- Airbus reported a third-quarter profit of $1 billion on Wednesday. Boeing lost $6 billion in the same period.
- The European company has more orders and appears to be coping better with supply-chain issues.
- Airbus’s market value is about $28 billion higher than that of Boeing.
Airbus reported its third-quarter earnings on Wednesday, which showed its strength over rival Boeing.
The European planemaker posted a quarterly profit of 983 million euros ($1 billion) — a sharp contrast to Boeing’s $6.1 billion loss for the same period it announced last week.
UBS analyst Ian Douglas-Pennant said investors should be reassured by Airbus’ profit margins, “although commentary on supply chain weakness may offset this.”
The stock dipped on Thursday before turning positive. Although the shares are flat for the year to date, Airbus is worth about $123 billion — $28 billion more than Boeing. Its shares have slumped almost 40% this year.
Here are four key ways Airbus has been outshining its American rival this year.
1. Customer confidence
Airbus has outsold Boeing since 2019, when the 737 Max suffered the longest grounding for a US airliner following two fatal crashes that killed almost 350 people.
Customers grew frustrated with Boeing in the wake of January’s Alaska Airlines 737 Max blowout because it signaled quality-control problems and affected production.
In the first nine months of this year, Airbus’ 667 gross orders were more than double Boeing’s tally of 315.
The Airbus A320 family leads the industry in single-aisle planes and looks set to gain further with its game-changing A321 XLR, which will unlock longer routes. The first was delivered to Spain’s Iberia on Wednesday.
On the same day, Riyadh Air ordered 60 Airbus A321neos despite speculation late last year that the new Saudi airline would opt for Boeing 737 Max jets for its single-aisle fleet.
2. Coping better with huge backlogs
Sales are one part of the puzzle, along with delivering planes on time.
“We believe the primary focus among investors is the execution of aircraft deliveries,” Royal Bank of Canada analyst Ken Herbert said in a note to clients.
Both planemakers have huge backlogs: Boeing has more than 5,400 orders, while the Airbus total is about 8,750.
Supply chain constraints on labor and raw materials have hampered the industry this year, but Airbus has been coping better. It has delivered 497 planes this year compared with Boeing’s 291.
“Airbus’ main task is ramping up production of its popular airliners beyond even prepandemic rates,” Morningstar’s Nicolas Owens said in a note.
Like last year, Airbus expects deliveries to increase in the final three months of the year, meaning it will meet its goal of 770 planes. The guidance confirmation was “arguably the biggest surprise of the release,” Deutsche Bank analyst Christophe Menard said in a note.
A prime issue for Airbus is a scarcity of jet engines, which Bank of America analysts said remained “concerning,” but added: “It appears Airbus has much of what they need to meet the guidance.”
Boeing has far more problems. Regulators capped 737 Max production, and assembly lines have slowed down following scrutiny of its manufacturing processes. Boeing workers have also been on strike in a dispute about to enter its seventh week.
3. Defense and space
Commercial airplanes make up the bulk of both company’s businesses, but both have defense and space divisions.
Boeing’s operation was in the red to the tune of $2.3 billion this quarter, which it largely blamed on losses on military programs.
It also took a $250 million hit on the Starliner project. The spacecraft suffered helium leaks and its astronauts are set to return to Earth after eight months rather than eight days — and courtesy of Elon Musk’s SpaceX instead.
Airbus’ defense and space division has suffered too, and the company announced up to 2,500 layoffs earlier this month and took a charge of 989 million euros ($1.08 billion) in the second quarter.
This quarter, Airbus recorded earnings on the EBIT measure of 143 million euros ($155 million), including a 51 million euro gain from acquiring the remaining 50% of OneWeb — a satellite constellation similar to Starlink.
It appears SpaceX could threaten business for both Boeing and Airbus. Faury did not name Musk’s company on Wednesday’s earnings call, but said the European space industry “needs to transform in order to remain competitive against other global players, including some new players.”
4. Stability
In a duopoly, it might be tempting to twist the knife and criticize a struggling rival’s problems, yet Airbus has been careful with its words in the face of Boeing’s woes.
Faury said in February the Alaska Airlines blowout “makes us very humble” and it’s “never good when an incident is happening, whatever the type of plane.”
Commercial aircraft CEO Christian Scherer said at the Farnborough Airshow in July: “When one of the players loses its way, first and foremost, we’re focused on what we have to do at Airbus.”
Investors and customers can also find confidence in more stability at Airbus, with CEO Faury announcing in the earnings call that shareholders will vote on renewing his contract.
Since Faury took over at Airbus in 2019, three people have run Boeing.
Dennis Muilenburg and Dave Calhoun were both ousted from Boeing following different 737 Max crises. Kelly Ortberg has only been in charge since August but has a plan to turn things around after a turbulent time with the strike, layoffs, and regulatory scrutiny.
