Okay, so who’s the most successful aircraft maker in the world? Yes I know it’s a silly question, it depends on how you define successful but the two behemoths, Airbus and Boeing, have just released numbers for the fourth quarter that top off their 2014 performance.

FREE Download: The Monthly MMI® Report – covering the Aluminum market.

The FT reports Airbus hit a new production record to supply 629 aircraft in 2014, marking 13 consecutive years of increased deliveries. Not to be outdone, Boeing delivered 723 aircraft in the period, making the US group the world’s largest manufacturer of aircraft for the third year in a row. So colors to Boeing then? Well, not quite because according to the Telegraph Airbus booked 1,456 net new orders for its aircraft in 2014 – net aircraft being new orders less cancellations, their second-best year ever and down only 3% on 2013 when they sold 1,503 aircraft.


Not THAT kind of dogfight! Source:

Boeing, by comparison, booked 1,432 new orders in 2014 so, counting new orders, Airbus came out on top. Both firms have massive forward-order books, or a backlog on deliveries depending on how you want to term it. This is great for suppliers, both mills and distributors, who can see a book of business stretching off into the future. No wonder aluminum extrusion and plate mills capable of meeting the requirements of the aerospace industry are investing with more confidence in capacity and supply chain logistics than any other – with the notable exception of automotive which, like aerospace, appears to be on a long-term growth trend for aluminum consumption.

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Source: The Economist

“Psst, Aluminum – watch your back, yo.”

That seems to be what plastic composites are saying more and more often these days, from General Motors’ old Saturn lines (remember those?) to Airbus’ new A350s.

Boeing Co. has defended aluminum metal as its fuselage material of choice for the new 777X that the company is building, but who knows how long the light, gray metal will be in favor – especially in the aerospace industry, where jet fuel is pretty darn costly and weight savings are just as imperative, if not more so, than in automotive lightweighting.

“Psst, Steel – you’re toast.”

Now, Finland-developed technology using carbon fiber in elevator cables is threatening to replace heavier steel cable in new skyscrapers, according to an article in the Economist. According to Johannes de Jong, Kone’s head of technology for large projects, “the steel ropes in a 400-metre-high lift weigh about 18,650kg. An UltraRope for such a lift would weigh 1,170kg. Altogether, the lift using the UltraRope would weigh 45% less than the one with the steel rope,” according to the article.

However, there’s a silver lining here for both aluminum and steel.

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Boeing CEO James McNerney threw down the gauntlet: “They [Airbus] don’t have the appetite to do a ground-up airplane, and they’d have to do a ground-up airplane.”

Tom Enders, the CEO of Airbus’s parent, European Aeronautic Defence & Space, or EADS, hit back: “The aircraft we rolled out a couple of weeks ago didn’t have rivets from Wal-Mart, like the ones our competitors had at the time of their roll-out.”


Boeing is not only picking on someone their own size; they’re also picking on much smaller parties. According to a few articles earlier this week, “McNerney told attendees at the company’s annual investor conference that suppliers will have to agree to cut their prices as contracts are renewed, or they’ll be cut from the Boeing team.

‘We have no-fly lists across the company,” McNerney was quoted as saying. “If a certain group is not working with us … they’ll be on a no-fly list. They’ll not be allowed to bid on new programs with Boeing.'”

According to the Dayton Business Journal, “Boeing has roughly 500 suppliers in Ohio — supporting an estimated 250,000 direct and indirect jobs in the state — and spent about $8.3 billion in purchases from Ohio companies in 2011, according to company officials. The aerospace giant also has 600 employees across Ohio and more than 6,600 retirees.”

That would be quite a different – yet interesting – catfight.

today's metal prices - MetalMiner IndXIn terms of aerospace raw materials, most aluminum prices on our MetalMiner IndX℠ increased over the past week.

A 1.9 percent increase made the Indian aluminum cash price the week’s biggest mover on the weekly Aluminum MMI®. Following a 2.1 percent increase in the week prior, the primary aluminum cash price fell 0.9 percent on the LME last week to $1,821 per metric ton. The aluminum 3-month price fell 0.7 percent on the LME to $1,857 per metric ton after rising 2.0 percent the week before.

