Airbus and the Boeing Company (NYSE: BA), giants of the aerospace industry, are jockeying for dominance in worldwide aircraft sales. Despite delivering about 20 aircraft less than the Boeing Companyin 2013, Airbus successfully secured the highest number of orders in the industry – peaking at 1,503 new orders over 2013 after adjusting for cancellations. The Boeing Company was able to secure 1,355 net orders over the same period and has remained the world’s largest plane-maker, even though it lost the competition for most orders.
While increased orders represent an opportunity for strong earnings growth, both companies will now have to actually produce their huge backlog of orders. Airbus had the largest back-order in the industry at the end of 2013, with 5,559 aircraft ordered but not yet delivered. That total represents $809 billion in planes Airbus is set to produce, and is a historical record in the industry. In comparison, The Boeing Company had a backlog of 5,080 aircraft at the end of last year. Much of the increase in orders has been a result of fleet replacement efforts in the United States, and strong demand from emerging markets. With such a huge number of orders, The Boeing Company and Airbus are now concentrating more seriously on production rather than securing additional orders. John Leahy, Airbus sales chief and commercial director said, “We cannot continue at this level (of orders), but what we are doing is continuing to increase production.”
Airbus and Boeing Production Numbers
The European aerospace giant, Airbus, is able to produce 42 medium-haul A320 planes in one month. In a competitive nature, however, The Boeing Company is upping its monthly output for its 737 plane from 38 to 47 per month, by the year 2017. In response, Airbus has said that it plans to increase production of its A320 model above the current 42, by 2018. In a show of confidence, the European company said that it could start upping production earlier than 2018; its CEO, Fabrice Bregier said, “We still have some homework but we believe there is some potential to go higher than rate 42; there is an upside and we are studying it for the [A320].”
“It’s a Duopoly”
Overall, total deliveries in 2013 for The Boeing Company totaled 648 planes, barely beating out Airbus which sent out 626 over the same period. Airbus is not the least bit fazed by losing out to The Boeing Company on total deliveries, Mr. Leahy said that the lower sales when compared to The Boeing Company “doesn’t matter to us at all.” He continued, “I think we’re happy with what we’ve got. It’s a duopoly, with a 50-50 split here. I don’t really care if they have two more airplanes or we have two more.”