Airbus wins annual results, trails Boeing in deliveries

Airbus announced 1,619 gross orders for 2013–1,503 net orders–and a backlog of 5,559 aircraft. The company delivered 626 aircraft for the year. It ended the year with 51% of the market vs. Boeing.

Boeing won the delivery race but came in second in orders.

CEO Fabrice Bregier said that 10 years ago Airbus delivered only half the aircraft it did in 2013.

Bregier, at the annual press conference, says “re-engining [the A330] is always an option, but not only option,” reports Reuters. “[Airbus COO-Customers John]  Leahy says Airbus could eventually add 1-2 rows to A350-800.”

Aviation Week reports the A350-800 EIS could be moved back a couple of years, also reporting it could be enlarged by two rows.

Bregier says A320 production could increase, reports say from the press conference. (We report in our e-mail distribution today what the production rates will be over the next few years–this will be published on this website next Monday.)

Here are a couple of early stories from the press conference:

Reuters

Bloomberg

Here is John Leahy’s slide show from the press conference: John Leahy’s Slide Show 2013 Annual Press Conference.The slides detail cancellations, including at last Kingfisher’s order for A380s and A350-800s.

Leahy said that the A380 order for 20 from Doric Leasing, announced last year, has not booked yet but will be booked this year.

Leahy says, rhetorically, “It’s about time to re-engine the A330, isn’t it? I don’t know. We sold 77 of them.”

Tom Williams, head of production, says Airbus wants half of the A320 family production for the A321. He says that on long-range missions, the sharklet-equipped family gets as much as 4.2% better fuel economies.

Gunter Butschek, COO of Airbus, says a major goal is to improve the efficiency of the A380 production as it heads toward a goal of delivering 30 a year in 2015.

Bregier on re-engining the A330: “[The A330] is selling very, very well. It’s more competitive than the 787, but we are investing in improving it. [Re-engining] is not in our near-term plans. It’s not the main option for the A330 family.”

Bregier said that “there is something a bit cynical for [Boeing] trying to claim a level playing field, largely losing the case [with respect to the 777X]…doing the same with 777X. Investing $4bn-$5bn and getting twice the subsidy. I reserve my position about what the WTO should say but it is incredibly cynical [by Boeing].”

Bregier says the A350-800 still has an EIS of 2016 but the size of this market is smaller than we had planned.

Leahy says prices for the aircraft will be hiked by 2.6% effective now.

44 comments on “Airbus wins annual results, trails Boeing in deliveries

  1. Could Airbus be setting up for a stretch to the A350-800 and an actual replacement for the A330? If the GTF is ready for the big birds by 2018-2020 and they are as efficient as advertised, that could be a bit of a hit to the 787 as they would only be delivering the last of the ostensibly low priced birds just as such an A330 replacement would be coming to market.

  2. Airbus is only going to win the delivery race when Boeing doesn’t have the sales to drive high production rates. Airbus just doesn’t have the manufacturing capacity that Boeing does.

    • Airbus is building its production capacity around the world, though – FALs in France, Germany, China and now the USA. That ought to give it the scope and flexibllity to increase

    • IMHO Airbus products are so much better than competition that, at this time, customers prefer to wait !!! Anyway production volume at Airbus will increase and may be surpasses competition’volume.

      • Kind of interesting how that all works considering that the same companies provide parts to both suppliers. Maybe those suppliers offer an off grade part to the other airframe companies? Or are you saying that the world should be concerned if they fly on anything other than a Airbus? What do airlines do who buy from other airframe suppliers?

      • I would say that which they will put together between now and 2018.

        Seriously, I based my comment on the fact that Boeing had delivered 620 aircraft in 1999 and Airbus had, until the last couple of years, come nowhere near that. It seems that assumption is now out of date.

        But it should be noted that the Mobile A320 facility is still being built and it is questionable if Tianjin will ever run at full capacity.

        • If you just count the Seattle contribution to Boeing’s 620 Aircraft delivered in 1999 (and ignore the MacDac contribution), then the number of planes that legacy Boeing delivered in 1999 was 561. Boeing quickly ramped-up production and delivered a great number of planes during this period – and lost a lot of money doing it.

