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Boeing Extends Lead On Airbus With Mega Orders

Apr. 14, 2018 2:06 PM ETThe Boeing Company (BA), EADSF, EADSY71 Comments


  • Contrary to Airbus, Boeing did book wide body orders.
  • Airbus booked 8 orders 6 of which come from conversion.
  • Turkish Airlines Dreamliner order added to backlog.

The order battle between Boeing (NYSE: NYSE:BA) and Airbus (OTCPK:EADSF, OTCPK:EADSY) is one way for the companies to flex their muscles, next to marketing their respective products as the best solution with the highest fuel efficiency and passenger comfort. Even though the orders (in terms of value) are in no way a reflection of financial performance, it's important to have a look at the order inflow. That's because the order tallies give a nice impression of which manufacturer has the best mix of discount, comfort, slot availability and efficiency and it gives an idea of the overall health of the aircraft market and appetite for new aircraft.

Afbeeldingsresultaat voor 787 silhoute

Source: ainonline

In this article, AeroAnalysis will look at the order inflow during March for both manufacturers and their role in the narrow and wide body markets.

Overview for March

Airbus and Boeing together hauled in 205 gross orders in March compared to 169 orders in the same month last year. The increase is primarily caused by Boeing booking 2 mega orders slightly offset by lower orders for Airbus. Looking at the division of the orders in March, we’d mark Boeing as the winner as it logged 197 orders versus 8 for Airbus. In terms of value, Boeing received $13.3B worth of orders versus $0.4B for Airbus.

In March, Boeing booked 197 gross orders, 37 wide body jets and 160 single aisle aircraft:

  • 1 Boeing 737 MAX BBJ was sold.
  • Jet Airways booked a long awaited order for 75 Boeing 737 MAX aircraft. Talks had been ongoing since mid-2017.
  • An unidentified customer ordered 73 Boeing 737 MAX aircraft.
  • SkyUp Airlines ordered 5 Boeing 737 MAX aircraft; 2 MAX 8s and 3 MAX 10s.
  • Two unidentified customers ordered 2 and 4 Boeing 737 MAX aircraft, respectively.
  • Boeing also received orders for its freighter aircraft

This article was written by

Dhierin Bechai profile picture
Dhierin is a leading contributor covering the aerospace industry on Seeking Alpha and the founder of The Aerospace Forum. With his Aerospace Engineering background he has a more indepth knowledge about aerospace products enabling him to cover a complex niche. Most of his reports will be about companies in the aerospace industry or airlines industry, comparing products and looking at market forecasts providing investors with unique and thorough insights. Dhierin has accumulated nearly 20 million views never failing to spark healthy and thoughtful discussions for investors and aerospace professionals.

His reports have been cited by CNBC, the Puget Sound Business Journal, the Wichita Business Journal and National Public Radio. His expertise is also leveraged in Luchtvaartnieuws Magazine, the biggest aviation magazine in the Benelux.

AeroAnalysis offers wide variety of services, ranging from providing data and cost models to consultancy possibilities. Check out our website for more information. Though we believe in the strong nature of our analysis, we are in no way giving buy or sell recommendations and advise everyone to do their own due diligence before making investment decisions.

Analyst’s Disclosure: I am/we are long BA, EADSF. 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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Comments (71)

BA @340 is a huge bargain. Deliveries roll out, Orders roll in and Defense heats up. This is a good formula for BA!
Hudson Investments profile picture

Granted that BA is doing everything right and Trump is strong on defense, however, the market will have to digest the potential tie up with KLX, and Embraer.

Did they pay too much?
Were the synergies beneficial?
What are the liabilities?

Hopefully the market will embrace what Boeing is doing.
Hudson Investments profile picture
Here is how Boeing will expand its PE ratio

Wall Street Journal reported this.
Dhierin Bechai profile picture
So it will become even more expensive?
Hudson Investments profile picture
Dhierin Bechai, Marketplace Contributor

More expensive than what? Duplicating the acquired companies from scratch? Answer: NO.

