Boeing Books Rising Orders But Trails Airbus

January 5, 2012

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Boeing lost the 2011 order race by a wide margin and lagged its rival Airbus on deliveries for the ninth year in a row, figures showed on Thursday, but it pledged to fight back in 2012 with big sales of the revamped 737.

At Boeing, a 3 percent rise in total deliveries from 2010 showed the resilience of overall aircraft production, in contrast with many other sectors of the economy, but also confirmed difficulties in getting up to speed on the latest aircraft models, including the revolutionary carbon-composite 787 Dreamliner.

Boeing said on Thursday it delivered 477 commercial planes last year, up from 462 in 2010 and nearly in line with a company forecast of about 480 aircraft. The US jet maker booked net orders for 805 planes, buoyed by the best-selling 737 narrow-body and its wide-body 777, which set an annual order record for the company.

After taking longer to decide on a strategy for meeting demand for more fuel-efficient smaller jets, Boeing sank to the worst market share in the 40-year history of its rivalry with Airbus in 2011, but is expected to push the pendulum the other way with its competing 737 MAX in 2012. On average, the two aircraft manufacturers have a roughly equal share of the USD$100 billion annual passenger jet market.

In terms of gross orders, which are not adjusted for cancellations, Boeing had a 38 percent market share in 2011 with 921 compared with Airbus's end-November total of 1,521 orders.

Industry sources say the European firm is set to end the year with orders well above 1,600 once its final figures are released on January 17.

Randy Tinseth, vice president of marketing for Boeing commercial, said Airbus logged "some significant orders early in 2011" but added the tide turned towards Boeing after the US company announced plans for the MAX, a revamped 737 with new engines due to enter service in 2017.

"I think we took the momentum away in the latter part of the year, especially on the wide-body side and with the MAX," Tinseth added. "And I think this year is all going to be about the MAX."


Airbus delivered more than 530 jets in 2001, industry sources said. Airbus had predicted 2011 deliveries of 520-530 aircraft, up 4 percent from the previous year, as demand from emerging markets cushioned both leading aircraft manufacturers from a feeble Western economy.

Commercial aircraft production continues to grow, despite uncertainty late last year over the availability of financing, and looks to have hit a combined level above 1,000 jets for the first time in 2011.

Airbus declined to comment on its 2011 performance ahead of a company presentation on January 17.

Airbus overtook Boeing in 2003 in a global passenger jet market valued at USD$4 trillion over the next 20 years.

Their rivalry led to what became the world's largest trade dispute over mutual accusations of subsidies, with World Trade Organization cases expected to reach a climax in 2012.

Steady deliveries are seen as the lifeblood for both industrial titans next year as doubts gather over the economy and the ability of airlines to pay for their aircraft.

Alex Hamilton, managing director with EarlyBirdCapital, who follows Boeing, said the 2011 orders were an "indication of the strength of the recovery."

"We are clearly off the bottom of 2009, but have not surpassed the peak of 2007," Hamilton said. "We do not expect to pass the peak of 2007. We would expect orders to remain strong (in 2012) as the cycle should continue."

Barring global recession or a disorderly break-up of the euro that could trigger widespread economic contagion, the industry insists for now that financing for the USD$80 billion to USD$100 billion needed annually to pay for deliveries is secure.

Airbus also won a bigger share of orders than its US rival in 2010 after promising to revamp its best-selling A320 with new fuel-saving engines.

But Boeing is expected to bounce back, as the 737 MAX is seen likely to capture most attention in 2012. Boeing said orders and commitments for that plane top 1,000.

The two companies are preparing for a major battle over a USD$16 billion order from United Airlines in the first quarter expected to cover approximately 180 aircraft, including possibly 130 of the latest generation of revamped 150-seaters.