the surging demand for air travel, particularly among fast-growing carriers in Asia.

Both plane makers are expected to announce plans in the coming weeks for another boost in output, according to analysts, even as some suppliers flag ongoing issues with the pace of jet orders. Engine makers' ability to boost output this year will determine whether Airbus and Boeing can raise delivery rates again over the next two years, said analysts. Boeing Chief Executive Dennis Muilenburg has said customers want the company to push output even higher.

"We need to be assured that this demand will stay for some time," Olivier Andries, chief executive of Safran SA's engine unit, said at an investor event last month. A joint venture between Safran and General Electric Co. provides engines for the new Boeing 737 Max and some Airbus A320neos. The Pratt & Whitney unit of United Technologies Corp. also supplies engines for the Airbus jet.

Deliveries rather than orders have become the most closely watched measure of the aerospace rivals' performance, as they work through order books for more than 13,000 jets due for delivery over more than seven years. Most of a jet's purchase price is paid at delivery, driving profits and cash to fund huge stock-buyback programs that have lifted shares in both plane makers in the past three years.

But the production pressure on Boeing and Airbus is showing little sign of easing. Boeing logged 893 new orders in 2018, adding to already multiyear wait-periods for its most popular aircraft type. Airbus, which is expected to report order intake Wednesday, struck several big plane deals in December, suggesting its backlog of orders is equivalent to several years' worth of production.

Airbus and Boeing have already announced plans to boost output of their best-selling single-aisle jets this year. Boeing will increase monthly production of its 737 family to 57 from 52, with Airbus raising output of its A320 family to 60 from around 52. Airbus officials have said they see demand to push single-aisle output to 70 planes or more a month, with the only question being whether suppliers can keep pace to build all those aircraft.

Achieving those unprecedented production figures would depend on timely deliveries from suppliers. Boeing deliveries in 2018 were hurt by late shipments of engines and parts from Spirit AeroSystems Holdings Inc., which left dozens of unfinished planes parked around Boeing's Seattle-area facilities.

Spirit, which makes the 737 fuselage, recently reached a new deal with Boeing that sets the terms for production through to 2030.

For Airbus, supply hiccups largely focused on late engine deliveries, though internal delays compounded production problems. It, too, had planes sitting at production sites awaiting parts.

Write to Doug Cameron at doug.cameron@wsj.com and Robert Wall at robert.wall@wsj.com

(END) Dow Jones Newswires

January 08, 2019 14:38 ET (19:38 GMT)

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