The order battle between Boeing (NYSE:BA) and Airbus (OTCPK:EADSF) (OTCPK:EADSY) is one way for the companies to flex their muscles, next to marketing their respective products as the best solution with the highest fuel efficiency and passenger comfort. Even though the orders are not a straightforward reflection of financial performance, it’s important to have a look at the order inflow. That’s because the order tallies give a nice impression of which manufacturer has the best mix of discount, comfort, slot availability, and efficiency, and they give an idea of the overall health of the aircraft market and appetite for new aircraft.
With the COVID-19 crisis hitting the travel market hard, Airbus and Boeing are facing an unprecedented crisis. At times like these, it’s important to keep an eye on orders, deliveries and cancellations. This piece is part of our order and deliveries series on Boeing and Airbus. On top of that, I have bolstered the data side of The Aerospace Forum which allows subscribers to slice order and deliveries by region, customer, aircraft type and more to get detailed visualizations of the current state of the market.
In this report, AeroAnalysis will look at the order inflow in July for both manufacturers and their role in the narrow- and wide-body markets.
Note from Author: Boeing recently changed the way it reports orders and deliveries. As a result, we had to rework the way the data is loaded into our databases which resulted in the monthly reports for Boeing, Airbus and Lockheed Martin (LMT) to be delayed.
Admittedly, orders and delivery numbers are unlikely to excite any aerospace investor at this point. However, I still do believe that the monthly series on orders, deliveries and cancellations is valuable as it allows us to detect trends early on. The current roadmap seems to be to recover the delivery flows as it’s the first reflection of recovery of air travel, after which the focus becomes to align the order book better with future demand and that includes rescheduling deliveries, processing cancellations and reduced expectations for order inflow.
Order overview for July
Airbus and Boeing together received four orders in July compared to 64 orders in the same month last year. Airbus booked all four orders leaving Boeing with zero orders. You could mark Airbus as the winner of the monthly order battle in terms of gross orders. However, at this stage it’s a battle of losers.
Boeing 787-9 (Source: Air Lease Corporation)
During the month of July, Boeing received no orders.
More interesting were the cancellations that Boeing received during the month:
- ALAFCO cancelled orders for 20 Boeing 737 MAX aircraft, these orders plus 20 orders were previously listed as possible future cancellations.
- AerCap (AER) cancelled orders for 15 Boeing 737 MAX aircraft.
- An undisclosed customer cancelled orders for 1 Boeing 737 MAX.
- Avolon cancelled orders for two Boeing 737 MAX aircraft.
- Jetline cancelled orders for five Boeing 737 MAX aircraft.
The full report on Boeing’s orders and deliveries as well as conversions and customer reveals in July can be read here.
Airbus A320neo (Source: Air Lease Corporation)
During the month of July, Airbus received four orders:
- An undisclosed customer bought two Airbus A320neo aircraft.
- Lufthansa Technik ordered two Airbus A321neo ACJ aircraft.
The full report on Airbus’ orders and deliveries as well as conversions, cancellations and customer reveals in July can be read here.
Overview of Boeing and Airbus orders year to date
In July, Airbus received four orders and no cancellations, leaving the jet maker with four net orders for the month. Boeing received no orders and 43 cancellations, bringing the net orders for the month to -43. Year-to-date net orders are 302 for Airbus and -366 for Boeing. At this stage and the current market environment, Boeing and Airbus both are focused on keeping their cancellations as low as possible where Boeing obviously will have the more difficult task in doing so.
For the year combined net orders stand at -64. Airbus has a positive net order tally of 302 units built up in the first month of the year while Boeing saw 366 cancellations in excess of orders. Last year net orders for Boeing and Airbus combined were 131: 79 for Airbus and 52 for Boeing. As expected, the year-over-year lead that held for a couple of months was not big enough to carry the jet makers through the year.
We continue to see that Boeing and Airbus are both seeing significant pressures on order inflow. Airbus seems to be positioned better simply because it doesn’t have a program-specific crisis such as Boeing, but a crisis as we are seeing now… that’s something neither jet maker had prepared for. In a matter of weeks, we went from “this will pass” (which is true) to “this will affect the industry in 2020 and beyond.” The coming months are going to be interesting as we are seeing the end of the order boom for jet makers with the focus shifting to containing cancellations. So far, Airbus is doing a better job than Boeing, but we are at a start of backlogs being stretched further than initially intended and expected and that’s pressuring order inflow for the year and leads to cancellations on an uncertain growth profile.
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Disclosure: I am/we are long BA, EADSF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.