Airbus wins 2017 orders race against Boeing after last-gasp sales spree

PARIS (Reuters) – Frenetic selling in the closing weeks of 2017 saw Airbus overhaul Boeing’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 maker said net orders after cancellations rose 52% to 1,109 jets in 2017, vaulting past Boeing’s 912. Without the cancellations adjustment, Airbus gross orders were 1,229, compared with Boeing’s 1,053

After peaking in 2014, Airbus says jet demand is 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% from the previous year.

Boeing remained the world’s largest jet maker for the sixth year running, however, with a record total of 763 deliveries.

December’s surge in commercial and industrial performance allowed Airbus to meet or exceed targets that had seemed elusive a few months ago. It caps a turbulent year for the company after rows over corruption investigations and management tensions.

Analysts described it as a robust farewell performance by two of the company’s dominant figures: record-holding 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 told Reuters.

Both bequeathed challenging targets to their successors. Leahy predicted that orders would exceed deliveries in 2018 for the ninth year in a row, while Bregier predicted “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’ Pratt & Whitney. But Bregier said he was confident the US business had turned the corner after delays on new engines.

The underlying production target is therefore closer to 770, implying 7% growth, which is closer to recent trends.

Oddo Securities analyst Yan Derocles said the more confident tone regarding engines for the A320neo gave more credibility to the target of 800 jets.

TARGETING TOP DELIVERY SPOT

Bregier also predicted a record order pipeline of more than 7,000 jets would allow Airbus to lift deliveries beyond those of Boeing in 2020. Both are neck and neck in planned production.

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 best-selling 737.

Some in the industry have been left wondering how far Airbus was forced to cut prices to grab deals such as the 430 jets sold to four budget carriers via US investor Indigo Partners.

Leahy, however, said the Indigo deal and other year-end activity reflected fundamental demand.

“It is a very serious deal with some very serious airlines,” he told Reuters.

But in the widebody, long-haul segment, Airbus lost about half its market share last year, with no new orders and two cancellations for the A380 superjumbo, though Boeing also suffered cancellations for its competing 747.

Airbus is locked in make-or-break talks with main A380 customer Emirates about buying 36 more superjumbos.

Leahy confirmed a Reuters report that the future of the A380 lies with Emirates, even though other airlines are interested in smaller numbers of the 544-seat jets. If the deal falls through, Airbus would have “no choice” but to close 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,” Bregier told Reuters. “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.”

Airbus confirmed it plans as part of any possible Emirates deal to reduce A380 output to six aircraft a year from 15 last year.