Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Bjorn’s Corner: New engine development. Part 4. Propulsive efficiency April 19, 2024
- Boeing unlikely to meet FAA’s 90-day deadline for new safety program April 18, 2024
- Focus on quality not slowing innovation, says GKN April 18, 2024
- Boeing defends 787, 777 against whistleblower charges April 17, 2024
- Dissecting Boeing CEO’s statement next new airplane will cost $50bn April 15, 2024
Airbus, Boeing 1Q earnings ahead
April 20, 2016: Airbus and Boeing will report their first quarter earnings April 28 and 27 respectively.
Year-to-date, Boeing is clobbering Airbus in orders and deliveries. It should be noted that last year, Boeing jumped to an early lead in orders and Airbus came roaring back by mid-year and year-end to outsell Boeing by a wide margin. Each company has guided at least 1:1 book-to-bill. This suggests Boeing would outsell Airbus this year because of a higher production rate: more than 740 compared with fewer than 700. Given Airbus’ propensity to have a stronger second half sales than first half, the outcome of the sales race is anything but iffy to call at this early juncture.
Airbus deliveries are well down this year. A320neos and A350s are piling up at Toulouse and Hamburg due to engine issues with the Pratt & Whitney GTF for the A320s and seat shortages for the A350s.
PW says it will have the teething issues for the GTFs worked out by June. There is no information immediately available about the seat shortages. It’s likely Airbus will address both on the earnings call.
Reuters reports there are at least 12 A320neos parked at Toulouse, and likely a similar number at Hamburg, awaiting engines. Both locations assemble and deliver A320s. There are at least six A350s parked at Toulouse, according to Reuters. The underlying production of each airplane is sound, the news service says.
Boeing’s quarter
- Update, 0630am PDT: Bank of America Merrill Lynch downgraded Boeing today to Underperform (sell).
Boeing previously reported its first quarter deliveries, at 176 airplanes, were down somewhat year-over-year. Officials already said deliveries overall will be down this year as the 737 line transitions to the MAX and fewer deliveries of the 747-8 are made. The 777 Classic line is fully sold and the 787 line is humming along. The Terrible Teen 787s are going through the Everett Modification Center for delivery to customers later this year.
As is the case with every quarter, Boeing will no doubt get cash flow and deferred production cost questions on the earnings call.
There might be a question of the probe by the Securities and Exchange Commission over whether the program accounting for the 787 and 747-8 were intentionally misrepresented to investors. We believe this to be without merit, as previously described. If asked, Boeing would be expected to say the probe and lawsuit are without merit.
Between now and then, the Wall Street analysts will be issuing preview notes. If there’s anything of particular interest, we’ll pick them up. (We only rarely see European notes on Airbus.)
Stock performance
Boeing’s stock has been volatile this year. Lower than expected guidance given on the January year end 2015 earnings call, which announced the lower delivery rates this year, followed by news of the SEC probe, took their toll on the stock price. Boeing’s share repurchase program boosted the stock from its low point, according to analysts.
Here is the most recent three month stock history.
The dip in January correlates with the 2015 earnings call. The February dip marks the SEC probe news.
Airbus’ three month stock price, in Euros, follows a similar overall trend line.
Boeing overall remains the better performing stock.
There is tension – one can feel the vibrations – in the current SE quotations, as Delta, United (and probably also American) are out shopping. We may expect immediate repercussions upon Airbus, Boeing or Bombardier stocks, with additional trading frenzy on top in the event of an unveiling of a first mover MOM project by the one or the other of the two OEM Arch-Rivals.
It’s an interesting time for us AvGeeks, observing the respective Sporty Game strategies as these are being played onto the 4-sided market chessboard. We are grateful to LNC for the within Tribune for comments. Very entertaining !
The correct strategy for the OEMs in the short term obviously is to ramp up the respective industrial throughputs to resorb their gigantic – excessive, sur-realistic – delivery backlogs … mostly, cash flow is generated 70 % upon delivery to the Customer, whereas the other 30 % (PDP) are sunk into parts, materials and sub-assemblies from partners, BFE vendors and suppliers to the FAL. Airbus needs to accelerate its industrial machinery if Brégier wants to keep up with the higher WB FAL speed coached by Boeing.