          Delivering a large number of planes is nice, but it’s even better when some money is made. For example, Boeing delivered 601 planes in 2012 – and lost money doing it because of the high costs of the 787 – which don’t seem to stop. I will be surprised if Boeing Commercial makes money this year.

        • Hold on, but in the last reply you implied that Airbus will not be able to match Boeing’s production, now you agree with Bregier? Delivering more than 700 is nice (by the way it happened in 1996, including MDD) but the numbers include those types not in production anymore or severely ramped down, 757, 747, 767 + sites closed. Having gone down to 251 deliveries in 2002, they needed to make a significant level of investment to bring themselves up to the levels they are now, just as Airbus had to do themselves. I have to say I am surprised that Boeing beat Airbus only by ~20 a/c.

  3. Looking at the pics of the wing load tests released by both A & B, does anyone know why it seems like the A350 wasn’t flexed(pulled up) as much as the 787 was? Airbus says it went above 5m and Boeing says it went up to about 7m or something? Is it just as a result of the 787 wing being more flexible or Airbus not going beyond what it needed?

    • Wing thickness ( at the root ) tends to be higher in Airbus wings.
      ( some pictures around that compare dimensions. )
      For the same introduced moment arm the material can be thinner/lighter.
      But the second area moment “stiffness” increases with ~thickness³.
      I would expect the combined effects to produce stiffness ~= thickness² or a bit more.
      So 20% more thickness would reduce displacement by more than ~1/3 ?
      ( Keep in mind the A350 wing has a higher design load than the 787.)

  4. I really hope Airbus leaves the A330NEO on the concept floor. This is a bad idea for so many stakeholders and Air Asia X will be the only winner. Anthoer interesting point was that the A320 family was second to the 737 family this year. 800 plus for the A320 versus 1000 plus for the 737. Another few years of that and we’ll back to the level playing field. Then when the A350/A330 bending really takes effect Airbus will be challenged to be the market leader.

    • Anthoer interesting point was that the A320 family was second to the 737 family this year.

      No, it was not.
      It still had a market share lead of 53:47 vs the 737, with CEO/NEO and NG/MAX considered.

      800 plus for the A320 versus 1000 plus for the 737.

      Again, incorrect.
      Net, the A320 (CEO and NEO) won 1162 new orders in 2013. This stacks up against a net 1046 for the 737 (NG and MAX).

      Even if you compare just NEO vs. MAX, the A320 won in 2013 – by a slightly bigger margin, even.
      Net numbers were 876 NEO against 699 MAX.
      That’s a market share lead of 56:44 for the NEO based on 2013 net orders alone.

      The one category the 737 did win in 2013 was NG vs CEO: 286 vs. 347 (45:55, again, net numbers).

      Everybody can draw their own conclusions from this regarding what market share may look like in 2014 or 5 years down the line – but stating that the 737 outsold the A320 1000 to 800 in 2013 is factually wrong.

      Sources:
      The presentation linked by Scott above (http://leehamnews.files.wordpress.com/2014/01/201401_jjl_annual_press_conference_final.pdf) and ATW:
      http://atwonline.com/finance-amp-data/boeing-reports-1355-net-orders-648-deliveries-2013)

    • Sorry- I checked the webiste and saw the number for A320s was +1000. and I guess I picked up only the CEOs from above. Story should have been writeen better to show that the total number of A320s and not a break out. :) Give a guy a keyboard and he will type just about anything.

  5. “800 plus for the A320 versus 1000 plus for the 737. Another few years of that and we’ll back to the level playing field.”
    Another few years are not going to change anything, from the day the planes were offered, the market share remains the same, 60-40. On another point, however, Airbus yet again outsold Boeing in the Single Aisle market.

    “I really hope Airbus leaves the A330NEO on the concept floor.”
    Why such worry? Let them launch and fail with it.

    • Who retracted 200 737 NG orders ?
      IMU Boeing still needs to bridge an order gap to sell available NG production before the MAX becomes available.

