The Boeing 737 is the world most successful commercial jet airline, with 10,271 units delivered over 60 years as of September 30, 2018.
But… they also have a humongous 4,714 units still waiting to be delivered. With an estimated three weeks to build each plane from scratch, and approx 42 planes built each month across the Boeing range, it would seem that Boeing has a backlog of 112 months… or just over 9 years.
And that’s just for the planes ordered up till now. With just under 50% of all Boeing 737’s without a replacement order, there is plenty of room for more demand.
Current 737 operators have only placed MAX orders to replace 56.5% of the airplanes in service. This compares with 77% of the A320 family ratio.
Why is there a delay?
Boeing has had quite a few delays with their 737 program but should be given credit for trying to increase production past 60 planes a month.
- Running out of qualified staff, asking retirees to come back to the factory to help with the backlog.
- Running out of room to store half finished jets, as they wait for parts from other factories.
- Running out of suppliers to provide parts, leading to new Boeing factories opening up worldwide (Such as in Airbus’s home turf in the United Kingdom).
- Problems with their other jets (Such as the 787 Dreamliner) distracting top line talent to fix the problems.
- Lack of engines to actually fly the finished planes, as Engine suppliers struggle to meet the demands (Boeing might ramp up but their suppliers don’t).
The delays are due largely to two suppliers: engine maker CFM International, a joint venture between General Electric Co. and Safran SA, and fuselage manufacturer Spirit AeroSystems Holdings Inc. Both companies have said some of their own small suppliers are struggling to meet demand.
How many more orders are there?
It gets more serious when you start to discuss the possibility of more orders. As we mentioned above, plenty of current 737 customers have not yet decided to order a replacement plane for their aging fleets. Whilst it might seem a bit silly, if there is an upwards of a decade wait time, Airlines will need to order now to replace in 10 years.
This would be an additional 3,430 orders on top of the current 4,000, extending the wait time by another 5-10 years (To 2029). By this time, you would hope that Boeing would have a new 737 design beyond the Max series.
Then there is a latent demand that will arrive from growing regions, such as Asia and Africa. If Boeing wants to take advantage of this, they will need to greatly boost the amount of production they can provide.
What does this mean for the Industry?
At the current rate of product (Of current orders, not including any future orders, like the 120 737 order from Vietjet that yet to be added in) Boeing will not have an open slot in its factory until 2024.
So, Airlines that want to expand rapidly or replace their fuel inefficient fleet have to choose other jets.
Such as the Airbus A220 program, which is ramping up as we speak to poach these orders (You can read our controversial Boeing 737 vs A220 article here).
Or the equally qualified A320 program, originally designed to be the Airbus alternative to the 737 (And been very successful, with over 7,000 orders).
Boeing has also partnered up with Brazilain Embraer to help serve this growing demand.
Airlines might also look at simply extending the life of their current fleet, creating a massive secondary market for rentals and parts. Or they might look at different planes entirely, moving upmarket to the rumored 797.
Lastly, nations such as China (Which 20% of the worlds plane demand resides) are creating their own planes to cut out their reliance on American aircraft. You can read about the alternatives to Boeing and Airbus here.
But is Boeing worried?
Not at all, the company has a ridiculous cash flow upwards of $6 Billion USD that will fortify the industry for years to come. You might not be getting your Boeing 737 any time soon, but don’t worry, Boeing will get around to you eventually.