2023 forecast

The recovery in domestic air passenger traffic continued into 2022, when the number of aircraft departures in the first nine months were 90.4% of departures in the same months of 2019, according to the U.S. Department of Transportation Bureau of Statistics Annual Report 2022. Despite year-end holiday travel delays and numerous flight cancellations, U.S. air travel is on track to soon surpass pre-pandemic levels. With China easing travel restrictions, international air travel numbers likely will follow a similar upward trajectory. Airlines returned parked jetliners to service, but more importantly, are seeking to replace current airplanes with more fuel-efficient versions as oil prices rise.

Predictions of a recession in 2023 are contradicted by statistics showing consumer demand is resilient, with economic experts suggesting a softer landing or a downturn delayed to later in the year. This bodes well for the continued rebound in commercial aerospace, especially as supply chain disruptions diminish. The demand for newer, more economical aircraft should continue this year.

Airbus delivered 661 commercial aircraft to 84 customers in 2022 – an increase of 8% compared to 2021 – and reported 820 net new orders, higher than 2019’s 768. At the end of 2022, Airbus’ backlog was 7,239 aircraft, the highest number since 2019.

“That’s obviously less than we were targeting but given the complexity of the operating environment I want to thank the teams and our partners for the hard work and the ultimate result,” says Airbus CEO Guillaume Faury, addressing the deliveries’ shortfall. “We continue our ramp-up trajectory to deliver on our backlog.”

In the single-aisle category, Airbus’ A220 won 127 firm gross new orders while the A320neo family won 888 gross new orders. In widebodies, Airbus tallied 63 gross new orders including 19 A330s and 44 A350s of which 24 were for the A350 freighter.

Airbus is adjusting the speed of the A320 family ramp-up to rate 65 for 2023 and 2024 and maintains its objective of reaching rate 75 by the middle of the decade. https://www.airbus.com

Airbus deliveries 2022 vs. 2021

Boeing reports 774 commercial orders for 2022 after cancellations and conversions, including 561 orders for the 737 family and 213 orders for the company’s twin-aisle airplanes. The company delivered 480 airplanes for the year.

“We worked hard in 2022 to stabilize 737 production, resume 787 deliveries, launch the 777-8 freighter and, most importantly, meet our customer commitments,” Boeing Commercial Airplanes President and CEO Stan Deal says. “We will stay focused on driving stability within our operations and the supply chain as we work to deliver for our customers in 2023 and beyond.”

Notably, during Q4 2022, the company secured net orders for 376 aircraft, including an order from United Airlines for 100 737 MAX and 100 787 airplanes.

Commercial orders after cancellations and conversions include: 561 orders for the 737 MAX; 213 orders for widebodies (114 787s, 31 767s, and 68 777s); 78 freighters (includes 45 767-300 and current 777 freighters); and more than 50 orders, including conversions, for the newly launched 777-8 freighter.

Boeing 2022 commercial aircraft deliveries

Commercial deliveries include13 P-8A Poseidon military-derivative 737s and 44 new production freighters.

Boeing President and CEO Dave Calhoun told employees, “We generated more than $3 billion in free cash flow in the fourth quarter [2022], driven by progress in our performance and strong demand. This helped us generate positive full-year free cash flow for the first time since 2018, an important metric in our recovery.”

The 737 program is stabilizing production rate at 31 per month with plans to ramp production to approximately 50 per month by 2025 or 2026. The 787 program continues at a low production rate with plans to ramp production to five per month in late 2023 and to 10 per month by 2025 or 2026.

As of Dec. 31, 2022, the Commercial Airplanes backlog is 4,578 jets valued at $330 billion.

In its defense business, Boeing delivered 75 new and remanufactured AH-64 Apache helicopters, 28 new and renewed CH-47 Chinook helicopters, 12 F-15 and 14 F/A-18 fighter jets, 15 KC-46 tankers, and four MH-139A Grey Wolf test helicopters.