Chinese aluminum prices were mixed for the week. The price of Chinese aluminum billet rose 0.3 percent over the past week. This was the third week in a row of increasing prices. Closing out the third week of rising prices, the Chinese aluminum cash price increased by 0.3 percent. Chinese aluminum bar remained essentially flat from the previous week.

European 5083 plate saw its price rise 0.7 percent over the past week. European 1050 aluminum saw a 0.7 percent decline over the past week. The week finished with no movement for Korean 3003 coil premium over 1050 sheet. The price of Korean 5052 coil premium over 1050 sheet did not change since the previous week.

FREE Download: The most recent Monthly MMI® Report – price trends for 10 metal markets!

The Aluminum MMI® collects and weights 12 global aluminum price points to provide a unique view into aluminum price trends. For more information on the Aluminum MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

As we outlined in Part One, Boeing and Airbus — and their supply chains — are optimistic that they can keep cranking out planes and sell them. On the other side of the equation, airline carriers need new planes, as a growing percentage of the planes in their fleets are nearing 20 years old.

The WSJ article linked to above quoted Henri Courpron, chief executive of International Lease Finance Corp. “Addressing the recent spate of big orders of 100 to 400 airplanes by individual carriers, Mr. Courpron joked that they are ‘proof that there are still a number of egos running airlines around the world.’”

Which leads us to quite a worrisome issue — these egos may be ordering without a secure method of payment. The FT recently reported that a survey showed that 22 percent of major airline carriers are “not very confident” about how they’ll finance this year’s aircraft purchases.

This is mainly because European banks have been the main lenders to airline carriers, and now their willingness and ability to lend at pre-2008 rates has dried up. Because of the recent Eurozone crisis, EU banks — especially French ones — have had a hard time securing USD-denominated funding, according to the FT. (Planes are usually bought in US dollars.)

With major Western carriers suffering from a host of problems, this can’t be good news. They may be forced to markedly change the way they finance their purchases, including looking toward the bond markets, said Paul Sheridan of Ascend, the agency behind the survey.

In the end, this market of buyers and suppliers will likely find a balance. Austerity will continue to take its toll on airline carriers, and margins will undoubtedly be shrunk, even if only in the short- to medium-term. But those carriers that remain solvent will find creative ways to finance their planes, while OEMs’ production overestimates and backlogs will likely result in an appropriate number of planes being delivered.

If anything, we are seeing Boeing and Airbus’ recent optimism encountering some turbulence for the first — but certainly not the last — time.

Sure, airplane jet orders are booming — but can airlines pay for it?

MetalMiner covered the aerospace market and its impact on metals demand last summer, when major OEM Boeing forecast booming airplane demand in the next several decades. Now, it looks as though the state of the economy and its effect on airlines’ orders may be at odds with Boeing and Airbus’ lofty outlooks and production goals.

More recently, last November, my colleague Stuart wrote about India, Japan and Brazil’s proactive moves to secure product. In addition, “the governments of Qatar, Oman, South Korea, Denmark, Switzerland, Turkey, Romania, Malaysia and Bulgaria…are all also reportedly considering acquiring aircraft. So on both the civilian and military aerospace front, Boeing, Lockheed Martin and European consortium EADS/Airbus, not to mention their component and subcontractor supply chains, are likely to remain busy well into the middle of the decade meeting the demand.”

If we’re to take some of the most recent reporting on the topic to heart, it’s already happening. According to Industry Week, Boeing forecasts global demand for 33,500 new commercial jets over the next 20 years, while Airbus sees the need for 27,800 new jets over the same time period. (Crain’s Chicago Business noted that Boeing alone “has orders from 60 customers for 873” of the recently-FAA-approved 787 with GE engines.)

However, this boom, while initially good for the business of the OEMs’ Tier 1 suppliers, such as Florida-based B/E Aerospace and Iowa-based Rockwell Collins Inc., will inevitably strain the supply chain.

The IW article quotes the US aerospace and defense leader for PWC, Scott Thompson, as saying that Boeing and Airbus have eight years of backlog; after analyzing the OEMs’ suppliers’ “operational” and “financial” readiness, a recent PWC report found that 21 percent of suppliers face a high risk of falling behind on the demand — in no small part due to the fact that the OEMs have moved much of the design and manufacturing work onto the suppliers’ shoulders.

