David L. Calhoun
President and Chief Executive Officer at Boeing
Thanks, Matt and good morning, everyone. I hope you're staying well as we navigate to the other side of this crazy global pandemic. We continue to work with our customers, our suppliers and our partners to stabilize our industry and chart the path to recovery. While this summer brought us new challenges with the variants, we have seen encouraging signs of increased vaccination rates, further progress on coordinated international travel policies and protocols and ongoing discussions with customers on their fleet planning.
As expected, the recovery has been uneven. However, it continues to gain broader momentum giving us confidence in the resilience of our market. Vaccines have proven safe and effective and they are key to personal health and reopening the global economy, reopening travel routes and businesses. Our customers both commercial and defense have implemented vaccine mandates for their employee populations.
After careful review and consideration and to ensure compliance with President Biden's Executive Order we are implementing a requirement for US based employees to show proof of being fully vaccinated from COVID-19 or have an approved reasonable accommodation. As we have done since the beginning of the pandemic, we will continue to prioritize the health and the safety of our employees. We are making important progress in transforming our business driving stability and quality in our operations and investing for the future. I'm proud of our team's continued resiliency and unwavering focus on our mission. Before I go through our business update, I'd like to formally welcome Brian West, our new CFO, who is with us here today. In the two months since Brian started, he has spent countless hours at our operational sites with the finance and the broader teams digging into issues, gaining an in-depth understanding of our business. Brian is an exceptional leader and we're grateful to have him on board.
With that, let's start with an update on the business in the next chart. Beginning with a 737 program, we continue delivering to our customers and supporting their efforts to return their fleets to service. In the third quarter, we delivered 62 737 MAX airplanes, the most we've delivered since the first quarter of 2019. We have made noteworthy progress since receiving approval from the FAA. And today, over 175 countries have approved the resumption of 737 MAX operations. We delivered more than 915 airplanes including about one-third of the 450 airplanes originally in inventory.
We have largely placed the airplanes that required remarketing. Our airline customers have returned more than 200 previously grounded airplanes to revenue service. 31 airlines have returned their fleets to service. And those airlines have safely flown over 206,000 commercial flights totaling more than 500,000 flight hours. Importantly, the fleet has an impressive schedule reliability rate of more than 99%. And as domestic and regional traffic recovers, for example, intra-Europe, demand for the 737 MAX continues to improve. In September, we saw the eight straight month of positive net commercial airplane orders primarily due to the 737 MAX.
At the end of the quarter, we had over 3300 aircraft in our 737 backlog highlighting the Airplanes families value proposition. Given this demand during the third quarter, we increased our production rate to 19 airplanes per month and continue to progress toward a production rate of 31 per month in early 2022. While we continue to deliver from inventory, we are balancing the need to increase the production rate to position us to support increasing demand longer term. We're actively working to ensure the production system, including the supply chain is stable prior to making decisions to further increase the production rate. Raw materials, logistics and labor availability will also be key watch items for future rate increases.
As we previously communicated, the timing of remaining regulatory approvals will shape our near-term delivery plans and our production rate ramp beyond 31 per month. Following the completion of the 737 MAX flight tests in China during the third quarter, we continue to work toward approval by the end of the year with a resumption of deliveries to follow in the first quarter of next year. We also continue to make progress on the certification of the 737 MAX 7 and the MAX 10. We currently anticipate the first delivery of the MAX 7 in early 2022 and the first delivery of the MAX 10 in 2023. As always, we will follow global regulators lead in the steps ahead on all certification matters.
On the 787 program, we remain fully committed to our methodical approach to driving first time quality and stability in our operations. The issues that our engineering teams and or our suppliers have identified and are addressing are part of this purposeful process and we have transparently communicated with our regulators, our customers and our suppliers, every step of the way. As recently shared, we have also identified quality issues with a sub-tier part supplier. While our review is ongoing, there are no immediate safety of flight concerns. We are in regular communication with the FAA on these issues and are committed to taking any action required to address them.
