July 19, 2021
Here is the article.
- It is hard for to figure out which stock symbol is for airbus. OCT: EADSY, why is over the counter?
- Airbus reported 39 airplane orders in the first quarter, but 100 cancellations led to a net order decline of 61.
- Boeing did much better with 282 gross orders, but a slew of cancellations led to net order growth of just 76 airplanes.
- First, Boeing leaned into one of its most important customers in the quarter, Southwest Airlines, which agreed to buy 100 airplanes with options for an additional 155 in the future.
- Also, Southwest Airlines ordered 737 MAX airplanes, and given that the ban on the 737 MAX was lifted late in 2020, it's likely that the orders represented a temporary boost.
- Airbus' financial position is a lot stronger than Boeing's right now. In other words, Airbus has more resiliency should anything go wrong.
- Due to a combination of the 737 MAX grounding and the COVID-19 pandemic, Boeing's debt has ballooned, and it was slightly more than its revenue in 2020.
- Airbus is better positioned than Boeing in both an operational and financial sense.
Comparing the two aviation giants in a post-pandemic world.
Order trends
Boeing shareholders were pleased to hear that, for the first time in two years, its net airplane orders were ahead of its rival in the first quarter. However, on closer inspection, the numbers don't look great for either company. Airbus reported 39 airplane orders in the first quarter, but 100 cancellations led to a net order decline of 61. Boeing did much better with 282 gross orders, but a slew of cancellations led to net order growth of just 76 airplanes.
That said, Boeing's outperformance on orders in the quarter is probably not a turning point in the battle with Airbus. First, Boeing leaned into one of its most important customers in the quarter, Southwest Airlines, which agreed to buy 100 airplanes with options for an additional 155 in the future. It's a significant order, but it will be difficult to repeat it, not least because Southwest is the largest operator of an all-Boeing fleet.
Also, Southwest Airlines ordered 737 MAX airplanes, and given that the ban on the 737 MAX was lifted late in 2020, it's likely that the orders represented a temporary boost.
Second, as you can see in a comparison of recent yearly orders on the Airbus A320 family compared to the Boeing 737 MAX, Boeing has a lot of catching up to do following the grounding of the 737 MAX.
Second, as you can see in a comparison of recent yearly orders on the Airbus A320 family compared to the Boeing 737 MAX, Boeing has a lot of catching up to do following the grounding of the 737 MAX.
Second, Airbus also faces issues with orders and the pricing of orders, and there's a downside risk for both companies if the commercial aviation market doesn't recover as planned. However, Airbus' financial position is a lot stronger than Boeing's right now. In other words, Airbus has more resiliency should anything go wrong.
Due to a combination of the 737 MAX grounding and the COVID-19 pandemic, Boeing's debt has ballooned, and it was slightly more than its revenue in 2020. While there are no questions around Boeing's solvency, the extra debt it took on will burden the company with higher interest-rate payments for many years to come.
DATA BY YCHARTS
The bottom line
Airbus is better positioned than Boeing in both an operational and financial sense. There is a case for buying Boeing based on its traditional outperformance, but the next few years will be anything but traditional for both companies. As such, Airbus is a better buy.
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