Airbus pulls ahead as Boeing’s problems deepen

Airbus last week consolidated its position as the world’s leading aircraft manufacturer for the fifth consecutive year, announcing that it had delivered more planes and secured more orders than Boeing in 2023. At the same time, Boeing was trying to trigger a massive public relations and safety crisis brought on by a heartbreaking near-disaster involving its aircraft line of line 737 Max.

In the long-running duel between the two aviation rivals, Airbus has gained a head start.

“What was once a duopoly has become two-thirds Airbus and one-third Boeing,” said Richard Aboulafia, managing director of AeroDynamic Advisory in Washington, DC. “A lot of people, whether investors, financiers or customers, look at Airbus and see a company run by competent people,” he said. “The contrast with Boeing is quite profound. “

The incident involving the 737 Max 9, in which a hole opened in the fuselage of an Alaska Airlines flight mid-flight, was the latest in a series of safety lapses for the airliner. work by Boeing – including two fatal accidents in 2018 and 2019 – which are indirectly helping to propel the fortunes of the European aerospace giant.

As the Federal Aviation Administration expands its control over Max 9 production, Airbus’ advantage is likely to strengthen. Airlines are embarking on a massive expansion of their fleets to meet a post-pandemic surge in demand for global air travel, and are considering which airline to turn to.

Shares of Airbus, a consortium with factories and offices in several European countries, hit a record Friday after its chief executive, Guillaume Faury, said the company had won 2,094 orders for new planes in 2023, the largest number in a single year. This includes the popular A320neo single-aisle aircraft, its main competitor to the 737 Max.

Boeing too reported more aircraft deliveries and orders in 2023 than the previous year, but at a slower pace than Airbus. The two companies together manufacture the vast majority of commercial aircraft in the world.

Mr. Faury declined to comment directly during a press briefing Thursday on the latest problem encountered by Boeing’s Max plane. “We are following very closely everything that emerges from the ongoing investigation,” he said.

Airbus has had its own problems: During the pandemic, supply chain problems forced it to cut production and lay off employees, fueling a billion-euro ($1.1 billion) loss. . She settled a corruption investigation in 2020 for 4 billion euros. And in 2019, it stopped building the A380 superjumbo plane after airlines demanded smaller models.

Since the Max 9 incident on Jan. 5, Boeing shares have fallen about 20 percent, as investors weigh how big a blow this debacle will prove to be. David Calhoun, the company’s chief executive, had said he hoped 2024 would be a comeback year. Instead, the company is working to contain the new fallout.

Boeing said Monday it would make changes to quality control processes at its factory and at a major supplier, Spirit AeroSystems, which installed the plug for the unused exit doors that exploded on the Alaska Airlines flight. On Tuesday, Boeing announced that it had appointed retired Navy admiral Kirkland H. Donald to evaluate the company’s “quality management system” for commercial aircraft.

Although no one was injured, the Alaska Airlines episode reignited safety questions that Boeing was working to answer after two of its Max planes crashed in Asia and Africa in 2018 and 2019, killing 346 people. All 737 Max planes were grounded worldwide for two years, creating an unusual opportunity for Airbus to gain a foothold and take more market share of Boeing’s business.

Reporting by the New York Times and others revealed pressure within Boeing to compete with Airbus’ A320neo, a growing, fuel-efficient success that caught Boeing off guard. Boeing’s decision to build the Max as a variant of the 737 because it would be faster, easier and cheaper than starting from scratch affected the plane’s design and development, playing a role in its troubling history.

“Over the last few years, the economic equation has changed in favor of Airbus,” said Philip Buller, an aviation analyst at London-based Berenberg Bank.

“The disruptions that affected the Boeing Max made it seem like a less reliable aircraft to have in your fleet,” he said. “So the merits of it being slightly cheaper disappear, because the Airbus is a more reliable plane that you can fly instead of grounding it.”

The safety problems have been costly in other ways for Boeing. The company is struggling with nearly $40 billion in debt stemming from the Covid travel crisis and the previous 737 Max safety crisis. This has raised questions about the extent to which Airbus will invest in future generation aircraft as Airbus seeks to gain a competitive edge, Mr Buller said.

“If you have $40 billion in debt and a plane that is your cash cow is grounded because the door exploded, that’s a sign that management is not investing in the future but fighting against “fire today,” he said.

As airlines continue to increase their post-pandemic aircraft orders in order to build larger, newer fleets, Airbus appears to be widening its lead. In two major deals, Air India ordered 250 Airbus planes and IndiGo, India’s largest carrier, agreed to buy 500. The company reported an order backlog of 8,600 planes in 2023, against 5,626 for Boeing.

Supply chain issues have made it harder for both countries to build planes quickly enough. Airbus delivered 735 planes to carriers and airline leasing companies in 2023, at the high end of its target range and more than the 528 delivered by Boeing. Airbus is out of stock until the end of this year for its single-aisle aircraft, and until 2028 for its A350 wide-body aircraft, the company said.

While the global air fleet should grow by a third over the next decade — the carriers are expected to operate 36,000 planes by 2033, up from about 27,400 commercial planes today — both companies are looking to increase volume in the long term.

Mr Faury said Airbus would increase production of the A320neo to 75 planes per month in 2026, aiming to leapfrog its rival. Boeing plans to increase production of 737 planes to 50 per month by around 2025.

For now, Airbus remains humble, at least publicly.

Three days before the Alaska Airlines incident, a Japan Airlines Airbus A350 was engulfed in flames after colliding with a coast guard plane while landing in Japan. The design and materials of the Airbus helped prevent the fire from injuring passengers and crew members.

And Spirit AeroSystems, which made Boeing’s door stopper, is also a major supplier to several types of Airbus aircraft. It manufactures wing parts for the A320 at a factory in Scotland and center section panels at its North Carolina factory for the A350 fuselage. Mr. Faury said Airbus was closely monitoring the U.S. regulatory investigation into Boeing and its supplier.

He played down concerns that the race between Airbus and Boeing to produce more of the in-demand jets in coming years could hurt quality, saying safety, integrity and compliance were the main pillars of the company.

After the Alaska Airlines and Japan Airlines incidents, “we are all very focused, each on our product, to understand, analyze and learn all the lessons,” Mr. Faury said in a separate appearance last week during of a French aerospace gathering.

“We always ask ourselves: What does this say about precautions that we might not have thought of that we need to think about? » declared Mr. Faury. “How likely could this happen to us?