  6. I think the current market shares for the 737 and A320 tell just half the story.

    Many A320s were A321$ this year without much competition. Looking at the number of airlines that booked, the customers themselves and airlines switching, I’m afraid Boeing isn’t making the profits the sales numbers / list prices suggest.

    http://www.pdxlight.com/neomax.htm

    Boeing seems to be holding on, preventing diving below 40% marketshare, at a price. They can’t do to many AC like deals (price levels, let US government finance ac aircraft, buying Embraers and Airbusses).

    http://www.reuters.com/article/2013/12/16/boeing-share-idUSL6N0JU0KZ20131216

    IMO an NSA launch cannot wait until 2020. If A320 NEO production is ramped up in China and Mobile, the GTF matures (also CS300/CS500) and Airbus a few extra A320 variants, it’s over & out for the good old 73. The first signs are there.

    • IMO an NSA launch cannot wait until 2020. If A320 NEO production is ramped up in China and Mobile, the GTF matures (also CS300/CS500) and Airbus a few extra A320 variants, it’s over & out for the good old 73. The first signs are there.

      To be honest, I think you’re being overly dramatic here. Boeing has already sold out more than three years of production for MAX (at current production rates). Their current 737MAX backlog of 1763 firm orders is nothing to be sneezed at. It’s just that NEO betters this by almost 900 frames, which is admittedly very impressive.

      And yet – Boeing can probably live easily enough with roughly a 60:40 market share split for the next 10-15 years. 1763 firm orders with more in the works should give them enough scope to recoup their investment before pouring money into a 737-successor, even if we assume smaller profit margins than on the 737NG and higher development costs than on the A320NEO. With MAX EIS in 2017, I wouldn’t expect a successor much before 2030. Same for a NEO successor.

      • If Airbus produces 50% more NBs in cheaper places it can offer IMO better products at lower prices. Not sustainable for Boeing. Boeing will deny and say the 737 does just fine until the moment they have the resources for the NSA. Price indications leaked from the AA, Lionair and AC deals don’t look good either. Maybe SouthwestRyanair Delta and United paid royal prices because they wanted 737 MAX’s badly? Maybe, maybe not.

        • If Airbus produces 50% more NBs in cheaper places it can offer IMO better products at lower prices.

          Big if there. The Chinese FAL only just delivered its 150th plane, over five years (!) after it was started. Between them, the TLS and HAM FALs deliver the same amount of planes in the space of about four months.
          Even if you assume much lower wages in China, the saving per airplane won’t be huge based on that output. Airbus are not about to relocate all NB production to China. Also remember the planes assembled there still largely consist of parts made elsewhere, many of which are bought from suppliers that also supply Boeing with components.
          In short: I don’t see any breakthrough on either side (A or B) that would allow them to completely thrash their competitor on manufacturing cost per plane.

          Not sustainable for Boeing. Boeing will deny and say the 737 does just fine until the moment they have the resources for the NSA. Price indications leaked from the AA, Lionair and AC deals don’t look good either.

          With regard to their main product line(s), I don’t buy the “they’re selling a non-competitive product purely on price and thus aren’t making any/enough profit” argument when it’s directed at Airbus. I don’t see why I should buy it when it’s directed at Boeing.
          I do believe NEO is the more compelling product, which is reflected in its market share. I also believe that – largely due to the higher development cost compared to NEO – Boeing’s profit margins on the MAX are going to be thinner than Airbus’ on NEO, and Boeing’s own on the NG. But thinner profit margins are still profit margins, and at ~1800 firm orders, I wouldn’t be too concerned about the ROI on MAX even if I was a Boeing shareholder. Although I would be a bit envious of the higher ROI on NEO that Airbus are going to get.

          Maybe SouthwestRyanair Delta and United paid royal prices because they wanted 737 MAX’s badly? Maybe, maybe not.

          You know the answer to that yourself, as you’re a reader of Scott’s column. Which means you know that industry sources suggest that Boeing won United largely on price, for instance. Just like Airbus won other deals on price. It still doesn’t mean that Boeing won by offering a price that results in producing 150 planes at a loss.

