Pontifications: Airbus flies past Boeing in order race

By Scott Hamiltn

By Scott Hamilton

Sept. 7, 2015, © Leeham Co.: Airbus flew past Boeing in the annual orders race when the August numbers were reported last week by both companies.

With the order for 250 A320s finally firmed up by India’s Indigo Airlines (it was announced last year), and an order for 45 A330ceos announced by China, the outcome was clear.

Through August, Airbus now has a 66% market share of single-aisle orders. Boeing has a 60% share of wide-body orders, thanks to a boost from FedEx for 50 767-300ERFs. (Boeing reported 48 767 orders net of cancellations.)

But if you remove the FedEx orders and just look at passenger airplanes, Airbus edges out Boeing in the year-to-date wide-body market share.

YTD Airbus, Boeing Orders Thru Aug

Airbus handily wins the market share race for single-aisle orders through August. Boeing wins the wide-body market share handily, boosted by the order for 50 767-300ERFs from FedEx. Take away the freighters for a passenger-to-passenger comparison and Airbus edges Boeing in wide-bodies. Sources: Airbus, Boeing. Click on image to enlarge.

Neither company reported any orders (net) for the Very Large Aircraft, the Airbus A380 and the Boeing 747-8. In fact, both sides took hits to the VLA when Russia’s TransAero couldn’t take delivery of either type–it is one of the very few airlines to have ordered both.

With cargo airlines also deferring 747-8Fs, it appears Boeing is faced with about six or seven white tails now. Airbus has a large number of A380 orders that have been deferred or which are with customers that would fall into our Bombardier-style yellow-red risk assessment.

Eliminating the FedEx 767Fs from Boeing’s YTD tally, Airbus edges Boeing in wide-bodies with a 52% share.

The wide-body competition could easily shift again if Emirates Airlines is ready to choose between the Airbus A350-900 or the Boeing 787-10 by the time the Dubai Air Show comes around in November. This bake-off is for 50-70 airplanes or more.

Another variable: whether Airbus launches the A380neo at Dubai, with a huge order from Emirates as the launch customer.

Boeing knocked the socks off Airbus last year in wide-body market share, but 2014 was an unusual year. Airbus suffered the cancellation of 70 A350s (by Emirates) and Boeing firmed up the November 2013 program launch of some 225 777Xs announced at the Dubai Air Show (Emirates, along with Qatar Airways and Etihad Airways). This is a more normal year for wide-body tallies.

The Dubai Air Show may be the determiner for this year’s bragging rights.

 

34 Comments on “Pontifications: Airbus flies past Boeing in order race

  1. Can’t help it, but it seems that Boeing is slowly but surely losing out. By the time they come up with a NSA in 10 years plus, their market share might have declined into a single digit

    • In ten years, 2025, they should be delivering a state of the art 200 seater with more comfort, or they seriously dropped the ball.

  2. So it was the A330 and the 767 that again delivered the sales results, more than a decade after the launches of their supposed replacements. Who would have thought it?

  3. It’s funny how airbus consistently sells more but boeing consistently has higher margins and higher profits…an order is an order!! So what if they came from fedex!! Do you think airbus is making any sort of huge margin on 250 planes to one buyer?? As enthusiasts we really should move past this A vs B crap. Let’s just celebrate the magnificent man made creatures of aviation.

    • Those “higher margins and higher profits” are nothing more than a mirage.
      Via program accounting Boeing shows a profit from borrowed money.
      ( To compare “real” numbers you have to look into the nonGAAP accounting numbers that Boeing publishes on the sidelines.)

      • ‘Those “higher margins and higher profits” are nothing more than a mirage.’

        This is particularly the case in times of growing production numbers. when the music stops then the pre-booking of profits will come back to haunt Boeing.

        • This “Airbus fanboy” argument is recycled every week.

          I wonder if either of you has ever taken an accounting class.

          My belief is that sophisticated wall street firms, who have money on the line, can sort out real earnings better than a couple of chat board pontificators. That is probably why Boeing’s market cap is $88 billion and Airbus is about half of that.

          • The same “sophisticated Wall Street firms” which managed the subprime market or the US Car companies?

          • Good one!

            And Boeing has a defense divisions that Airbus pretty much does not (though the are doing nicely on the A330MRT!

          • Yes, I get it. The “Airbus fan-boys” like to have a hypothesis that can’t be tested. Assertion is all that matters.

