Boeing Beats Airbus Or Not (NYSE:BA) (OTCPK:EADSF)

For several years, I have been covering the monthly order and delivery numbers for Boeing (NYSE:BA) and Airbus (OTCPK:EADSF) (OTCPK:EADSY) including cancellations. So, throughout the year I am able to see where either jet maker is falling short or exceeding expectations. This helped me determine early on that Airbus’s delivery target was not realistic. In this report, I will be comparing the numbers for Boeing and Airbus and look how each jet maker performed compared to 2021.

Airbus Wins On Gross Orders

Airbus was the clear winner when looking at gross orders with 1,078 orders compared to 935 orders for Boeing. However, that win was primarily achieved with stronger performance in the single aisle segment driven by orders from Chinese customers, a market that is still locked for Boeing from sales perspective. The sales differential of 318 aircraft in the single aisle segment, in fact, can almost be fully explained by the 292 single aisle jets that Chinese customers bought from Airbus in mid-2022.

In the wide body arena including freighters, we are in a whole new setting where Boeing is on the upper hand. Given that wide body aircraft sell for roughly 3 times the price of single aisle jet, Boeing’s dominance in the wide body segment could be of importance when assessing the performance of each jet maker from value perspective. The large wide body segment is a slow one. With the Boeing 747 and Airbus A380 programs terminated, the aircraft class is reserved to the Boeing 777X which is not a fast seller. The medium wide body class only includes the Boeing 787-10 and Airbus A350-1000 and just like for the Boeing 777X, those are also not the fastest sellers. Technically, the Boeing 777 passenger models are also part of this class but it is not a fast selling segment either. Since Boeing sold only one Boeing 787-10 while Airbus sold 12 Airbus A350-1000s, Airbus is the winner in the medium wide body segment. However, in the small wide body segment which includes the smaller variant of the Airbus A350 and the Airbus A330 for Airbus and the Boeing 787-8/9 for Boeing, we see that Boeing is doing great. “Unrivaled” might be a big word but the gap between the two jet makers is significant. This is driven by a recent order from United Airlines (UAL) which includes all members of the Boeing 787 family but has been booked as 90 orders for the Boeing 787-9.

In the wide body freighter segment, Boeing and Airbus both saw strong sales for their newly launched Boeing 777-8F and Airbus A350F but Boeing could also count on a strong order inflow of 45 units putting it in the lead for the wide body freighter segment.

Beforehand, some might have expected that Airbus would wipe Boeing out in terms of orders another year. However, the reality is that we can attribute the wins for Boeing and Airbus in each category to a handful of orders or program order inflows. For single aisle order inflow, Airbus had a firm lead thanks to 292 orders from China, while in the small wide body segment, Boeing won thanks to a big order from United Airlines and in the widebody freighter segment the continued strength of the Boeing 777F and Boeing 767-300F was reflected. In a strong market, we hope to see a 30-70 to 40-60 distribution between wide body orders and single aisle orders, but neither original equipment manufacturer achieved this. Airbus had a wide body share of 6% while Boeing got to 25%.

Boeing Narrows Net Order Gap

On net order level, the gap between Boeing and Airbus narrowed from 143 to 46. The gap for the single aisle segment remains around 300 units. The big difference is made in the wide body segment. Airbus suffered some big losses there as it decided to eliminate 23 orders from Qatar Airways for the Airbus A350 and was forced to cancel four Airbus A350 orders for Aeroflot. The Airbus A330neo suffered even bigger, but expected, losses as AirAsiaX cancelled orders for 63 aircraft and an unidentified customer cancelled orders for 20 units. So, in terms of net orders, Airbus remains in the lead, but with big order losses for its wide body programs, one can wonder how the value has developed.

Boeing Wins On Value

Using the evoX Order and Deliveries Monitor, we found gross order value for Airbus of $63.6 billion and cancellation value $22.9 billion bringing the net order value to $40.8 billion with cancellations accounting for 5% of the backlog.

Boeing booked $72.1 billion in gross order value, which is 13% higher than Airbus while its $10.8 billion cancellation value was less than half that of Airbus giving it a net order value of $61.3 billion beating Airbus by $20.5 billion which is quite significant I would say.

Airbus Wins On Deliveries

While orders are important, since it gives you insights in demand for a product and upward or downward pressure on production rates, deliveries is where it matters most in the near term as each delivery enables a significant cash flow. We see that without doubt Airbus won in 2022. It delivered 661 aircraft, which is 181 units higher than its US competitor and the delivery value of $43.7 billion was nearly $10 billion higher. Although Airbus had guided for stronger performance for the majority of the year, we see that its ability to deliver aircraft is still superior.

Year-over-year: Boeing Has The Better Growth Numbers

In a duopoly, comparison between the two market leaders is always of interest. It only becomes less interesting if you are not interested in considering investing in either of the companies based on relative performance. In that case, what might be more interesting is looking how the metrics have developed compared to last year. Both jet makers, were guiding for a significantly better year but where they able to make it happen?

Airbus saw gross orders improve by 40% and net orders even improved by 62% leading to a 34% increase in net order value. Deliveries that were only 8% higher than 2021 was somewhat underwhelming, but still resulted in a 9% higher delivery value with a 1.1 net book-to-bill measured by value.

Boeing saw gross orders increase by only 3% and that was driven by 2021 being packed by cancellations that were concurrently offset by order inflow. Net orders, however, were up 62% delivering a 77% higher net order value while deliveries were up 41% and delivery value was up 34%.

Conclusion: Airbus And Boeing Stock Remain A Buy

I will let everyone pick a metric to determine which jet maker was the stronger one in 2022. I am more oriented on value recognizing that a widebody sells for 3x times the price of a single aisle so I would say that Boeing won in terms of orders and Airbus won in terms of deliveries with Boeing showing the biggest year-over-year improvement. Airbus stock was up roughly 9% during the year in line with its higher delivery value, but Boeing’s stock price performance was significantly hit by turbulence in its defense segment meaning that its double digit improvement in metrics for the commercial segment hardly carried any value during the year. 2023 is going to be another year with supply chain issues, but I do believe that both jet makers will see further improvement in the delivery numbers which should also drive value.

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