        • @anfromme:
          Tianjin is a single FAL line. FXW has 3 ( or is it 4 now ) FAL lines and Toulouse afaik ?2?. Thus I’d be surprised if Tianjin in the current configuration will go beyond ~12% of production ( they are at ~7 now )

        • “I don’t buy the “they’re selling a non-competitive product purely on price and thus aren’t making any/enough profit” ”

          Other things play can play a role. The NEO sold out, commonality with existing fleets, financing, better fitting seat capacity, trade debts, politics, airfield performance you name it. All I’m saying is, it seems at this moment Boeing is fighting an uphill battle with the MAX. And sales / prices tell the story. There will be a sfc delta too. I don’t believe a 79 inch GTF will perform similar to a 69 inch LeapX. Not sustainable IMO.

  7. Airframe out the door figures of these two shows up what appears are two quite different production approaches.

    Airbus YOY stats show an almost unblemished history of steady production growth. By comparison Boeing’s own YOY figures have distinct peaks & troughs.

    Quite what doe this tells us about either of these two about planning, management & control over suppliers is open to conjecture.

    As a business growth model of which neither is perfect there is one that reflects an apparent superior degree of business acumen.

    • What this says is that European labor laws make it onerous for Airbus to lay off workers (18 mos severance pay) to meet economic peaks and valleys, so it may as well continue to build airplanes. Boeing is free to layoff and rehire at will. The uninterrupted production stream is one reason why appraisers tend to value A320 family lower than 737 family because of a surplus of supply-and-demand. Or so they say.

      • Seriously? In the last 15 years Airbus built A320 ‘white tales’? I remember Boeing complaining that Airbus was ‘flooding’ the market with A320s, however I do not remember them piling up at an airport somewhere straight after delivery… In addition, Boeing’s production curve doesn’t just effect them but their suppliers, a lot oversees with stricter labour laws…

        • Whereas Boeing chose to cut 30,000 jobs in order to prop up their a/c valuation? Is it a bit like buying your own shares to please the investors?

        • Propping the price by way of scarcitiy works mostly to the benefit of the leasers.
          ( and those opposed forex the NEO through their mouthpieces )
          Appeasing the capital markets floats Boeing share value.
          IMHO this is a theory comparably faulty to most other economic explanations from the US and their economic hitmen^HBank of Sweden “nobelprize” laureates.

        • No, they didn’t build white tails, Airbus dropped the price to sell them, hence the valuation issues.

          Even assuming this is true – what has that to do with how easily you can lay off workers? The price is negotiated when the order is placed.
          Sure, during an economic downturn, there may quite likely be some negotiations after the fact with regard to payment schedules, possibly even the overall price. But you’re not seriously suggesting that only Airbus would have engaged in this practise in, say, 2001/2002, are you? Particularly considering that US airlines suffered the most during that period and Boeing is much more exposed on the US market than Airbus is.

          Airbus did actually build more A320s over the last 15 years than Boeing did 737s, so we are seeing an alleged lower selling price in conjunction with a higher number of frames produced; a pretty good explanation for lower valuation, to be honest.
          On that note, it’ll be curious to watch MAX valuation 12-15 years down the line – Boeing is allegedly offering steeper discounts than Airbus, while they’re still selling fewer MAX.

          For the record – I’ve no way of checking, but for the sake of the argument, I have no problem accepting that used A320s (CEO) are valued lower than used 737s (NG).

          However, myself and others have stated this before and will stick to this point: European labour laws are not behind this.
          As has been pointed out, these laws and regulations aren’t what some people (across the pond as well as in the EU itself) seem to believe they are; most of all, actual single-aisle deliveries over the last 14 years simply don’t match up with an alleged pattern of one manufacturer laying off people and massively reducing output, while the other just kept on producing.

          European (Minimum) redundancy statutory redundancy bears no relationship to your perceived reality.

          As you know I work within the industry & I see workmates with twelve years plus employment history departing with less then six months salary, this is not hearsay but EU statutory minimum redundancy policy & reality.

          Indeed.
          As an example, in Germany, law (KSchG §1a) stipulates that redundancy payments should be 0.5 months’ worth of gross salary for every year of tenure with the company (where every period above 6 months is rounded up to a full year). At that rate, you’d need to be with the same company for at least 36 consecutive years to be entitled to the alleged mandatory 18 months’ redundancy payment. And even that is not a hard statutory requirement the employer has to pay under all circumstances – although I suggest reading up on the matter if you’re interested in the finer details.