            By what date will the stock price collapse? If it doesn’t materialize by then will you all acknowledge it was a dumb thesis? Have you all shorted the stock given your strong convictions.

            This weekly assertion is the dumbest argument since Mega Airplane for Mega Cities for the A380 from 10 years ago. Airlines are still laughing about that one.

          • Dear HozzBoz

            Been qualified as an accountant for 25+ years and am fully aware of the accounting implications. Anyone who has read my posts will appreciate I am neither fanboy of either OEM but rather a fan of the fantastic engineering, manufacturing and technical developments in commercial aviation of all OEMs and the aircraft they develop.

            In terms of the accounting treatment of long-term programs I can fully see the merits of the Boeing treatment but there is no doubt that the Airbus treatment is more prudent. The fundamental risk is that with the Boeing treatment there is a incentive to extend the accounting block and it allow for earlier booking of profit. Given that you can only book profit once this will have the clear implication of depressing future profits.

            You could look at this as window dressing and research suggests that manipulating financial statements does have a beneficial impact on the share price of a company albeit normally only temporary in nature.

            I would flip the argument, Boeing suffers from a more than aggressive and adversarial investor market. This forces them to be more ‘defensive’ in their treatment of investor days. They also have the fundamental issues of a long-term business model that investors are wary of and critically some key programmes that are in a poor state (748. 787, tanker), as for that matter has Airbus

            Note once you start ‘spinning’ your financial results you will always run the risk that you lose the confidence of the investment community and I believe that Boeing senior management have definitely been guilty of more spin than Airbus senior management in recent years.

            Kindly do not direct your vitriol on me
            Thanks

    • Real margins and profits? Don’t bother. Boeing doesn’t want to discuss them and the stock holders don’t want to know them. A win-win.

      To assume the one off 767F order boosting widebody sales is a trend / clear sign, well..

      Airbus 250 NEO order profitability? Lets assume normal supply & demand market dynamics..

  4. Airbus sells more aircraft but Boeing delivers more. Scott, at what point do the OEMs make money – when the order is made or when the aircraft is delivered?

    • For Boeing and the 787 currently at neither end 😉
      ( Same for A350 and marginally A380 )
      For all other combinations flow accelerates towards delivery.
      but the best flow is said to come from selling spares 😉

    • Deposits are made when the aircraft is ordered and progress payments up to 30-40% of the contract price by the time of delivery. Remainder price upon delivery, and that’s when the profits are realized (in theory)/

  5. I’m interested to see what Emirates does vis-a-vis the A350 vs B787-10.

    I’m still convinced that Emirates cancellation of the A350 was done to put the screws on Airbus with regards to the A380NEO.

    I’m not sure about the operating metrics between the A350-900 and the B787-10, but I do know from a passenger point of view the Airbus is a MUCH nicer experience (as we know Emirates will definitely go for the sardine can 9 abreast seating if takes the B787).

    Emirates A380’s are the only aircraft of theirs that I will fly on as the B77W are vile!!

    • You are so very right, Jason. After flying Emirates from Cape Town to Copenhagen via Dubai in Y on a 10 abreast 777, I have sworn never to fly them again except on the A380. Which is what I will do because I just book them from Copenhagen to Delhi and back via Mumbai. The alternative was Qatar on the 787 with 9 abreast which is just as bad as the 777.

        • TransWorld I’m not that worried about this as the proposed 11 abreast seating for the A380 would still have 18in seating in economy. This will be achieved By them tweaking the side walls to make space for the extra seat per row.

          As yet, no airline has taken up this higher density layout though.

          That said, no one was doing 10 abreast on the B777 until recently, and now it’s becoming the norm (something I’m told will be done to fix this with the B777x range)

      • Wise move Rudolf as Qatars B787 are a particularly nasty example of this new sardine can layout favoured at the moment.

        Their A350 on the other hand is a delight to fly on though. So just goes to show that 1in extra seat width does make a huge difference to passengers comfort.

  6. I am kind of curious of what the marginal efficiency equation is on airliner production. If Airbus is able to stay at 55-60/month for the 320 series and Boeing has to slide down to say 35/month. Is there a significant manufacturing cost advantage to Airbus once the production line are optimized for these volumes? All production faces declining marginal gains. What about Bombardier and Embrear, how much (if any) do they lose out on unit costs? My suspicion is more is made of it then there is. As long as your employees are fully utilized, and efficient at each task, I think the gains on rate become very marginal, very quickly. But I am sure someone has better info then my suspicion. Please do tell!!

