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Boeing and Airbus half-year scorecard: Deliveries outweigh orders by 2:1

7-Jun-2010

IATA Director General & CEO, Giovanni Bisignani, announced over the weekend that it is “finally time for some cautious optimism” for the recovery of the aviation industry. But that optimism has not yet converted into significant new aircraft orders.

For the year to the end of May-2010, Airbus delivered 206 aircraft, against 73 net aircraft orders (81 gross, excluding cancellations). Boeing has seen more of a recovery than its European rival, with 111 net orders (139 gross) in the same period and 179 deliveries.

The manufacturers have delivered 385 aircraft between them in the first five months of the year, against net orders of 184 aircraft: a deliveries to orders ratio of 2.1 to 1.

At the beginning of 2009, both manufacturers confirmed they did not expect orders to recover enough to outweigh deliveries this year. But, with airlines noting a better-than-expected recovery in traffic, the manufacturers have announced plans to increase output, particularly their strong-selling narrowbodies.

Of Boeing’s 139 gross orders this year, 76 have been for the narrowbody B737, with 38 B777 orders and 25 B787s. While the B777 and B787 have suffered from continued cancellations (seven and 16 respectively this year), the B737 has gotten off comparatively lightly, with just five cancellations.

Airbus reported 25 A350 orders (all from United Airlines) and a mix of A330 orders in the first half, as well as 28 A320 narrowbody orders. With the delays to the B787, the twin engine A330 and B777 widebodies have seen strong ordering.

Airbus continues to escape the cancellation concerns that have hit Boeing. The European company reported another four cancellations in May-2010, but has only lost eight orders this year. In comparison, Boeing has suffered the loss of 28 orders, 23 of them widebodies.

The A380 has had a barren six months, with no orders reported, but Airbus reports that order discussions on the aircraft have “picked up markedly”. Airbus is slowly increasing output on the aircraft and ploughing through the engineering backlog the programme has generated. Airbus CFO, Hans Peter Ring, has floated a five-year break-even horizon for the programme, but much depends on the euro to US dollar exchange rate.

Airbus delivered its 30th A380 on 05-Jun-2010 (to Emirates, the carrier’s 10th). Seven A380s have been delivered so far this year, and the manufacturer is sticking to its delivery target of 20. Airbus denied reports that it has signed another order with Emirates for more A380s.

The A350 XWB programme continues to take shape and according to the manufacturer remains on target for its 2013 service entry. Airbus has admitted that it has eaten into some of the margins it had built into the programme but European governments have reportedly committed to their promised launch aid recently.

The EUR3.5 billion in financing promised by France, Spain, Germany and the UK for the A350 is a red rag in front of the noses of Boeing and the US. This is particularly so given the charged political atmosphere of the ongoing US aerial tanker competition, as well as the imminent WTO ruling on European claims of US subsidies to Boeing, expected some time in Aug-2010. Both sides claimed victory when the WTO ruled on the US case against European aid and subsidies to Airbus but the full ruling has not yet been officially released to the public.

The second half of the year: Will orders pick up?

2H2009 was a much stronger period for ordering than the first half of last year. Boeing reported just 65 orders in the first half of 2009, compared to 198 in the second half. Airbus booked 90 orders in 1H2009 and 220 in 2H2009.

At the end of May-2010, Boeing confirmed it won a tender from the Russian State Corporation "Rostechnologii" for B737NGs, beating Airbus. While an order for the aircraft has not yet been formally announced, it is believed to be for 50 aircraft, with options for another 15.

Boeing is confident that the outlook for aircraft orders in 2010 has improved and it will raise its order forecast in Jun-2010. Boeing is now “hearing from customers we haven't heard from in the past”, according to CEO, Jim McNerney.

Airbus is also more confident of better ordering in 2H2010. The manufacturer has stated that it is more positive in its outlook for 2010, although it has not lifted its original order outlook for 250-300 gross new orders.

Selected Aviation suppliers’ daily share price movements (% change): 04-Jun-2010


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