      • What this says is that European labor laws make it onerous for Airbus to lay off workers (18 mos severance pay) to meet economic peaks and valleys, so it may as well continue to build airplanes. Boeing is free to layoff and rehire at will. The uninterrupted production stream is one reason why appraisers tend to value A320 family lower than 737 family because of a surplus of supply-and-demand. Or so they say.

        That, to me, seems quite far-fetched, to be honest. Sounds like another easy explanation based on preconceived ideas and half-truths about European labour laws. I don’t contest that workers in the EU as a rule enjoy more protection than they do in the US, but evan that has its limits and tends to get exaggerated in both its extent and its effects. For instance, 18 months severance pay isn’t a European standard by any stretch of the imagination. A friend of mine was recently told he’d get laid off and if he’s lucky, he’s going to get around 3-4 months’ pay.
        Also, there is such a concept as temporary/contractual work, doing shorter hours at reduced pay, etc., all heavily used by European and US companies with presence in the EU alike. So it’s really not a case of “oops, we’re stuck and just need to keep producing despite demand completely dropping through the floor”.

        Anyway, actual production numbers also speak a different language: Yes, Boeing slumped twice since 2000. The first time in 2003 and ’04, as an effect of 9/11. The second time in 2008, as an effect of strikes. 2009 through 2010 largely levelled off, but at much higher rates than 2007 or 08. It was during this “levelling” period that Boeing actually narrowed the gap to Airbus single-aisle deliveries – which has since been increasing again.

        Looking at the numbers, Airbus did reduce its output after 9/11 (from 257 in 2001 to just over 230 the next three years), but not to the same extent as Boeing. Slowly coming out of that post 9/11 slump, Boeing initially increased production drastically in 2004, while Airbus remained level – but from 2005 Airbus was more aggressive in increasing output.
        Remember 2005 was the first year that both recorded four-digit orders, (or very close to it, anyway). Boeing went from 202 737s in 2004 to 212 the next year, while Airbus was able to increase output much more drastically, from 233 to 289. Deliveries continued on that trajectory ever since, with Airbus leading Boeing in single aisle production in every single year after 2001.

        So yes, there are plenty more A320s out there than 737s (4753 vs 4288), at least if we’re talking about frames delivered between 2000 and 2013. Which is a good enough explanation (or part thereof) for the lower valuation of A320 versus 737. But this isn’t the result of Airbus “levelling off” while Boeing decreased production – it’s chiefly the result of Airbus ramping up production more aggressively than Boeing did over the course of the last 10 to 14 years.

        Here are the numbers, for everybody’s benefit – as indicated above, I don’t think these paint a picture of one manufacturer laying off during crises while the other “had to” carry on. Source are boeing.com and Airbus’ collected 31-Dec O&D spreadsheets.

        https://dl.dropboxusercontent.com/u/7865671/A320vs737%20deliveries%202000-2013.xlsx

      • That “value” creation stems from the same nice talk up that produced the structured credit bubble. Similar logic in Boeings deferred production cost
        and other value upping rhetoric. We’ll wine and dine you ..

      • Scott your absolutely incorrect,

        European (Minimum) redundancy statutory redundancy bears no relationship to your perceived reality.

        As you know I work within the industry & I see workmates with twelve years plus employment history departing with less then six months salary, this is not hearsay but EU statutory minimum redundancy policy & reality.

        The world has moved & no person has the right of a job for life & unless you have something delicate to share on departure rarely do employers offer more than the indicated statutory minimum.

      • You are correct but the solution in Europe is to balance permanent workforce with the right % of term employees should thing go wrong. These are also a good pool for permanent hires.
        Boeing also do this.

      • That seems logical to me, and a good explanation. If you will get burned trying to lay off employees, then you might as well keep them occupied and build product and hope the market buys it. And the only way the market will buy in a depressed situation is if the price is low enough to justify the expense.

        • That seems logical to me, and a good explanation. If you will get burned trying to lay off employees, then you might as well keep them occupied and build product and hope the market buys it. And the only way the market will buy in a depressed situation is if the price is low enough to justify the expense.

          Except the facts don’t show this happening.