As to the 787, generally we are conducting inspections and rework and we continue to engage in detailed discussions with the FAA regarding the required actions for resuming deliveries. As we mentioned last quarter, we continue to re-prioritize production resources to support the inspection and the rework and are currently producing at a rate of approximately two airplanes per month. Once deliveries resume, we expect to return to five per month over time. Keep in mind, exact timing of deliveries and future production rates will depend upon inspections and rework, ongoing customer and supplier conversations, production stability and our activities with the FAA. Again our regulators will make the ultimate determination, but we believe, we have a clear line of sight to the steps ahead and we are continuing to make steady progress to begin delivering airplanes to our customers.
Moving to the 777, the 777X program, the combined production rate is two per month. Given continued strength in freighter demand, we have coordinated with our supply chain and are increasing 777 freighter production capacity in the near term. We now expect 2022 777 deliveries to be relatively in line with 2021. On the 777X program, we continue to subject the airplane to a comprehensive test program, demonstrated safety -- performance and reliability while working through our rigorous development process to ensure we meet all applicable requirements. We continue to engage with the FAA and global regulators throughout this process and like any development program, we are learning along the way and incorporating those learnings into our plans.
As we progressed in our certification work, we continue to conduct Boeing flight test and began engine performance flight testing earlier this month. The airplane is performing well and in line with our customer commitments, based on the data that we've collected to date. We will validate these results and we will continue to work with the FAA to ensure we meet their requirements prior to beginning the certification flight test. We still expect that we will deliver the first triple 777X in late 2023. Given the continued robust freighter demand and the compelling economics of the 777X, we are currently evaluating the timing of launching a freighter version of our triple 777X airplane. We will keep you updated as we progress in this evaluation.
In addition to the 737 MAX 7, the MAX 10 and the 777X, we are investing in our future laying the foundation for our next commercial airplane development program. This quarter, we stood up an integrated product team to bring together a digital environment where the next commercial new airplane and production system can be designed together. While we have not launched a new airplane, this is an important step in our digitization journey and our development journey to evaluate how we holistically design, build, test, certify and support the airplane and production system. It will build on the valuable experience of our recent defense programs.
Meanwhile, we continue to execute for our customers across our business. Let me highlight a few key milestones. Our defense, space & security team made progress on key programs. For example, our MQ-25 unmanned test asset completed aerial refueling of a F-35C fighter jet and an E-2D command and control aircraft. We also delivered 37 aircraft in the quarter, including the first CH-47F Chinook to the Royal Australian Army. As was recently shared, the NASA and Boeing teams have identified the most probable cause of the valve malfunction on our Commercial Crew Startliner and we are working through corrective and preventative actions.
We are currently working toward opportunities for the second Orbital Flight Test launch in 2022 pending hardware readiness, the rocket manifest and space station availability. As we have demonstrated, we will continue to prioritize the safety of our employees, crew members and spacecraft as we progress. In our Global Services business, our team continued to perform and demonstrate sustained recovery from the impacts of COVID-19. As cargo demand increases, we announced plans to create additional capacity for the 767-300 Boeing Converted Freighter. In addition to these program accomplishments, we continue to make progress on our commitment to drive the future of sustainable aviation.
Boeing recently joined virtual White House event on sustainable aviation, reiterating our commitment to have our commercial airplanes capable of running on 100% sustainable aviation fuels by 2030 and our partnership with SkyNRG to expand the global supply of sustainable aviation fuel. We also hosted a two-day Boeing Innovation Forum in Glasgow bringing together partners in the region, customers aviation experts and STEM students to accelerate efforts, to ensure a safe and sustainable aerospace future. We're also excited to participate in the IATA Annual General Meeting to discuss our path toward a more sustainable future and how we can support the aviation sectors commitment to achieve net zero carbon emissions by 2050. In fact, just yesterday, our Chief Technology Officer, along with the CTOs from six other leading aerospace manufacturing companies reaffirmed our commitment to reaching this industry-wide target. Now let's turn to the next slide to discuss the industry environment.
