Boeing and Airbus: Who's Eating Whose Lunch? (BA)

Jan.22.06 | About: The Boeing (BA)

The Stalwart submits: Generally, we think that the idea of an "executive blogger" is silly, since executives should have something other to do. Boeing's Vice-President of Marketing Randy Baseler is an exception. His blog is informative, opinionated, well written, and generally interesting.

All last year, the news was filled with stories about how Boeing was eating Airbus' lunch, in terms of orders, but a few days ago, Airbus announced that they actually won 2005 in terms of order volume. Here's Baseler's take:

Anyway, most of the headlines read that Airbus won a close orders race in a record year for commercial airplane orders overall. A lot of people have asked me over these past couple of days if I was surprised. And the answer is no. Not really. Airbus always seems to find a way to come up with bigger numbers.

To me, the real story is not about who got more orders or who delivered more airplanes in 2005. It was a big year for both companies. But the story itself is inside the numbers. It's really about which particular products did well this round and which stand to make it across the goal line down the road. And in that regard I really like Boeing's field position.

If you ask me what did surprise me, I'd tell you the big surprise is how poorly Airbus performed in the widebody segment. When you really break down the numbers, you see that the Airbus orders story is all in the A320 family. 82% of their orders were for single-aisles!

On the other hand, Boeing garnered about 70% overall of the high-value widebody orders this past year:

* 63% of the market for 200-300 seats (787, 767)
* 84% of the market for 300-400 seats (777)
* 70% of the market for large airplanes (747)

It's obvious that questions surround the Airbus twin-aisle (widebody) strategy.
Here's what I mean. The Boeing 777 received 154 orders. Their A340and A330-300 (the airplanes they match-up with our 777) received 15 orders each. Doesn't even seem like the same ballpark.

Read the whole thing, it's a good look behind the news.

BA 1-yr chart: