Boeing Maintains YTD Lead Despite Airbus' Efforts
Would Airbus be able to book more orders during the second half of 2016?
Yesterday, Airbus Group SE (EADSY) posted its disappointing year-to-date (YTD) order and delivery sheet, updated till 31 May, 2016. When compared to its rivals, the aircraft manufacturer’s total new orders remained on the lower side; it only booked 83 new orders during the month.
With addition of the new orders, the total gross YTD clocked in at 200 jets, which after cancellation resulted in 162 net orders. In comparison, Boeing Co (BA) booked a total of 298 gross orders YTD, and with 30 cancellations its net orders summed up to 268 jets during the same period.
Boeing has left behind Airbus in delivering the most commercial jets to customers. While the latter recently reported 234 total deliveries by the end of May, Boeing had already delivered 230 jets by the end of April. Although the US manufacturer has not updated its delivery book for the month of May yet; however when updated, the deliveries are expected to be far higher when compared to Airbus.
Airbus has made many efforts to secure new orders from its existing and new customers; however, the company has not been able to do so due to tough competition in the market. Boeing, which has been trailing behind peers, seems to have the upper hand this year, in terms of booking new orders.
Possible Reasons Behind Airbus Lag
One of the most prominent reasons for Airbus’ reduced demand is its A320neo and A350 commercial jets that are faced with technical problems. This can be attributed as the main reason behind customers losing confidence in Airbus’ aircraft.
Recently, Qatar Airways decided to walk away from its order of 50 A320neo, based on engine issues that are yet to be resolved. The airline was slated to be A320neo’s launch customer in January this year; however Qatar Airways put a hold on deliveries earlier this year.
As a result, Lufthansa Airline became Airbus’ launch customer. According to rumors, Qatar Airways was considering the option of placing an order with Boeing to acquire its 737 Max series jets, that are similar in configuration to Airbus’ A320neo.
Way Forward
In an attempt to uplift its top and bottom line to regain stakeholders’ confidence, Airbus promised to deliver 650 commercial jets by the end of this year, which is a higher number than the 635 jets delivered last year. However, achieving this target seems to be a big challenge for the aircraft manufacturer, considering the unresolved aircraft issues.
Airbus is said to be closely working with United Technologies’ Pratt & Whitney, which manufactured the engines used in its A320neo commercial aircraft. Considering its current problems, Airbus too is of the opinion that it will only be able to increase deliveries, and book more orders during the second half of 2016.
However, this would not be an easy feat for Airbus, as its rival Boeing continues to move ahead to increase deliveries. Bombardier Inc. (OTCMKTS:BDRBF) too, is expected to give its peers a tough time, as it recently conducted a demonstration flight of its CS100 carrying 100 passengers, including Star Alliance Members. Airlines from all around the world have shown interest to acquire Bombardier’s latest CSeries aircraft; an announcement about new orders is expected, following the jet’s first commercial flight expected this summer.
Conclusion
Airbus seems to be focused on resolving its A320neo and A350 commercial aircraft technical issues; however, delivery delays have already hurt the company. Loss of customers’ confidence is obvious from Airbus’ order book. This situation is expected to improve during the second half of 2016, that is if the company resolves the aircraft issues and meets delivery targets.
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