A Look At Airbus' Commercial Orders And Deliveries In May 2016

| About: Airbus Group (EADSF)

Summary

Airbus booked 83 orders in May.

Airbus delivered 57 aircraft, 2 less than monthly requirement to meet its annual delivery target.

Book-to-bill ratio currently is .85 for 2016.

As part of the annual order and delivery battle between Boeing (NYSE: BA) and Airbus (OTCPK:EADSF/ OTCPK:EADSY) I provide a monthly overview and analysis. The April report can be read here. In this article, I will have a look at the orders and deliveries in May.

Orders

Figure 1: Airbus orders (up until) May 2016 (Source: AeroAnalysis.net)

In April, Airbus booked 85 orders, with 41 orders for its wide body product and 44 orders for its narrow body aircraft. In May, Airbus booked 83 orders, keeping order inflow almost flat month over month.

At list prices, the orders are valued at $10.3B, but after discounts the orders have a market value of $5.0B:

  • An undisclosed customer ordered 12 Airbus A320ceo aircraft and 3 Airbus A321ceo airframes.
  • A second undisclosed customer ordered 45 Airbus A320neo aircraft and 15 Airbus A321neos.
  • Cebu Pacific ordered 2 Airbus A320neos.
  • Philippine Airlines ordered 5 Airbus A350-900s.

Order inflow was more or less flat month-over-month, but order inflow was solid with Airbus receiving more than 80 orders for the second month in a row. The total number of net orders stands at 162 which still is quite a weak performance for Airbus' standards. Year-over-year gross orders fell 19%.

Deliveries

Figure 2: Airbus deliveries (up until) May 2016 (Source: AeroAnalysis.net)

Whereas Boeing guided lower, Airbus expects to be able to increase production year-over-year and has set a target of delivering more than 650 aircraft.

Deliveries were slightly lower than the monthly 59 that are needed on average.

  • Deliveries for the A320 were higher than expected
  • Deliveries for the Airbus A330 were lower than expected
  • Cathay Pacific Airways (OTCPK:CPCAY) received its first Airbus A350
  • Airbus is currently failing to ramp up A350 deliveries

Airbus delivered 4% less aircraft in the first months of 2016 compared to 2015. This likely has to do with the problems Airbus is facing on the A320neo, but should be compensated for in the second half of 2016 when these issues have likely been fixed. Additionally, Airbus is facing supply chain issues on the Airbus A350 which causes delays in deliveries.

Book-to-bill ratio

Last year, Airbus had a book-to-bill ratio in excess of 1.5. Also, in 2016, the jet maker expects to be able to book more than 1 order for each airframe it delivers. In May, the book-to-bill ratio was 1.46. Year to date, the book-to-bill ratio is .85. Despite orders inflow and deliveries picking up pace throughout the year, the road towards reaching its targets will be a long one for Airbus.

Conclusion

Despite order inflow being unnaturally weak in the first quarter of 2016, I expect order inflow to pick up pace in the coming months. Airbus expects its order book to grow in 2016, but with a book-to-bill ratio of .85, this will be a challenge. Additionally, issues on the Airbus A320neo program and Airbus A350 program could negatively impact Airbus' 2016 deliveries.

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Disclosure: I am/we are long BA.

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.

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