Last month, we released our 2021 Boeing market outlook, which forecast the total market value of $9 trillion over the next decade. This is up from $8.5 trillion a year ago and from $8.7 trillion in the pre-pandemic 2019 forecast reflecting the markets continued recovery. The forecast closely aligns to what we laid out last year. Our government services, defense and space markets remain significant and relatively stable while increased government spending on COVID-19 response is adding pressure to defense budgets in some countries, others are increasing spending on their security. Overall, the global defense market remains strong and enduring with all of our major programs.
We remain focused on delivering the highest quality, innovative, capable and affordable platforms to the war fighter and maintaining the health of our supplier base. The diversity of our portfolio creates new opportunities and continues to help provide critical stability for us as we move forward. We continue to focus on our customers' needs, expanding capabilities on our trusted platforms, investing in next generation technologies like autonomy and building on our foundation in model based engineering to deliver and intelligently support key franchise programs like the T-7A and the MQ-25. We see strong continued bipartisan support for US National Security including strategic investments in Boeing products and services as Congress works through its annual budget and authorization process for fiscal year 2022.
The F/A-18 and the Chinook Block II remain critical capabilities for the warfighter, both domestically and for non-US customers. We will continue to work with the administration and with Congress to ensure the necessary support for these key programs in place. The commercial market is shaping up largely as we expected. While near-term pressure due to COVID-19 continues, the recovery is broadening and the key long-term fundamentals remain strong. We've seen positive momentum in some markets. However, the recovery continues to be uneven. In the third quarter, we saw global departures increased slightly to an average of 67% of 2019 levels, up from 59%, the previous quarter. Similar to what we saw in the first half of the year, domestic traffic is leading the recovery.
However, traffic took a slight step back in late summer due to the Delta variant and increased travel restrictions resulting in global august domestic traffic of approximately 30% below 2019 levels. Since then, it has shown signs of improvement, most notably in the domestic China market. The US domestic market continues to be a bright spot in the recovery with TSA screenings resuming an upward weekly trends since mid-September and peak travel days are reaching 80% to 85% of 2019 volumes. We are also seeing the recovery accelerate in more parts of the world with reduced travel restrictions and coordinated protocols. Japan's domestic traffic is accelerating after the country recently dropped its COVID state of emergency. And European airlines have seen large booking spikes following the US decision to open the vaccinated foreign travelers in November.
Passenger traffic in other parts of the world, particularly Southeast Asia remain significantly lower due to continued travel restriction uncertainty and case rates. Even there however, there is increasing momentum for air travel as vaccination rates climb. International operations are starting to see incremental improvement with August traffic 69% below 2019, which was an improvement from June and July. And we are seeing promising signs of entry protocols loosening across the trans-Atlantic quarter. Despite this progress, international traffic is still a long way from full recovery. Limited coordination on travel protocols are still significantly hindering traffic in the international segment. Yet, the active fleet is now approximately 85% of its previous size.
With single-aisle activity levels slightly above twin-aisle. With utilization rates and load factor still below historic levels, airlines are flying around 60% of their normal global capacity. Recent changes to government policies could accelerate this to 70% by year end. However, we have seen continued variability in capacity due to supply chain and logistics challenges, our customers are facing. As the recovery continues to expand, airlines are shifting their focus to medium term fleet planning. As part of this assessment, airlines have retired or announced plans to retire around 1500 airplanes since the onset of the pandemic. We anticipate this trend will continue as our customers modernize their fleets to reduce carbon emissions and an increased operational efficiency.
