Airbus takes off

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07/09/2019 | 04:31 pm
After 8 years, Airbus is regaining its status from rival Boeing as the world’s largest commercial aircraft manufacturer – an outcome for which Boeing may have itself to blame.
Airbus has experienced strong first half delivery numbers and it’s first tangible signs of shifting business from its American rival in the wake of Boeing’s 737 MAX crisis. The cumulative effect is paving way for Airbus to reclaim its position as the world’s largest commercial aircraft manufacturer.

Commercial aircraft deliveries at a glance

Boeing delivery figures have suffered in the wake of a turbulent first half of the year. Boeing 737 MAX deliveries have been frozen since March following the Ethiopian Airlines crash which killed 157 onboard. International regulators await comprehensive safety revisions from the American manufacturer before regranting airworthiness. Furthermore, uncertainty surrounding the return of the MAX has promoted order amendments. Virgin Australia has deferred delivery for its first MAX variant until July 2021 with CEO Paul Scurrah stating ‘The airline would not introduce a new aircraft to its fleet unless it was satisfied with its safety’. Boeing has affirmed its key priority lies on a safe return to service for the 737 MAX, which may arguably deter the firms focus on delivering on 2019 order commitments and increasing production to meet its seemingly ambitious target of 895-905 commercial aircraft deliveries this year. The impact of this cumulative uncertainty is reflected in Boeing delivery figures. By May 31 2019, Boeing delivered only 202 commercial aircraft compared to 296 over the same period in 2018, a 32% year on year decrease. 

Source: Airbus, Boeing 

Contrastingly, Airbus has had strong first half delivery figures. The firm stated in its Q1 presentation that its present key priority lies in optimizing to ensure it will deliver on 2019 delivery commitments. By May 31 2019, Airbus delivered 313 commercial aircraft compared to 223 over the same period in 2018, a 40% year on year increase. This marks a clear lead against Boeing in H1 delivery numbers and positions the company to meet targets of 880-890 commercial aircraft deliveries in 2019. In comparison with its American competitor, this stands as an arguably more attainable goal. Although a record production task lies ahead for Airbus, it should also be considered that Airbus delivered 500 aircraft in the second half of 2018 which is near to the 567-577 aircraft that Airbus will need to deliver this second half to meet delivery targets. Completed delivery figures so far this year for Airbus clearly illustrate a strong delivery profile.

Source: Airbus

Saudi Arabia’s ‘Flyadeal’ & International Airlines Group

Saudia’s 737 MAX recent order cancellation reveals first signs of shifting business in the wake of uncertainty and further potential troubles for Boeing. Earlier this month Flyadeal’s parent company, Saudi Arabian, announced it was cancelling its December 2018 commitment with Boeing for up to 50 MAX aircraft, a deal valued at $5.9bn. Instead, Flyadeal has decided to take delivery of 30 Airbus A320 Neo’s starting in 2021 with the possibility of expanding to 50 should the airline choose. This is significant as it is the first concrete indicator that airlines may be entirely reconsidering their commitments to Boeing’s MAX aircraft in favor of Airbus’s A320 Neo product and business may be shifting. In turn, further bolstering Airbus’s order book. However, despite the uncertainty some airlines are continuing to choose the MAX. British Airways owner IAG signed a letter of intent for the purchase of 200 737 MAX aircraft. Although not a firm order, this is regarded by some as a vote of confidence in the MAX and Boeing. However, despite this intent still presenting confidence in the aircraft, Douglas Harned of Bernstein Research raised questions of this ‘surprise endorsement of a challenged program’. This commitment may therefore be more illustrative of opportunistic buying at a substantial discount of the list price than true confidence and interest in 737 MAX itself.

Overall, Airbus currently lies ahead of Boeing in 2019 commercial aircraft deliveries, a notion that will be reinforced later this month with both manufacturers releasing half-year reports. Assuming Airbus is able to maintain its strong delivery profile, this trend is expected to continue through the second half of this year as analysts foresee it could take several further months for the MAX to regain airworthiness and even longer to get deliveries back on plan. In turn, furthering delivery turmoil and enabling Airbus after many years to reclaim its title as the world’s largest commercial aircraft manufacturer. However, for Boeing the above raises fear of downward revisions of the firm’s outlook moving into the third and fourth quarters of the year. Ultimately, resolving the MAX crisis must remain Boeing’s focus to prevent additional delivery delays and further shifting of narrow body aircraft business to its growing European rival - who may be a victim of its own success.

Written by Benjamin P.
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