If you mean to ask does an acquisition add cost to BA, answer: YES, as do all acquisitions. However, if the acquisition adds to new products and services revenue stream, it will be accretive to earnings. This is a good thing especially to further "cradle to grave" service for new plane buyers, and to compete with Bombardier and Airbus in C class jets.
Dhierin Bechai profile picture
You said the price to earnings ratio would increase. You mean Boeing's price goes up while earnings remain the same or the price remains the same and earnings become lower?
Orders are the future but deliveries are the MONEY$$$$$
Thanks for the reference/ link.
Hey Dhiraj, what's with airlines cancelling the A350 ? Or rather airlines choosing the 787 over the A350 or the A330neo ?
Dhierin Bechai profile picture
The name is Dhierin ;) Many of the aircraft that are being canceled now have been ordered years ago. The A330neo value proposition hinges on fuel savings and lower capital costs versus the Dreamliner, if Boeing has the liberty to play with the pricing then things might be more difficult to chase for Airbus. As for the A350 it's a lot of airplane compared to what some airlines require in terms of range. This however does not mean that the A330neo or A350 will not sell in the nearest future.
A very nice article, sir. Enjoyed reading.
Airbus has been turning the scales in the last month for quite a few years. Boeing has booked another order from American Airlines.
For me, Boeing can only win the yearly order if they come up with the new NMA/MOM, or NSA.
Airbus appears to have a definite advantage with its 321 aircraft. Only a new plane introduction can tilt the case in favor of Boeing, though the new aircraft introduction may lead to cancellation of existing orders from both the manufacterers.
Do you have any news about the introduction of a new plane from Boeing, sir?
Dhierin Bechai profile picture
I will continue coverage for the NMA in the near future. I did write an 80-page report about the aircraft though so there certainly is news: http://bit.ly/2qIDTSj
AirAsiaX has cancelled their A350 order. I nearly spit my coffee with joy when I read the headline too quick, and thought it was the A330neo order that they cancelled. Even though they unfortunately have not cancelled their A330neo order, this is still welcome progress in their fleet development. I hope to see this lead to a cancellation of their A330neo order before their first one gets delivered.
I read it yesterday, I believe in Aviation Week. Seems like it probably will hurt production for a bit as the engines for the new planes are being diverted to replace problem engines on present planes. Luckily the article said it effects 25% of the planes, so it is a minority, although a significant minority. For the short term, Boeing may need to rearrange the order of production. I would suspect the airlines will be going after Rolls directly. Dhierin, can you confirm if the airframer holds any responsibility when the engines are a problem?
Chip Skylark profile picture
Dhierin have you been following the Rolls Royce situation? Is there any likelihood of this coming down on Boeing? Just read an article by The National and the situation is looking grim for the airlines...
Dhierin Bechai profile picture
This could be a problem to Boeing. Boeing has an obligation to deliver the aircraft in time, if that does not happen they might have to compensate the airline for this. Since the delay is caused by the engine supplier, Boeing could hold them accountable though.
Hudson Investments profile picture
Why doesn't Boeing build their own engines? SpaceX does.
Chip Skylark profile picture
It looks like the stock wasn't affected. Things are looking very good right now - Russia appears to be taking a soft stance on sanctions and Trump has eased off as well.

The new arms transfer policy might be a game changer for the military-industrial complex should it be implemented a few months from now. Exciting news from the White House!
Chip Skylark profile picture
Hopefully the bears drag it to 300 so I can get in cheap. Would not be surprised if this stock was trading at 500 next year.
Hudson Investments profile picture
Skylark chip