Backlog at Defense, Space & Security was $54 billion, of which 28% represents orders from customers outside the U.S.

Boeing officials say its Global Services Q4 2022 revenue of $4.6 billion and operating margin of 13.9% reflect higher commercial volume, partially offset by lower government volume. https://www.boeing.com

Embraer reports that through Q3 2022 it had delivered 27 commercial jets (21 E175 and 6 E195-E2) and 52 executive jets, 28 of them the Phenom 300 light jet and 19 medium-sized Praetor 500 and 600 series, totaling 79. Company guidance for the year was 60 to 70 commercial jets and 100 to 110 executive jets. At the end of Q3 2022, Embraer’s commercial jet backlog stood at 297 E175, E190, E190-E2, and E195-E2 jetliners. https://embraer.com

Lockheed Martin

After 141 F-35 Lightning II stealth fighter aircraft were delivered in 2022, the worldwide F-35 fleet now numbers 894 airplanes with more than 1,870 pilots and 13,500 maintainers trained on the aircraft.

A reflection of heightened security concerns, Canada, Germany, and Switzerland became F-35 customers in 2022. The German Ministry of Defense is procuring 35 F-35A aircraft. The agreement includes a comprehensive package of engines, role-specific mission equipment, spare and replacement parts, technical and logistic support, training, and armament.

The Royal Canadian Air Force will receive 88 F-35A multirole stealth fighters, a sustainment solution tailored to Canada’s sovereign requirements, and a comprehensive training program.

Greece and the Czech Republic have requested the fighter, and the Finnish Air Force ordered 64 F-35A multirole fighters at the end of 2021.

At the end of 2022, the F-35 Joint Program Office (JPO) and Lockheed Martin finalized the contract for production and delivery of up to 398 F-35s for $30 billion, including the U.S., international partners, and foreign military sales aircraft.

In September, the F-35 JPO shared news of the impact the F-35 has on the broader non-aerospace economy. Lockheed Martin’s initial annual economic impact estimate of $65 billion is conservative, according to AeroDynamic Advisory, which estimates the value is approximately $72 billion. The figure reflects money spent on internal manufacturing and final assembly activities as well as direct spending with multiple tier suppliers and a broad range of sustainment activities. https://www.f35.com; https://www.lockheedmartin.com

INDUSTRY INSIDERS

Richard Aboulafia, FRAeS Managing Director, AeroDynamic Advisory

Last year should have been better than it was. Aero markets are mostly in very positive territory, but aircraft deliveries only rose 9.5% by value from 2021. Due to supply chain disruptions, industry output has become de-linked from market health. As a result, the deliveries’ recovery is much slower than hoped.

Defense markets are particularly strong. Due to Russia’s war on Ukraine, and ongoing tensions in the Western Pacific, world defense spending is at a high, exceeding $2 trillion worldwide for the first time in 2021. Combat aircraft markets are in excellent shape, as major powers need to re-equip their militaries to deal with peer adversaries, rather than counter-insurgency operations and low-intensity warfare. But due to supply problems and program delays, military output actually declined by 2% last year.

Single-aisle commercial jets are the biggest civil segment, and demand is quite strong. These jets primarily serve domestic markets, which, outside of China, have come back to 2019 levels. Domestic routes are a commodity service, where airlines have little pricing power. Domestic service economics depend on cost control. When fuel is $100/bbl, if one airline has an Airbus A320neo or a Boeing 737MAX and its competitor doesn’t, then the airline with the modern jet can both out-price and out-profit the competition, so single aisles benefit from relatively high fuel prices.

Other civil segments are quite strong, too. Business jet use has been very strong, although there are signs of softening. Used jet availability remains very low. Backlogs are quite high. Indicators are above 2019 levels, and output is roughly there, too.

