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Airbus overtakes Boeing in 2017 after last-minute order race sales spree
Frantic deal-making in the closing weeks of 2017 saw Airbus SE overtake Boeing Co’s recent lead in the global jet market to win their annual order contest for a fifth year in a row, though doubts remain over the future of its flagship A380.
The European plane manufacturer said net orders after cancelations rose 52 percent to 1,109 jets in 2017, vaulting past Boeing’s 912. Without the cancelations adjustment, Airbus’ gross orders were at 1,229 compared with Boeing’s 1,053.
After peaking in 2014, Airbus says jet demand has been growing faster than expected, reflecting busier traffic as global economies kick into a higher gear.
“The market is just stronger everywhere,” Airbus sales chief John Leahy told reporters.
Airbus confirmed it had met its core 2017 target of more than 700 deliveries by releasing 718 jets to customers in 2017, up 4 percent from the previous year.
Boeing remains the world’s largest jetmaker for the sixth year running, however, with a record total of 763 deliveries in 2017.
Aviation legacy
December’s surge in commercial and industrial performance allowed Airbus to meet or exceed targets that had seemed elusive a few months before, capping a turbulent year for the company after rows over corruption investigations and management tensions.
Analysts described this as a strong farewell performance by two of the company’s most dominant figures: Legendary salesman Leahy, who retires this month after more than 20 years at the helm, and Chief Operating Officer Fabrice Bregier, who steps down in February after losing a corporate succession battle.
“We beat Boeing one last time... we just went for it,” Leahy said.
Both bequeathed challenging targets to their successors, with Leahy predicting that orders would exceed deliveries in 2018 for the ninth year in a row and Bregier predicting “close to 800” deliveries this year as output accelerates after engine delays.
That figure includes 30 aircraft already built and waiting for engines from United Technologies Corp’s Pratt & Whitney, but Bregier said he is confident the US business had turned the corner after delays on new engines.
Oddo Securities analyst Yan Derocles said the more confident tone regarding engines for the A320neo is supporting the target.
Delivery spot targets
Bregier also predicted that a record order pipeline of more than 7,000 jets would allow Airbus to lift deliveries beyond those of Boeing in 2020 for the first time since 2011.
Boeing has questioned whether all of the aircraft sold by its rival will be delivered.
December’s sales breakthrough focused mainly on the bread and butter of the Airbus portfolio – the medium-haul A320 family, which competes with Boeing’s bestselling 737.
Some analysts pondered whether Airbus had boosted discounts to grab deals such as the 430 jets sold to four budget carriers via Indigo Partners.
“The price at which they have sold these aircraft... will determine the extent to which they will bolster Airbus’ future profitability,” Moody’s Vice President Jeanine Arnold said.
Leahy, however, dismissed any doubts about the Indigo deal.
“It is a very serious deal with some very serious airlines,” he said.
A senior market source said buyers with long relationships with Leahy had brought forward some purchase plans in December in hopes of a good deal, uncertain about how aggressive Airbus would be under his successor, Rolls-Royce’s Eric Schulz.
The influential Leahy has a reputation for getting Airbus to back deals that a company outsider might take longer to deliver. But Boeing, which had led the order race through November, took a swipe at Airbus’ last-minute order surge.
“We set out a plan for the whole year, not just the final weeks,” Boeing’s commercial sales chief Ihssane Mounir said. “We won new business in a disciplined fashion and grew our large order book with a very diverse customer base.”
Airbus performed less well in the wide-body segment, with no new orders and two cancelations for the A380 superjumbo, though Boeing also suffered cancelations for its competing 747.
Airbus is locked in make-or-break talks with main A380 customer Emirates about buying 36 more superjumbos. Leahy confirmed an earlier Reuters report that the future of the A380 does indeed lie with Emirates, even though other airlines are interested in smaller numbers of the 544-seat jet. If the deal falls through, Airbus would have “no choice” but to close A380 production, he said.
Reuters reported in December that Airbus had drawn up plans to phase out A380 production if those talks collapsed, without waiting for other potential buyers.
“There is some hope. Whether it means we soon conclude an agreement with Emirates? I hope so. There is a joint interest in achieving that, but we are not there yet,” Bregier said.