Boeing delivered 45 jets in January[1]. That’s 19 more than Airbus’ January deliveries. COMAC and Embraer each delivered three aircraft in January 2025. Airbus plans to deliver 820 commercial aircraft in 2025, 7% more than in 2024 (Boeing delivered 348 in 2024). Boeing’s 737 deliveries remain capped at 38 aircraft per month. The newly appointed Secretary of Transportation, Sean Duffy, has said he will keep the production cap in place until he is satisfied with Boeing’s safety standards. Safran[2] CEO Olivier Andries has made public statements expressing confidence that Boeing will hit a delivery rate of 38 per month in the first half of 2025 and 42 a month by the end of the year. The 45 aircraft Boeing delivered in January were the most in a month since December 2023. January was the company’s first full month of production since the seven-week machinists’ strike last fall. CFM International, the sole provider of the LEAP engines used on the 737 MAX is expecting to increase its LEAP production by 15 to 20% this year. That would allow Boeing to ramp up its 737 MAX production. Both OEMs face supply chain challenges involving issues with engines and aerostructures manufacturer Spirit AeroSystems. Spirit AeroSystems produces fuselage sections for Boeing’s 737 and 787 aircraft as well as flight deck sections. Spirit also supplies Airbus with fuselage sections and front wing spars for the A350 and wings for the A220.
Southwest is planning to sell some of its older 737NG aircraft and replace them with the newer 737 MAX8. The air carrier plans to retire 51 aircraft to operate an all-MAX fleet by 2031. It’s additionally weighing whether to sell 10-737-800 aircraft. “These are midlife aircraft that currently have highly favorable market valuations.”[3] As new equipment deliveries continue to be delayed older aircraft are retained in service longer. Air carriers are facing lessor lease extensions of six years for older aircraft and eight to ten years for new aircraft. Engine durability challenges related to Pratt & Whitney’s geared turbofan (‘GTF’) and CFM’s LEAP engines continue to impact operators. IATA’s chief economist Marie Owens Thomsen has said the wave of recent lease extensions has resulted in airlines operating the oldest fleet in modern history.
In North America, 26% of U.S. Freight ton-miles are moved by rail. Trinity Industries Fourth Quarter 2024 Investor Presentation reported continued strength in lease rates with their ‘future lease rate differential’[4] +24.3% and fleet utilization at 97%. Trinity feels the North American Railcar Market is ‘in balance’ and is forecasting approximately 35,000 new railcars to be delivered in 2025 (not including conversions). Trinity is a leading railcar manufacturer with 41% of industry deliveries in FY 2024. Their portfolio includes 270 different railcar designs serving approximately 900 different commodity groups, 52% Freight Cars and 48% Tank cars.The Conference Board’s January 28th report reveals consumer confidence is falling and expected inflation rising. For now, the Fed is holding interest rates steady. Deregulation, deficit reduction, and extending the 2017 tax cuts will help. Fleet investment provides stable cash flow, tax advantages, and hard asset inflation benefits. Release opportunities provide a natural interest rate hedge. Air traffic and rail freight support the economy. But the U.S. Economic Policy Uncertainty Index is higher now than at any time since the Great Recession. Are we at a peak in the value cycle? To answer that question and successfully grow aero and rail investments, Call RESIDCO.
Glenn Davis 312-635-3161
[1] Boeing ended January with 5,554 aircraft in its backlog, 4,296 737s, 109 767, 427 777s and 722 787s.
[3] Tammy Romo, outgoing Southwest CFO, January 30, 2025.
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