The annual Airbus-Boeing order book competition: everyone’s a winner

16 January, 2018

With a tidy 430 A320 sales to LCC industry maestro Bill Franke, for the Indigo Partners suite of LCCs around the world, Airbus managed to sail past Boeing for the number of jet aircraft orders secured in 2017. Mr Franke wouldn't have paid top dollar, you can be sure of that, but it was still a momentous sale.

Airbus' net orders (after cancellations are deducted) rose 52% in 2017 to 1,109 jet aircraft. This compared with Boeing's 912. Airbus' deliveries in 2017 reached a new company record of 718 aircraft; on this count Boeing won however, delivering 763.

The record orders - along with very high levels of deliveries in 2017 - reinforce the fact that we basically have a healthy competitive production position, with two major providers in the large jet market. Meanwhile, engine manufacturers are having trouble keeping up. 30 of Airbus' completed A320s are still awaiting engines from Pratt and Whitney. But the order win was a nice farewell for ace Airbus salesman John Leahy, as Airbus pipped Boeing at the post for 2017 orders; he retires now.

The great bulk of all sales is in single aisle 737s and A320 families. Boeing leads in the wide body, long haul market, with the highly successful 787 - at the same time as the A380's future remains in doubt. In fact, Mr Leahy said this week that its future is dependent on a long awaited order from its main customer, Emirates; and that makes it look pretty bleak.

2017 was as sweet as it gets

These order books do promise that the current high levels of capacity in the market are likely to remain, promising a healthy competitive situation for travellers in 2018 too.

The remarkable near-double digit traffic growth in 2017, coinciding with good profitability, probably marks the sweetest spot the airline industry will ever experience. Much of it was helped by a strong tailwind from low fuel costs. But as oil prices rise, with Brent Crude over USD70 a barrel, it's unlikely the same performance can be repeated.

There's a large proportion of highly price sensitive travellers who will be easily deterred if fares creep upwards. Meanwhile with the plentiful capacity in the market in the short term, there will be adjustments in the equation of capacity-fares-profits (so, if fares don't go up, traffic may continue strong, but profits will be challenged).

Both companies' share prices reflect what has been a happy year for their shareholders. Boeing's share price has more than doubled over 12 months; Airbus is up by a more modest 40% (both manufacturers of course also produce military equipment too).

Boeing Co share price, 2017-18

Source: Yahoo Finance

Airbus Share price 2017-2018

Source: Yahoo Finance