A Look At Airbus's Commercial Orders And Deliveries In November 2016

| About: Airbus SE (EADSY)
This article is now exclusive for PRO subscribers.

Summary

Airbus booked 15 orders.

Airbus delivered 61 aircraft; 16 short of the monthly requirement to meet the annual delivery target.

The book-to-bill ratio currently is 1.04.

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

I am currently polling interest for a premium research service on Seeking Alpha focusing on the aerospace sector. Are you interested? Let me know here.

Orders

Figure 1: Airbus orders (up until) November 2016 (Source: AeroAnalysis)

In October, Airbus booked 19 orders, with all orders for its wide-body product. In November, Airbus booked 15 orders, keeping order inflow stable month-over-month.

At list prices, the orders are valued at $1.7B, but after discounts, the orders have a market value of $0.7B:

  • A private customer ordered an Airbus A320neo
  • Hawaiian Airlines ordered 1 Airbus A330-200
  • An undisclosed customer ordered 3 Airbus A320ceo aircraft and 5 A321ceo airframes
  • Air Arabia ordered 5 Airbus A320ceo aircraft

Compared to November 2015, order inflow decreased by roughly 90%. During the first 11 months of 2016, Airbus received 600 orders versus 1079 orders in the first 11 months of 2015, a 44% decline.

Important to note is the composition of the (net) order inflow during the year, which is primarily focused on the Airbus A320. Shares of the Airbus A330 and Airbus A350 in the net order inflow are below 10%.

Deliveries

Figure 2: Airbus deliveries (up until) November 2016 (Source: AeroAnalysis)

While 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 at the start of the year and increased this to 670 units in October. To meet its delivery target, Airbus will have to deliver 93 aircraft December.

With 61 deliveries, Airbus deliveries increased month-over-month:

  • Deliveries for the A320 were slightly above average expected figure
  • Airbus A330 deliveries increased to 7 aircraft
  • Emirates accepted 2 Airbus A380 aircraft
  • The European jet maker delivered four A350 airframes to five customers.
  • Airbus A350 deliveries continue to fall behind expectations, but I see some stabilizing around at least 5-6 deliveries per month and higher delivery volumes in December

Airbus delivered 3.8% more aircraft in the first 11 months of 2016 compared to 2015. Airbus has been experiencing some delivery delays, but those have faded allowing the jet maker to increase output. I do expect some higher Airbus A350 output as well as an increase in A320 deliveries. In order to reach its delivery target Airbus needs to deliver a record-breaking 93 aircraft in December.

Book-to-bill ratio

Last year, Airbus had a book-to-bill ratio in excess of 1.5. For 2016, the jet maker initially expected to be able to book more than one order for each airframe it delivers, but lowered this to a book-to-bill target of 1 at the start of November. In November, the book-to-bill ratio was 0.25. Year to date, the book-to-bill ratio is 1.04. Reaching a gross book to bill ratio of 1 or higher should be possible as the jet maker has finalized a deal with Iran for the purchase of 100 aircraft.

Customer spotlight

In this month's customer spotlight, we have Hawaiian Airlines. The airline commenced operations in 1929. The airline currently serves a total of 28 destinations with a fleet of 52 aircraft. The airline operates flights from Hawaii to 28 destinations in 14 countries

Hawaiian Airlines has a fleet that is almost equally split between Boeing and Airbus. In the coming years, the 8 Boeing 767 aircraft will be replaced by the Airbus A330-800neo and the Airbus A321neo giving Airbus a bigger share in the Hawaiian fleet.

Conclusion

Airbus expects its order book to remain stable in 2016 and is currently at a book-to-bill of 1.04. After cancellations, the jet maker has a book-to-bill ratio 0.71. In September, Airbus canceled all 89 orders from defunct Kingfisher Airlines… Something that should have happened a long time ago. Good news is that Airbus seems to be leaving supply chain issues behind.

Airbus should be able to easily reach a book-to-bill ratio of at least 1, but just like Boeing, the jet maker is having problems selling wide-body aircraft.

To reach its delivery target the jet maker needs to deliver 93 aircraft, a record monthly output.

If you would like to receive updates for my upcoming articles, please click the "Follow" text at the top of this page next to my profile.

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.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.