Titanium Industry Anticipates Return of Boeing 787 Dreamliner Production

By Michael C. Gabriele

The titanium industry has been waiting two years for Boeing’s 787 Dreamliner to be approved for takeoff. Based on reports from the July 2022 Farnborough Air Show, along with articles by two major national newspapers, the titaniumintensive commercial jet may soon be gaining altitude, albeit slowly and cautiously.

The Wall Street Journal, on Aug. 9, reported American Airlines would take its first delivery of a 787 Dreamliner “after a long pause in deliveries of the jet. Earlier, in a July 19 online article, the Journal reported that Boeing sold five widebody 787s to AerCap Holdings NV, at Farnborough, describing the deal as a “boost for Boeing’s 787 Dreamliner program. Delivery of the jets have been on hold for much of the last two years as the plane maker resolved production issues with U.S. air safety regulators.

AerCap, based in Dublin Ireland, which touts itself as the largest aircraft leasing company and the world’s biggest 787 customer, confirmed the Farnborough transaction on its website (www.aercap.com), while noting that the deal brings AerCap’s total bookings of the 787 to 125 jets, owned or on order.

In the wake of the Farnborough deal, The New York Times reported, on July 30, that the Federal Aviation Administration (FAA) “cleared the way” for Boeing to resume deliveries of the 787 Dreamliner, which were put on hold in 2020 due to quality concerns. The quality issues “included finding and filling paper-think gaps in the plane’s body, replacing certain titanium parts that were made with the wrong material, and other fixes.”

From the perspective of the titanium industry, the 787—a compositeintensive commercial jet—is a major platform for the use of titanium. Boeing, on its website, stated that the 787 “makes greater use of composite material in its airframe and primary structure than any previous Boeing commercial airframe,” all of which is designed to reduce weight and fuel consumption for long-distance, international service. A key advantage for titanium, aside from its light weight, strength and corrosion resistance, is the metal’s compatibility with composite structures.

Boeing, as detailed on its website, indicated titanium use has been increased on the 787 to roughly 14 percent of the total airframe. “The expanded use of composites, especially in the highly tensionloaded environment of the fuselage, greatly reduces maintenance due to fatigue when compared with an aluminum structure. This type of analysis has resulted in an increased use of titanium as well. Where loading indicates metal is a preferred material system but environmental considerations indicate aluminum is a poor choice, titanium is an excellent low-maintenance design solution. Titanium can withstand comparable loads better than aluminum, has minimal fatigue concerns, and is highly resistant to corrosion.”

Richard Aboulafia, who joined the Ann Arbor, MI-based consulting firm AeroDynamic Advisory as a managing director in January (he previously served as the vice president of analysis at Teal Group, Fairfax, VA), took note of the developments regarding the 787. He described the FAA’s approval for Boeing to resume deliveries of the Dreamliner as “significant,” but quickly added that the current global market for widebody aircraft—despite the booking by AerCap—remains “rather dead.”

Aboulafia, a widely quoted analyst in the titanium industry regarding aerospace industry trends and business conditions, pointed to larger trends affecting the recent and future production of wide-body aircraft for both Boeing and Airbus. He’s long

observed the “secular shift” away from twin-aisle commercial jets in favor of the production of single-aisle aircraft in the fleet planning of Boeing and Airbus. He reiterated and further underlined this trend in an online April guest article for AviationWeek. The shift to single-aisles has been apparent for years, he wrote. “Backlog and delivery numbers both show this. By the first quarter of this year (2022), twin-aisle deliveries and backlogs by value had declined to just 30 percent of the market. This percentage is an all-time low since twin-aisles first entered the market.” Aboulafia, in the AviationWeek article, cited route fragmentation as the long-term trend “driving single-aisles upward and twin-aisles downward. Then the Covid-19 pandemic hit international traffic first, most and longest. This created a terrible twin-aisle overcapacity situation.”

Ethiopian Airlines will “upsize” four Airbus A350 wide-body, twinaisle Airbus jets, according to a July 28 press release. The A350 competes with Boeing’s 787 and is another major platform for titanium. The press release reported that “Ethiopian Airlines has already ordered 22 A350-900s, of which 16 aircraft have been delivered. With the A350-1000 upsizing, Ethiopian Airlines’ backlog consists of four A350-1000s and two A350-900s.”

Separately, the website simpleflying.com, in an online article published on July 11, reported Airbus next year is expecting to increase monthly production of its A350 family of jets to six from five aircraft—perhaps an early sign of increased interest in wide-body jets and international travel, in the wake of the global pandemic. For example, Australia’s Quantas Airways, in the first half of this year, ordered 12 A350-1000 jets, which are slated to provide direct service to London and New York from Australia. The simpleflying online report also mentioned that Airbus had delivered 29 A350-900 jets in the first half of 2022. In addition, Reuters, which filed a report from Farnborough on July 20, reported that Air India is mulling a possible booking of $50 billion that might include up to 70 wide-body jets (Airbus A350s and Beoing 787s) and as many as 300 single-aisle aircraft. In contrast to these developments, The Wall Street Journal on Aug. 4 reported that Airbus cancelled a deal to deliver 19 A350 jets to Qatar Airways, a transaction estimated at $7 billion. The article stated that Qatar already has taken delivery of 53 A350s and was set to receive an additional 19 jets in the coming years.