The only weak aero market is twin-aisle jetliners. The COVID-19 pandemic hit international traffic first, most, and longest. This created a terrible twin-aisle overcapacity. Meanwhile, the increasing capabilities of new single-aisle jets – the A320neo and 737MAX – makes them appealing replacements for twin-aisles on medium haul international routes, particularly across the Atlantic.

With all the civil and military programs, for all markets, production output goals aren’t being met. Deliveries only grew by 15% last year. The problem is worst in the jet engine production system, where castings and forgings represent a serious bottleneck. Many of these components are titanium, and the disruption of Russian titanium supplies due to the war – voluntary on the part of Western companies, as Russia hasn’t moved to block exports – has worsened pre-existing supply problems.

A tight labor market, coupled with the fact that we’ve just been through the first economic recovery to see commercial aviation relatively late compared with other sectors, and thus late to hire people, has resulted in major delays.

Civil and military aero markets remain strong, and the production delays have enforced discipline on jetmakers. Thus, there’s a good chance that our sector of the economy benefits from a cooling down in other sectors, lowering producer costs and freeing up labor. This implies a relatively benign 18-to-24 months ahead, with respectable growth and lower inflation. While supply disruptions could complicate this picture, AeroDynamic Advisory forecasts 19% deliveries growth in 2023 and 10% in 2024. https://aerodynamicadvisory.com

David Ziegler, VP Aerospace & Defense Dassault Systèmes

Start-up and legacy aerospace companies in 2023 will be pushing the limits of what technology can accomplish in two high-profile areas of vital importance to countries around the world: the pursuit of sustainable, net-zero emissions targets and electric vertical takeoff and landing (eVTOL) aircraft.

In commercial aviation, the imperative is advancing aviation’s ability to meet aggressive goals to shrink air transport’s carbon footprint. In the coming years, growing concerns over global warming will lead policymakers to intensify their scrutiny of the pace of industry progress.

Hydrogen is interesting to consider regarding the industry’s transition to net-zero emissions. However, the technology required to develop hydrogen-powered aircraft in direct combustion or through fuel cells still requires extensive research, with Airbus targeting introduction in 2035.

Meanwhile, sustainable aviation fuel (SAF) is the industry’s best bet for achieving near-term decarbonization, with the primary objective being its widespread use at 100% rather than blended with current jet fuel. But the industry must first determine the true reduction benefit in CO₂ emissions and the scalability of producing vast quantities of SAF required for world air travel.

NASA and industry engineers will be collaborating to measure emissions from SAF-powered aircraft in Boeing’s ecoDemonstrator technology program. The research team will be looking at different combustor technologies and using the unblended fuel to understand how emissions change across engines.

In the coming two years, leading developers’ eVTOL aircraft could be certified and become operational. Joby Aviation, one of the pioneers in this field, has already received its Federal Aviation Administration (FAA) Part 135 certification allowing it to start commercial service. But before it can operate its own designed aircraft for commercial service, Joby Aviation still needs to certify its eVTOL under Part 21.17b special class powered lift category.

The path toward certification is becoming clearer since the FAA revised its course for certification, and the industry is now gearing up for 2024 to start eVTOL operations. https://www.3ds.com

Ravi Kunju, Chief Product & Strategy Officer Altair

The biggest transformation in manufacturing will be the move toward domestic manufacturing, coming to a head in 2023 as manufacturers continue to struggle with global supply chain disruptions and governments push for local investment. This will mean demand for better tools and technology across the world – simulation and automation, improved processes, sustainable processes, and better products will start to be fulfilled in all regions, instead of specific hubs.