A lot of this jet production ramp-up is due to overbooking, according to Henri Courpron, chief executive of International Lease Finance Corp., whose firm leases aircraft for certain carriers, as quoted in the Wall Street Journal. OEMs overbook because they know not all aircraft that are ordered will be delivered. The CEO of aircraft lessor AWAS was also quoted as saying that he thinks plane builders “are trending production rates too high, temporarily.”

The most telling passage of the WSJ article may be this:

“Addressing the recent spate of big orders of 100 to 400 airplanes by individual carriers, Mr. Courpron joked that they are ‘proof that there are still a number of egos running airlines around the world.’”

But can those egos put their money where their mouth — er, order slips — are? Find out in Part Two


We’ve had some well-read posts on steel and base metals sectors since the New Year — from formal outlooks to more lighthearted fare. Enjoy the best MetalMiner posts of Q1!

1. Steelmakers Welcome Falling Coking Coal Price Trend

Stuart Burns on coking coal, iron ore and steel, oh my!

2. Cracks in Airbus A380 Wings Put Pressure on EADS

So it all comes down to aluminum alloy brackets, eh?

3. Steel Price Outlook for 2012 – Part One and Part Two

How close were we on our outlook and predictions? Spot on, full of it, or somewhere in between? Read these steel outlooks and tell us what you’ve seen in your steel buying experience so far this year. 

Maybe it would be unkind to suggest Boeing will be reading the developing story of Airbus’ A380 wing-crack problems with glee — all airlines suffer issues of this type at some time — but rarely has Boeing and Airbus’ rivalry been so intense, or the counter claims of government subsidies been so bitter. Nevertheless, Airbus has moved swiftly to minimize the PR damage, ensuring plenty of information was made available regarding the nature, extent and solution to the cracking issue.

For anyone not following the unfolding events, it started back in November when the Rolls Royce engine on a Qantas A380 failed rather spectacularly in mid-flight, sending shrapnel through the wings. According to the Telegraph, subsequent inspections during the repair process showed the presence of tiny cracks in an L-shaped bracket that connects the wing’s exterior to the internal “rib” structure.

Last month the European Aviation Safety Agency (EASA) ordered checks on 20 of the most heavily used A380s. Those checks showed the problem was more widespread, also affecting the other end of the bracket, which has vertical flanges that connect to the wing spar, prompting EASA to order all 68 A380s in service to undergo detailed inspection using high-frequency electric currents over the next few weeks.

There is no suggestion the planes are not safe to fly, and Airbus has stated the parts in question are not main load-bearing components; nevertheless, they can do without bad press on an aircraft that cost nearly $20 billion to bring to market and is not expected to make a profit before mid-decade.

Source: The Telegraph

So what exactly is the problem?

Well, the cracks, some of which are up to 2 centimeters in length (nearly 1 inch), seem to be limited to both the upper and lower edges of the brackets that connect the external skin to the central spars. The brackets have L-shaped feet, and it is at the point of connection between these feet and the skin that some brackets have begun to crack. The occurrence of cracks is not uniform on the same ribs on different aircraft, nor are they to the same extent on aircraft of the same age; the cracking is more random than that, suggesting it’s a result of problems in the assembly process, compounded by the selection of aluminum alloy used.

Each A380 wing has 2,000 such feet distributed over 62 ribs – 38 metallic and 24 carbon composite. Apparently the wing panels, some of the longest in use on any aircraft, are creep-formed to the desired contour of the wing surface at the location they will be fastened to. The rib feet at the top of the structure are designed knowing they will be in compression during actual service. The rib feet on the bottom of the structure are said to be designed to be in tension.

EADS who purchased the division from BAE Systems some time ago, make the wings in the UK as part of the Airbus consortium. The firm says the finishing of the holes, the application of the fasteners, and the less flexible nature of the 7449 T7651 alloy used, have all contributed to undue stresses in the area of the bond. The firm has a repair kit for planes in service and is working on a change in design and assembly to avoid the problem on new aircraft.

The wings, at 262-foot spans, are some of the largest of any commercial airliner, so maybe it was naïve to think that every conceivable issue was going to be computed in advance of service on such a pioneering design. But at 544 tons and capable of carrying up to 853 passengers in an all-economy configuration, airlines and their clients can be excused for demanding a comprehensive and lasting solution.