Supply Chain Vulnerabilities Persist

Separately, aside from trends on commercial aerospace twin-aisle jets, Aboulafia raised a red flag on near-term, global titanium supplychain vulnerabilities stemming from Russia’s ongoing invasion of Ukraine, which would affect single- and twin-aisle commercial aircraft. The worry is that economic sanctions imposed on Russia by the United States and Europe will disrupt the ability to acquire titanium castings and forgings. However, because of the uncertainty, he said titanium companies in the aerospace supply chain remain reluctant to make major capital investments as the bitter conflict drags on—in other words, forgo doing business with Russia and focus on domestic production.

The 787—a compositeintensive commercial jet—is a major platform for the use of titanium. A key advantage for titanium is its compatibility with composite structures. Boeing indicated titanium use has been increased on the 787 to roughly 14 percent of the total airframe. “Titanium can withstand comparable loads better than aluminum, has minimal fatigue concerns, and is highly resistant to corrosion.”

Aboulafia said the titanium supply chain is waiting to see whether Russia might once again become a major player in producing aerospace structures and parts. “Everyone is waiting to see if the problems with Russia can be resolved. U.S. suppliers don’t want to be left holding the bag.”

Concerns regarding the war in Ukraine have gripped the titanium/ aerospace supply chain this year. As outlined in the first-quarter edition of TITANIUM TODAY, Boeing halted titanium purchases from Russia. The Wall Street Journal, on March 7, reported that Boeing stopped purchasing Russian titanium since the invasion of Ukraine. Boeing also closed its engineering offices in Moscow and Kyiv and stopped sending spare plane parts to Russian airlines. A Boeing spokeswoman stated that the aerospace giant said it will focus on sourcing its titanium from suppliers the United States, Japan, China and Kazakhstan. “Our inventory and diversity of titanium sources provide sufficient supply for airplane production, and we will continue to take the right steps to ensure long-term continuity,” she said.

Pittsburgh-based Allegheny Technologies Inc., on March 9, announced the termination of Uniti LLC, its joint venture with Russianbased VSMPO-AVISMA, to market and sell a range of commercially pure titanium products. The joint venture primarily focused on selling to industrial markets such as power generation, chemical and petroleum processing, automotive, and transportation. ATI formed the Uniti joint venture with VSMPO in April 2003.

An Aug. 9 story in The Wall Street Journal reinforced Aboulafia’s worries on Russia’s dominance in the global supply chain. “VSMPO sells finished titanium goods at artificially low prices, which is probably why it serves about half of Airbus’ titanium needs,” the article stated. However, due to the ongoing conflict in Ukraine, “U.S. aerospace giants like Boeing, Ratheon and General Electric have either walked away from Russian titanium or minimized its use.” But the story reiterated concerns heard in recent months that the U.S. Department of Commerce has “repeatedly warned” that the status quo regarding reliance on Russian titanium is a threat to national security; in essence, identifying titanium as a strategic metal. “Airbus and other Western (aerospace) manufacturers have gained time to shift supply chains elsewhere. The aerospace industry will find it hard to shed its dependence on autocratic regimes.”

Andrew Bayne, Jr., the director of global materials planning for the Titanium Metals Corp. (Timet), in a guest article published in the secondquarter edition of TITANIUM TODAY, wrote that the titanium supply chain has been strained of due to Russia’s invasion of Ukraine. “Producers need to be flexible in how they source raw materials and schedule production,” Bayne declared. “Every link in the chain needs to be asking itself: Will my hiring of manpower to increase rates synchronize properly with my incoming raw materials? Will my suppliers be able to ramp up to support my increased requirements? Do I have a plan B or inventory if my supplies do not arrive on time? If you can answer yes, make sure the tier ahead of you and behind you agrees. And if you cannot, communicate early and often. If not, titanium runs the risk of impeding the overall air traffic recovery.”

Aside from the war in Ukraine and in the wake of the global pandemic, volatility in energy supplies and the tensions between China and the United States have had an impact on supply-chain vulnerabilities. Willy C. Shih, the Robert & Jane Cizik Professor of Management Practice at Harvard Business School in Boston, interviewed earlier this year, said it’s time for companies in the U.S. titanium industry to begin thinking 10 years ahead to change their investment strategies with an eye on long-term resiliency. Russia has been a dominant player in titanium and titanium forgings, especially in the aerospace sector, he pointed out. “Many people are waking up to the potential consequences of a longerterm stoppage in the flow of these critical materials.”

Shih said many business leaders are grappling with the strategic questions regarding strains in an over-extended global supply chain. According to Shih, the lessons from the turmoil caused by the global pandemic and the war in Eastern Europe are that “unpriced risks” and supply chain disruptions are no longer a vague concern in the distant future; rather, they’re highly likely, near-term threats that are becoming part of the annual business cycle. As a result, titanium supplychain executives need to invest in resiliency. Investments in resiliency might mean keeping idle production capacity at the ready in order to guard against potential supply chain problems, or establishing cooperative manufacturing consortia, which are narrowly focused to capitalize on process technology innovations. n