With oil prices today approximately 30% higher than at the end of 2019, operating efficiency is top of mind for most of our customers. The new airplanes we deliver will be as much as 25% to 40% more fuel efficient with commensurate reductions in emissions compared to the airplanes they replace. The freighter market remains robust with cargo traffic 8% higher year-to-date through august compared to 2019. With limited belly cargo capacity on passenger airlines more dedicated freighters are being utilized to transport cargo. This is resulting in healthy demand for our freighter offerings with 24 additional freighter airplanes ordered in the quarter and strong demand for Boeing converted freighters. In fact, our converted and new freighter orders through the first nine months of this year have already surpassed our highest annual freighter tally in history.
As we look to the medium and long term, we see our original forecast still holds. We continue to expect passenger traffic to return to 2019 levels in 23 to 24 and then a few years beyond that to return to long term growth trend. We still see recovery in three phases, first, domestic and regional markets such as Intra-Asia, Intra-Europe and Intra-Americas flights and finally long haul international routes. We've seen this phase recovery translate into demand with strong 737 MAX orders this year which mainly support domestic markets. We anticipate demand for wide-body aircraft to take longer in line with the international traffic recovery.
Our 10-year commercial airplane market outlook is largely unchanged from what we assumed a year ago, reflecting the impacts of the global pandemic as well as the ongoing market recovery. From now until 2030, we forecast, demand for over 14,000 single-aisle airplanes such as the 737 MAX which equates to roughly a 115 to 130 airplanes per month. From a 20 year perspective, we still see the impact of COVID but to a lesser extent as traffic reverts to long term trends. Through 2040, we project demand for about 43,500 new airplanes, an increase of about 500 planes over last year's forecast. And as air travel grows, we're committed to reaching sustainability goals and future guidelines through government and industry partnerships and a combination of technology, policy and operational advances.
In a significant area of growth projected demand has increased for dedicated freighters, including new and converted models. With sustained demand for air cargo tied to expanding e-commerce and air freights' speed and reliability, we project the global freighter fleet in 2040 will be 70% larger than the pre-pandemic fleet. On the global trade front, we continue to support monitor US China trade relations given the importance of the Chinese market to our economy and our industry's recovery as well as our near-term delivery profile and future orders, all of which influence future production rates. We remain in active discussions with our Chinese customers on their fleet planning needs and continue towards leaders in both countries to resolve trade differences by reiterating the mutual economic benefits of a strong and prosperous aerospace industry. Ultimately America's leadership in aerospace as well as the health and stability of millions of commercial aerospace jobs rely on free and fair trade, and we are confident our leaders, understand the importance of this area, not just for our business, but the -- for the overall health of our economy and competitiveness.
Turning to the commercial services market. We saw demand improve again in the third quarter as we supported airlines during their peak summer season. We expect this trend to continue near term slightly ahead of our expectations. That said, we still anticipate a multiyear recovery that may be uneven. Liquidity is improving across the industry and managing liquidity remains critical for the aerospace industry's bridge to full recovery. As we highlighted previously, product differentiation and versatility will be a key as airlines adapt to evolving market realities. In fact, the 787 has been the most utilized wide-body airplane during the pandemic, and demand for the MAX continues to grow. So far this year we have sold more than 550 and 737s across each of the models from -7 to -10 reflecting the value of versatility and commonality. I'm confident, our product line is well positioned and we're focused on executing to meet that customer demand.
Despite the continued challenges our industry is facing due to COVID-19, passenger traffic is increasing and more broadly, we're seeing incrementally positive indicators for economic growth. With economic activity picking up, labor availability within our supply chain will be the critical watch item. As we position for a robust recovery, we're focused on delivering for our customers and capturing the opportunities ahead. We're maintaining and in some cases expanding key investments and strategic processes, technologies and capabilities that will define our future. And whether we're investing in manufacturing technology, digital engineering, technology advances, autonomous solutions, supply chain capability or platform designs, sustainability will be a key factor in every decision.
We're continuing our transformational efforts to create long-lasting value, which will improve our performance help us generate positive cash flow and create a foundation to enable us to return to healthy margins. While we do this, we remain committed to safety, quality and transparency and I'm confident in our future.
With that let me turn it over to Brian.