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

| About: Airbus Group (EADSF)

Summary

Airbus booked 27 orders.

Airbus delivered 64 aircraft, 5 more than the monthly requirement to meet the annual delivery target.

Book-to-bill ratio currently is .61.

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 May report can be read here. In this article, I will have a look at the orders and deliveries in June.

Orders

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

In May, Airbus booked 83 orders, with 6 orders for its wide body product and 77 orders for its narrow body aircraft. In June, Airbus booked only 27 orders, a strong decline month-over-month.

At list prices, the orders are valued at $3.1B, but after discounts the orders have a market value of $1.4B:

  • An undisclosed customer ordered 8 Airbus A320neo airframes and 7 Airbus A321ceo airframes
  • A second undisclosed customer ordered 5 Airbus A321ceo aircraft
  • A third undisclosed customer ordered 3 Airbus A320neo aircraft and 4 Airbus A321neo aircraft
  • Airbus received no orders for its wide body products

Compared to June 2015, order inflow fell. The months June and July, however, are months that you cannot compare. Last year the bi-annual Paris Air Show took place in June. This year's bi-annual Farnborough International Airshow takes place in July. So it is not possible to make a meaningful year-over-year comparison this month. During the first 6 months of 2016 Airbus received 227 orders versus 382 orders in the first 6 months of 2015, a 40.6% decline. This figure is also skewed by the Paris Air Show last year in June, but also shows that Airbus is having quite a slow year in general.

Deliveries

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Figure 2: Airbus deliveries (up until) June 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 higher than the monthly 59 that are needed on average.

  • Deliveries for the A320 were higher than expected
  • Deliveries for the Airbus A380 were higher than expected
  • Ethiopian Airlines received its first Airbus A350
  • Airbus A350 deliveries continue to fall behind of expectations

Airbus delivered 3% 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 June, the book-to-bill ratio was 0.42. Year to date, the book-to-bill ratio including cancellations is .61. Despite orders inflow and deliveries picking up pace throughout the year, the road towards reaching its targets will be a long one for Airbus.

Customer spotlight

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In this month's customer spotlight we have Ethiopian Airlines. the fastest growing carrier on the African continent. Ethiopian Airlines was founded in 1945 and commenced operations in 1946. The airline currently serves a total of 124 destinations (101 for passengers and 23 cargo destinations) with a fleet of 77 aircraft (69 passenger and 9 cargo aircraft). In June the airline has taken delivery of its first Airbus A350, of which it has 14 aircraft on order. For its narrow body aircraft the airline has a preference for Boeing aircraft, while for the more costly wide body aircraft the airline has split orders almost equally between Boeing and Airbus. The Airline currently awaits 28 deliveries from Boeing, 13 from Airbus and 2 from Bombardier (OTCQX:BDRAF)

Conclusion

Airbus expects its order book to grow in 2016, but with a book-to-bill ratio of .61, this will be a challenge. Additionally, issues on the Airbus A320neo program and Airbus A350 program could negatively impact Airbus' 2016 deliveries. July will be an important month for Airbus investors. During the month of July, it will become visible how many orders Airbus saved up to show off at the Farnborough International Airshow.

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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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