    • I’m not an expert in that area but I would guess the main factor are the fixed costs like building the manufactoring line and maintaining it. The more units you can spread those over, the lower the total cost per unit. Maybe you can also get higher discounts from some of your suppliers when buying more.

      So raising production rates will give the most return if you don’t have to build a new line but just increase utilisation of your existing ones.

    • And keep in mind sales are not deliveries.

      both are virtually dead even in delivers (aircraft made) so the so called market share is meaningless unless

      1. Boeing runs out of gas and no more 737 sales

      2. Airbus cranks out more aircraft

      and at some point (maybe) Boeing comes out with an all new 737RS and the sales go crazy.

      • “… and at some point (maybe) Boeing comes out with an all new 737RS and the sales go crazy.”

        Not all that probable in the nearish future after NEO and then MAX had been announced and both sold/sell in large numbers.

        Boeing would have had to make the NSA stick as a near future available superior product against the NEO which was a physical impossibility.
        With the potential of future improvements being mostly engine centric I expect an NSA like product inviable in the next 2+ decades.

  7. Interesting shot on A350 blog,3 half finished A380’s sitting in the background.Presumably these are the Skymark planes,which seem to be hard to shift.This might be the acid test,if these can’t be got rid of at a reasonable price,then there is no point in going ahead with the Neo.Personaly I can’t see what the problem is,if you can’t fill the plane with your own passengers,just steal someone else’s.As far as Emirates is concerned,if there isn’t too much between the A350-900 and the 787-10,then they should go for the Airbus,as squashing people into Boeings is doing harm to their reputation.

  8. I agree wit all of the above. The 10 abreast 777 is an absolute torture and one not to be repeated. Etihad and Emirates confifure it this was and look as cheap alternatives to Qatar’s 9 abreast 777’s.

    Emirates would be a fool not to buy a mixed bag of A350-900 and A350-1000’s for their medium to long thinner premium routes. They would complement the 777-X very nicely when a smaller capacity is needed and when a more premium cabin is desired.

    The winner of the ME3 will be the one which will fly efficient airplanes allowing for comfortable configurations. Think Qatar!

  9. Boeing and the airlines came to the conclusion 10 abreast on the 777 and 9 abreast on the 787 is efficient and acceptable to the passenger. A conclusionmmore than welcomed by the financial people in those large organization.

    Maybe they underestimated a little who is really paying all their salaries, company cars, mortages and aircraft. And how vocal and brand damaging they can become, when they are dissapointed what they get for their money.

    BA smelled the coffee, the rest is still a bit in the denial phase. Good news for the 787-10 I think, not more seats per row, but more rows.

  10. Scott/ Leehamnews,

    Would you dare to suggest a breakdown by value… not list value but approximate actual sale price?
    Even just a statement whether A or B has added more money to their order book?

  11. A very tense business case. I guess an Airbus MOM /NMA hangs above the playing field.

    An Airbus A321/322 with a new wing. Costs 3-4Billion, Time to market 4 years. range 4500NM+ low risk because largely common with existing 10.000 A320s ordered and its global infrastructure/ engines shops/ pilotsbase.

    Not as capable/modern as something new, but good enough, low risk and available in good numbers early.

    Boeing experienced the NEO killing NSA before launch for similar reasons. But this time, there is no plan B (other than doing nothing).

    So Boeing needs large commitments (500?) before launch and anticipate Airbus ruining the prospects and margins 3-4 years before MOM/NMA EIS with a cheap good enough A321/A322.

    http://i191.photobucket.com/albums/z160/keesje_pics/AirbusA322NEOconcept_zps13d00dcd.jpg

    A bigger NMA aircraft will be heavier, more expensive and not have better engines. Though situation.

  12. Av Week has a freighter company in China taking 30 of the 767F

    Not sure why that vs the conversions and will see of course.

  13. Why would you exclude FedEx’ order of freighters?

    Isn’t it an order of complete airplanes?

    (Price contracted for is a different subject, you are just counting orders.

    There have been orders for more than 50 from passenger airlines.)

    • @Keith: comparing pax to pax, not pax-to-pax-to-freighters is just another metric to look at.

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