I saw lately the trailer for “Pawn Sacrifice” about the World Chess Championship match of Bobby Fischer versus Boris Spassky in Reykjavik, Iceland. They also played on a 4-sided board. Market intelligence is overrated by far.
@MHalblaub : you may look up INPI Espacenet for this French Patent :
SURFACE DE JEU POUR JEU D’ECHECS A QUATRE JOUEURS
N° de brevet: FR2504811 (A1)
Date de publication: 1982-11-05
Inventeur(s): Frequent Traveller
Demandeur(s): Frequent Traveller
Classification: A63F3/02
Players today : Airbus, Boeing, Bombardier, Embraer ?
Suppléants : COMAC, Irkut, Antonov, Mitsubishi, AVIC, Sukhoi …..
I played several times chess for three players on a 6-sided board. The game play was to finish the strongest player first…
The chess board for 4 players even has 12 sides but it is game for two teams.
I prefer a more simple game according to the rules: Go
I think both companies are in transition phases, ramping up, developing with all the hick-ups that come with it.
Long term prospects don’t really count these these for stock traders. Deferred cost have only recently made it into considerations of main stream press.
Even current stock developments depend on the way you look at things. Selecting the time scale of comparing stcoks changes the perceptions. And perception seem all that counts these days.
http://i191.photobucket.com/albums/z160/keesje_pics/Airbus%20boeing%205%20year%20stock%20april%202016_zpsmy94btny.jpg
5 Year stock price developments Airbus Boeing.
Darn, I should really have bought a bunch of Airbus stocks back in 2011!
I’d wish I’d bought Boeing stock two months ago, the Motley Fool looks right..
http://www.fool.com/investing/general/2016/02/12/time-to-get-greedy-with-boeing-stock.aspx
Buffet isn’t buying, instead he put his money into the aircraft parts business, Precision Castparts ($37 bill) and of course he has had Netjets for some time
Yeah Netjets is in my adopted hometown, Columbus.
And some 787 eye candy
http://www.charlestoncitypaper.com/TheBattery/archives/2016/04/19/watch-the-boeing-787-dreamliner-put-on-a-show-over-the-rbc-heritage-at-harbour-town
I still feel positive there’s a problem with Boeing’s 767/KC46 line. Only 1 76 was delivered (to FedEx) during the first period. Then things get “fuzzy”. The line’s supposed to be currently producing 1.5 a/c per month. So, did at least 3 more 76/KC46s get produced during the period–and just taken into Boeing’s inventory (as they’re not yet contractually deliverable to the USAF)? Or, did just 1 a/c get produced and delivered during the period. Maybe an answer will come during the call next week.
No its not, the higher rate doesnt kick in for FedEx till 2017/18.
“Flight Pro (aka Flight Global) has reported FedEx ordered 27 Boeing 767-300Fs for delivery from 2014 through 2018″LNC
6 fiscal years into 27 planes is 4.5 per year. The 50 plane order kicks in from 2018 ( so 1 or 2 per qtr is about right)
The answer is that yes Boeing is producing KC46s
This prediction a while back wasnt quite correct (jun 2013)
“However, we understand that Boeing is nearing a commercial order from FedEx for the -2C that will enable Boeing to boost production of the 767 lines to as much as 2.5 aircraft per month by October 2016” LNC
Fedex ordered more 300Fs instead ( as you would expect- why have all the wing, tail and reinforced floor of the 300F but a shorter fuselage in the 2C)
Thanks so much. So there are 2 complete “flight test” KC46s, 2 “flight test” 2Cs, and 3 more newly produced “production” 2Cs on the ramp–with or without engines?
I don’t know if there are 3 “production” 2Cs on the ramp, but there is at least one. Here’s a picture.
https://twitter.com/mattcawby/status/722278108565413889