Supply chain and delivery problems at Boeing and Airbus are opening giant markets for China's COMAC

good morning comac is the commercial aircraft Corporation of China it's headquartered in Shanghai and they are manufactures of passenger planes and this is a market that's currently dominated by Boeing in the United States and Airbus in Europe comac will be the biggest plane manufacturer in the world in a short time by 2040 and they'll be bigger than Airbus and Boeing combined and it's for the same reason that allows for Chinese success in every single other industry total monopolistic control over Supply chains and factory production I want to be careful here and say that this is not a qualitative assessment of Comax aircraft compared to boeings or airbuses it's just the realization that comac is able to build and deliver aircraft and Airbus and Boeing cannot first let's look at expected Global demand for airplanes both Boeing and Airbus make 20-year predictions on what demand is going to be and where it's going to be coming from the CMO is the commercial Market Outlook and Boeing has published a CMO every year since forever over 60 years and Boeing forecasts that the worldwide demand is for 44,000 new airplanes by 2043 with the biggest percentage increase in demand coming from south Asia southeast Asia and Africa Europe will need the most planes in total and an equal number going to North America and to China China is its own Market by the way it's in Southeast Asia but it's the world's number two biggest market so Boeing considers China to be its own single Isle aircraft will be 71% of the fleet in 2043 which is what comac focuses on their c919 is a narrow body single aisle plane so Boeing's estimate for Global demand is for 4,000 Airbus just published their CMO for the next 20 years and their number is 42430 Boeing and Airbus are organizing their companies to produce planes for a market that they mutually agree will be more than 40,000 new planes by 2043 20 years from now this is where Airbus believes the new airplanes will be going and Airbus carves out China from Asia Pacific China will need 8,500 20 planes mostly single aisle in blue South America will need over 2500 Africa 1,500 Asia Pacific X China another almost 10,000 aircraft demand is driven by world trade for the business traveler segment urbanization and growth of disposable income and middle class Drive Leisure Travel Airbus forecast Global air traffic here rpk is revenue passenger kilometer it's the number of paying passengers times kilometers distance flown in trillions and they expect to go from 8 trillion rpk to over 20 trillion 2 and a half times increase from today Airbus concurs with Boeing here that it will be emerging markets that drive most of this increase with domestic China making up the biggest increase in traffic flows compared to today looking at all the big leaps from 2023 to 2043 and Airbus sees huge jumps in China domestic India and inside and between these corridors Here China USA will see a big jump so will Western Europe China Asia emerging to China Asia developed to China all big jumps going back to comac just for a second we should expect that comac will be picking up most of these new orders just by default these are going to be very friendly countries with China or they're being served by Chinese Airlines South America Africa Asia Pacific their business and diplomatic ties are only getting stronger and so these will be Natural Markets for comac and here is airbus's demand forecast for planes like comac c919 single is narrow bodies over 33,000 new planes will be demanded over the next 20 years so Airbus and Boe need the capacity and the labor and the capital to supply a global market which will demand over 40,000 new planes in the next 20 years but they're having major problems and challenges meeting the market demand right now the problems at Boeing would take me an hour to go through so let's just look at the supply problems for Airbus this is from 26 June Airbus is cutting their revenues and profit forecast because of persistent specific supply chain issues especially in engines cabins and arrow structures which sounds like the whole plane actually they've got problems with supply of engines the outside of the plane and the stuff for the inside of the plane instead of being able to deliver 800 aircraft for this year it will only be 770 they're able to meet that reduced Target only by drawing upon spare parts inventories these are Parts held usually for repair and maintenance but instead they're going into new builds so they're running out of parts for those two their vendors are falling behind on their shipments to Airbus so Airbus is emptying their warehouses of spare parts Bloomberg says Airbus is missing parts everywhere and the situation is worsening the shortages are sabotaging the company's delivery plans for this year and Wrecking air bus's expansion plans for future years the problem is there supply chain which has been stretched for years and is now breaking down now it's engine shortages that are the major problem for them after the announcement Airbus stock dropped 12% right away and shares for Airbus suppliers were also down big dche Bank analysts didn't like anything they saw in the earnings report and they have no idea when things might get better delivery schedules are being pushed back a full year on its A320 air buses A320 is a single aisle aircraft which is Comax market for their c919 Airbus hopes to be building 75 a month that is 900 per year boe's got a similar problem with a 737 significant reduction in monthly production this is a bad sign too that this is the second time in just two years that Airbus announced a major reschedule just 3 months ago they said they'd be able to do 800 planes this year and now Deutsche Bank and other bankers and investors want to know where the other 30 planes went ironically many of airbus's problems are result of the market share they're picking up from Boeing big problems at Boeing for the 737 the 787 and the tri 7 are scaring away a lot of Boeing's best customers and so they're switching to Airbus Airbus added 237 net new orders close a May compared to boeings 130 but Airbus cannot produce for the customers that they've already got Airbus deliveries are down so Airlines have no choice but to keep older planes in the air these old planes use more fuel need more repairs and maintenance and this is all expensive the industry needs new planes what's more that workaround of keeping old planes in the air longer that only works for airlines that have older planes new Airlines and the airlines operating in Emerging Markets they need new aircraft indigo is an Indian airline and India is going to have one of the fastest growing markets and they can't get planes delivery bottlenecks mean fewer new planes fewer new planes mean fewer new tickets sold and some of these markets that Airbus and Boeing expect to be there won't be unless they can get airplanes to them all of these problems in supply chain and delivery schedules at Boeing and Airbus ACR to Comax Advantage it does remain to be seen if comac can produce over a, High high quality aircraft per year along with all the spare parts and gear that they'll need to have ready to supply 20,000 planes in 20 years we'll see about that what we're seeing now though is that Airbus and Boeing cannot Supply their own markets and their own best customers can't get planes and under those conditions comac will be able to sell whatever planes they do build this is Shanghai be good people