Boeing crushes Airbus with first-quarter aircraft orders despite the 737 MAX Fiasco – The Motley Fool



In the first two months of 2019, Boeing (NYSE: BA) recorded strong aircraft order activity Airbus& # 39; (NASDAQOTH: EADSY) the order book has declined significantly due to a series of order cancellations.

Airbus had more luck last month, offsetting some order cancellations earlier in the year. Nevertheless, Boeing has always dominated its European rival in terms of net orders for commercial aircraft for the month of March. This feat was particularly noteworthy given the global stranding of the Boeing 737 MAX several weeks ago.

A solid month for Airbus – but it's still in the red

In March, Airbus recorded 58 orders, offset by 17 cancellations. Importantly, 38 of the 58 orders received last month were for Airbus A350s, a family of aircraft that had been steadily declining in the order book in recent years. This contrasts with all cancellations for A320neo family aircraft, for which Airbus has an order backlog of nearly 6,000 orders in the backlog.

The biggest order of the month came from Lufthansa, which ordered an additional 20 A350-900s. Airbus had to make a major concession to win this deal, however, agreeing to buy six of Lufthansa's 14 A380 aircraft between 2022 and 2023. Given the lack of a viable resale market for the A380, Airbus will likely have to give up for parts.

Airbus also finalized a second major A350 order in March, winning a contract for five A350-900s and 12 A350-1000s from Taiwan's new company STARLUX Airlines. However, start-up airlines companies have a notoriously high failure rate, so this order may disappear.

An Airbus A350 flying in front of a cloud

Airbus finalized two large A350 orders last month. Source of the image: Airbus.

Despite the confirmation of 41 net orders last month, Airbus finished the first quarter with only 62 new firm orders since the beginning of the year, compared with 120 cancellations. The European aerospace giant still has work to do to get its total net orders for 2019 in positive territory.

Boeing continues to progress

Meanwhile, on this side of the Atlantic, Boeing had another strong month of orders in March. It recorded 43 firm orders net, 44 new orders, offset by a cancellation, which has just emerged from Airbus.

Like its main rival, last month Boeing benefited from the Lufthansa Fleet Renewal Plan, which received a firm order of 20,787-9 Dreamliners. It also finalized a second large order for widebody: a contract for the sale of 18,777-9 to British Airways, announced for the first time at the end of February. DHL has also ordered two 777 transport aircraft, which has allowed Boeing to strengthen its current 777 order book to ensure a smooth transition to its next-generation models (including the 777 -9) over the next few years.

In total, Boeing recorded 91 net firm orders in the first quarter of 2019: 149 better than the 58 negative Airbus.

The rest of the year will probably be very different

The performance of Boeing's orders in the last quarter was certainly impressive, but the current strandings of the 737 MAX – its best-selling model – will make it difficult to continue this momentum.

Boeing has already developed and started testing software updates that should prevent the recurrence of the two catastrophic accidents that led to the grounding of the 737 MAX. However, until regulators have approved the patches, airlines will probably be reluctant to order more than 737 MAXs. Even after the re-establishment of the 737 MAX's global fleet, some airlines may choose to wait a moment to make sure there are no more problems before considering new orders. (That said, the best selling year of the Boeing 787 over the last decade was 2013, the same year the model was grounded for four months due to multiple fires caused by its lithium batteries -ion.)

With the largest air show of the year in just over two months, Airbus will have a considerable advantage in terms of conquering new markets. In addition, several airlines have indicated that they may cancel some or all of their 737 MAX orders.

So, even with its big lead, Boeing should not beat Airbus for a second consecutive year in the annual race. Fortunately, with an order book of more than 4,600 orders in the backlog of 737 MAX, Boeing is well positioned to withstand a temporary 737 MAX sales decline.


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