Executives will be looking to squeeze every bit of efficiency out of their systems using data from across the enterprise. There’ll be an increased emphasis on machine-to-machine communication as data gets increasingly integrated from disparate systems, allowing businesses to use predictive analytics and artificial intelligence (AI)-powered prescriptive decision-making to make processes and production more efficient.  https://www.altair.com

Dr. Jeffrey Graves, President & CEO 3D Systems

There’s been a tremendous uptick in the number of manufacturers embracing metal additive manufacturing (AM) for producing end-use parts, particularly in the aerospace markets. I believe we’ll see that activity continue and that it’ll be bolstered by composite materials gaining traction for production applications, facilitated by the evolution of the materials and 3D printing technology. I anticipate new AM solutions designed specifically for mass production where manufacturers can rely on technology to accelerate their workflows in ways not previously possible. This will be further enabled by end-to-end software solutions that combine a variety of printing and finishing technologies to enhance productivity and maintain the traceability required by highly regulated environments. https://www.3dsystems.com

Dr. Ben Schrauwen, SVP & General Manager Oqton

We live in an era of shrinking production series, shortening product lifespans, and increasing customization. Today’s manufacturers need technologies that’ll support them in delivering products faster while keeping costs down. Additive manufacturing (AM) is a leading solution to address these requirements, and it’s become more robust, gaining ground in the industrial sectors of manufacturing. As AM becomes more widely adopted as a technology for production during the coming year, I believe software will play an increasingly important role in three key areas: automation, traceability, and verticalization.

We’ll see an increase in the availability of easy-to-use vertical software solutions for heat exchanger design and conformally cooled mold inserts that don’t require the user to have deep knowledge of the additive process.

Artificial intelligence (AI) techniques such as deep learning can drive high levels of automation not previously possible. With enhanced efficiency and lower cost, skilled staff can focus on other tasks that can add value to the manufacturing environment.

For highly regulated industries such as aerospace, the importance of traceability of the complete solution – including maintenance, materials, and operators – will continue to rise. https://oqton.com

Douglas K. Woods, President AMT – The Association For Manufacturing Technology

The fact that orders stayed above 2021 levels for 10 months really speaks to the continued strength in the demand for manufacturing technology. This demand has been spurred by the extraordinary economic challenges of the last few years, which has prompted expanded domestic manufacturing and foreign direct investment.

While job shops remain the largest customer segment, their orders have continued to decline since peaking in September 2022. Interestingly, the average value of orders from job shops has been increasing, indicating continued demand for the more-automated, higher-value machinery. Order activity in this sector appears driven by application-specific needs rather than expanding capacity. https://www.amtonline.org

Ryan Martin, CEO Fathom Digital Manufacturing

You’ll see demand for new Boeing and Airbus planes continue to increase as many of the major airlines deferred aircraft fleet refreshes during the last couple of years. There’s a tremendous number of additive manufactured components going into jet engines and aircraft interiors. Aerospace companies are early adopters and will continue to lean in heavily on additive manufacturing to support the increased demand and innovation that’s necessary for them to support their customers. https://fathommfg.com

Andreas Raptopoulos, Founder and CEO Matternet

While our aircraft meet and exceed safety specifications, a large number of autonomous aircraft – by Matternet and other manufacturers – operating safely over cities will pose new challenges. For aerospace manufacturers, there’ll be a marked increase in supply chain demand from companies looking to enter this space. Delivering on the promise of unmanned aerial systems (UAS) means leveraging economies of scale, and manufacturers will be called upon to dedicate a greater amount of their production capacity to the components required by unmanned aircraft. In this new era, we’ll see aerial networks comprising a large number of relatively small aircraft, rather than a small number of very large aircraft that airline networks rely on today. https://mttr.net

Jens Beck, Partner Data Management & Innovation, Syntax

Internet of Things (IoT) in logistics will be on the rise in 2023 as we’ll start to see more of these specialized products appear in the market. We see it as an important emerging technology in this space as events of the past year have shown the need for smarter supply chains.

I expect predictive scenarios and computer vision to become more widely used and required as markets understand the need for mature solutions that competitors are using. Visual inspection won’t only be leveraged on the shop floor, but on the front end, assisting with logistics operations or analysis on inventory movement. https://www.syntax.com