          Airbus did not build any A32S white tails, and prices for all A32S delivered were already contractually agreed way before delivery.
          If you’re talking about selling at a discount, you’ll have to talk about orders, not deliveries, which is a completely different discussion that has little to do with the availability and value of existing frames or mythical labour protection laws.

          So getting back to deliveries, delivery numbers for Airbus and Boeing for the last 14 years do simply not match up with one laying off workers by the thousands during economic troughs, while the other just keeps producing no matter what.
          Here’s the link again to 737 vs A320 deliveries from 2000 to 2013 so you can check yourself. The biggest dent in Boeing’s deliveries was in 2008, and that was the result of strike action – Boeing more than made up for that in 2009, with a tremendous peak of never-before-seen 737 delivery numbers, one of the few years where Boeing significantly narrowed the delivery gap to Airbus, who at the time were effectively flatlining their deliveries year-over-year.
          https://dl.dropboxusercontent.com/u/7865671/A320vs737%20deliveries%202000-2013.xlsx

  8. apropos: There is a Dreamliner standing in Narita with a busted battery.
    http://avherald.com/h?article=45c377c5&opt=0
    ( Last paragraph starting with
    “On Jan 14th 2014 a JAL Japan Airlines Boeing 787-800, registration JA822J, was parked at the apron of Tokyo’s Narita airport and was being prepared for departure for flight JL-707 to Bangkok (Thailand) scheduled about two hours later, when white smoke was observed from the aircraft’s main battery, … “

    • No doubt this latest incident will be attributed to “Teething Pains”. Of course, this ignored the fact that the 787 has been produced for over 6 years. So…I don’t buy it.

      i mean, if my six-year-old’s pants are smoking because fire is coming out of his arse, then I go to be a bit skeptical that it could be due to “Teething Pains”.

  9. What has not been mentioned is the rubber meets the road on the Single Aisle Deliveries:

    Boeing: 440 737s at a rate of 36.6 a month and a total of 44.3% or the market. Very close to the current 60/40 split in Airbus favor.

    Airbus: 493 A320s at a year long monthly rate of 41 a month (higher if you use 11 months actual). 55.7% or the market. Airbus continue to gain ground as Boeing eeeks out the non competitive setup of the 737 (when did anyone hear of an A320 loosing fuselage sections? let alone the non competitive engine setup). Airlines that talk say the fuel burn is so close as to be irrelevant regardless of the Boeing claims. Obviously instead of trhe NG Boeing should have replaced the 737 when they had the chance. Now, stuck.
    The only save factor is if Boeing goes to 50+ and can make more a year, but as the number show, Airbus at 42 is Boeing at around 48.

    747 and A380 were right at 24 for the year, Airbus is only making 2 a month as opposed to the planed 4 (wing issues factor in but…..)

    Boeing deliver 65 787s but a number of those were the leftovers that got fixed. A new battery failure and stay tuned if that affects produciton for the coming year supposedly at 10 (120 should be delivered)

    777/767 about matched A330 production (UPS is done with their orders, FedEx has a few so the 767s become almost a zero factor for deliveries until the Tankers come on line and thats not that many a month even with FedEx (that may change if other tanker contests come thorugh but nothign big).

  10. Sigh….Here we go again!

    Boeing needs to get this fixed, pronto! It should have been fixed twice already!

    My reading of the 2013 NTSB interim report, which includes the battery design requirements, is that regardless of the new containment, the probability of generating gas or smoke was supposed to be less than one in every 10^7 fleet flight hours. So, obviously this latest incident is worrisome. However, I’m no expert on the 787 certification requirements, so perhaps the FAA allowed the new containment to redefine what smoke and gas generation means in relation to the interior of the aircraft. It will be very interesting to hear what is said about these requirements in the coming days.

    There is of yet no reported history of the failed cell, and what production/inspection protocol it was under. It also was reported that there was a charger fault along with the battery fault, so those of us who are not in the loop face a chicken/egg scenario when speculating about the severity of the failure. In any event, the fact that only one of the eight cells failed indicates that the new isolation measures within the battery pack worked.

    From a forensic perspective, it is especially good that this latest failure seems to have been relatively mild. More instrumentation was included in the new pack design, and it sounds like the there is a good chance that all the electronics were unharmed. Boeing should get some good failure data from this.

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