Airlines have the passengers. Now they need the planes

Key Points
  • Boeing and Airbus have been struggling with parts and labor shortages.
  • The issues have made it difficult to ramp up production of new planes.
  • The limitations mean airlines can't expand flying as easily and airfare prices are likely to remain high.

In this article

The first U.S.-made Airbus jetliner moves down the assembly line at the company's factory in Mobile, Alabama, U.S. on September 13, 2015. Picture taken on September 13, 2015.
Alwyn Scott | Reuters

Air travel demand is showing no sign of easing, but Airbus and Boeing are struggling to hand over planes on time, a trend that's limiting airline growth and keeping fares high.

JetBlue Airways said Tuesday it was supposed to receive 29 planes from Airbus next year but will only get about 22.

"I think we're all well aware that they're struggling from ramp-up challenges driven by manpower and supply chain," JetBlue's CFO, Ursula Hurley, said on the New York-based carrier's quarterly call. "We're working hand-in-hand with them to manage through those."

Last week, American Airlines CFO Derek Kerr said the carrier expects to take delivery of 19 Boeing 737 Max 8 planes in 2023, compared with the 27 it previously expected based on guidance from the manufacturer. And Southwest Airlines is keeping aircraft delivery delays in mind in its 2023 plan.

Airlines that had parked planes and slashed flights early in the pandemic when travel demand collapsed are now struggling to expand during the travel boom.

Aerospace companies and airlines shed workers and are now trying to staff and train new employees. Along with shortages of trained pilots, the problems are making bargain flights even more elusive.

Executives at Boeing and its chief rival, Airbus, have said supply chain problems and labor shortfalls have prevented the companies from ramping up production to meet the recovery in air travel.

Boeing on Wednesday reported a 40% increase in its commercial unit revenues during the third quarter but acknowledged the challenges continue to weigh on production.

"We're not anticipating or suggesting that the supply chain world is going to get much better in the near term," CEO Dave Calhoun said Wednesday on the company's quarterly earnings call. "We expect it will continue to be challenged over the course of 2023."

Calhoun told staff that the issues will prevent production increases of its planes. Part of the problem isn't just staffing shortages but costly and time-consuming training of new workers.

"Within our production facilities, we're not pushing the system too fast," he said in a note to employees on Wednesday.

The company will hand over about 375 Boeing 737 planes this year, finance chief Brian West said, down from its January estimate of around 500 of them.

West said the company is working more on site with its top and second-tier suppliers in response to the ongoing challenges.

Boeing's European rival Airbus is aiming to increase production of its popular A320 family of planes to 65 a month in early 2024 and 75 in 2025, up from 50 a month this year.

But Airbus CEO Guillaume Faury said Friday that it would take at least until the middle of next year for the supply chain to stabilize.

"What we are sharing is the fact that ... the situation, the environment has got worse over the last 12 months," Faury said on the quarterly call with analysts. "And it seems like it has stopped to get worse, which means it's bad."

The issues have been felt throughout the manufacturers' suppliers, such as engine makers.

"While we are working many actions across our businesses every day to mitigate the impacts of supply chain constraints and labor availability ... we do expect these pressures will continue to persist into next year as well," said Raytheon Technologies CFO Neil Mitchill during the company's quarterly earnings call on Tuesday.

Raytheon's Pratt & Whitney engines fly on both Boeing and Airbus planes, and its Collins Aerospace unit supplies both manufacturers.

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