$300? You will miss the opportunity to own one of the best companies in. The world.
During this dip BA will nibble a few more shares. Great planes Yes, also a well run company!
Farnborough will be a very interesting few days for Boeing and the industry when Boeing announces they will be OFFICIALLY offering the 797
ron3637 profile picture
I would appreciate your thoughts on the current valuation of Boeing.
Dhierin Bechai profile picture
Think Boeing has plenty of room to run. My more detailed thoughts are a bit too long for a comment. So I will try to squeeze it into an article.
The most long I have heard from Wall Street is $500 and $800. No time frame provided. Still, interesting to hear that level of optimism. I'm long BA!!
Long Boeing. Great dividend as well.
Dhierin Bechai profile picture
Just by looking at the yield I think there are other nice dividend plays. In annual dividend there is no company paying better than Boeing.
SuperPac profile picture
In all the articles I saw in Google News search, the Titanium export ban from Russia to the US was discussed with words like ''may'' and ''could''. So there is no certainty yet. Future, who knows where this is going. Who knows if this is a real trade war or a skirmish or mere trade trash talk with lots of posturing. Time will tell.

Russian companies like Aeroflot order with Boeing and Airbus. There is a Forbes article explaining that from 2019 Russia intends imposing duties on imports from Boeing to protect and promote its domestic commercial aircraft manufacturing, the Sukhoi SuperJet 100 and MS-21-300.

Point to remember is that Russia's past commercial aircraft ventuers have folded (Tupolev, Ilyushin). Even the existing projects, Sukhoi Superjet and MS 21 have smaller seating capacities.

I think for a considerable time to come Boeing and Airbus will dominate the skies. Sure, short run supply problems of parts, components, materials, capacity constraints etc will keep croppig up but which business doesn't face such issues every now and then.

I am long Boeing and remain positive. I will add more at 300 - 320 price levels.

I am also considering going long Airbus, probably if it drops to its 200DMA.
Hudson Investments profile picture
I wonder if BA is sourcing precision titanium from other sources or starting their own processing facility.
SuperPac profile picture
Look up Norsk Titanium.

I think Boeing will be just fine. Its not like Russia doesn't need Boeing's commercial aircraft. Its a duopoly. There is no escaping Boeing.
Dhierin Bechai profile picture
If they source titanium that Boeing buys from Russia, then the problem is the same right?
Good article Dhierin.
Dhierin Bechai profile picture
Thank you, danrick.
Hudson Investments profile picture
Dhierin Bechai,

In your opinion, what if Trump is found guilty of a crime through Michael Cohen's tapes and impounded computers and then is impeached as it relates to the market and BA in particular?
Dhierin Bechai profile picture
I honestly have no clue on how markets would react to that. There is a lot to dislike about Trump, but I think for companies he does good things as well... at least he tries to strengthen corporations.

But I honestly don't think he is going to get impeached, the same way I dont expect things to escalate between the US and Russia or China.
Finally got around to scanning thru the BA 10-K and liked what I saw.
Good article again! By the way I clicked on the 'here' for airbus and went to the Boeing regains momentum article. Last year you stated that Airbus would need to produce well over 60 A350s or it would be a 'failed startup' and with a lot of work in the last quarter Airbus managed to get close to their 80 planes. They have claimed they will be at 10 planes a month by the end of the year, and we know that even if they have to sacrifice every worker in the plant, they will deliver 10 or more in December, but the whole year number seems to be more important. How many do you think they need to deliver this year to be a reasonable ramp up? The first quarter numbers put them at the 80 plane rate again. Also you have a lot of insight into finances at Boeing, but do you think you will know when Airbus starts making a profit on the A350s that it produces?
Dhierin Bechai profile picture
I swapoed the links. Fix has been submitted. For the A350, I expect around 100 deliveries this year. Next year production should be profitable according to Airbus.
Andrew Boydston profile picture
The weaker $ and Airbus higher pricing is an important effect on sales numbers.
Not as much as one would think. Both BA and AB plus the Airlines and Financiers actively manage currency hedging. Cost based contracts and airplane purchasing are over multiple years which inherently helps smooth the fluctuations.
Ben Gee profile picture
Is the weaker $ have anything to do with Boeing's success?
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