Boeing has edged out Airbus in the battle for orders, but is trailing in the race for a new aircraft
Boeing has announced that the next generation of aircraft will be introduced in the late 2030s. Airbus is ready to begin development several years earlier / Photo: Unsplash.com / emanuviews
On the opening day of the Farnborough International Airshow, aircraft manufacturer Boeing outpaced its main competitor—the European company Airbus—in the number of orders and closed nearly 150 deals. However, Boeing announced that it expects to bring a new generation of narrow-body aircraft— a replacement for its best-selling 737 Max—to market only by the late 2030s.
Airbus, for its part, has set a slightly tighter timeline, Bloomberg notes: the company said it could begin developing a new version of the A320 as early as the early 2030s.
Boeing shares fell 2.1% during trading on July 20, while Airbus shares in Paris also dropped 1.3%.
New Orders
The first day of the Farnborough Airshow proved to be a success for Boeing: the company received nearly 150 aircraft orders, according to Bloomberg. The largest deal was with the leasing company SMBC Aviation Capital, which ordered 100 Boeing 737 Max aircraft. Boeing also received 48 orders for its 787 Dreamliner wide-body aircraft from Saudi Arabia’s Riyadh Air and the Philippines’ Philippine Airlines (the latter placed an order for Boeing aircraft for the first time in nearly 20 years, the agency notes).
Airbus, in turn, received a similar order from SMBC: in conjunction with its agreements with Boeing, the leasing company also ordered 100 aircraft from the Airbus A320neo family.
According to Bloomberg, both manufacturers have sold out of virtually all their most popular models for the next decade.
New Aircraft Models
In this regard, to “improve positive cash flow and reduce part of its debt,” Boeing plans to ramp up production of its existing 737 aircraft over the next couple of years, Kelly Ortberg, CEO of the U.S. aircraft manufacturer, said in an interview with Bloomberg Television at the air show. According to him, Boeing is not yet financially ready to launch a costly program to develop a new aircraft. The launch of a program to replace Boeing’s best-selling model—the 737 Max—could take place by the end of the decade, the CEO added. For now, however, “the market isn’t quite ready for a new aircraft,” Ortberg believes: “Customers are telling us: let’s focus on the existing product,” he added.
This timeline reflects Boeing’s more cautious approach to replacing the 737—the aircraft that generates the bulk of the company’s revenue, notes GuruFocus. It could also affect the company’s competition with Airbus. The European aircraft manufacturer had previously set a tighter development timeline for the successor to the A320 family, hoping to bring it to market as early as the beginning of the 2030s, according to Bloomberg.
Currently, the A320 and 737 families account for the largest share of the companies' order books.
The competition between Boeing and Airbus over the development of the next-generation aircraft model is reminiscent of how the situation unfolded with the upgraded versions of the A320 and 737, according to Bloomberg. Airbus was the first to equip its model with new engines, naming it the A320neo. This move made the A320neo popular among customers and forced Boeing to catch up with its competitor through the 737 Max.
What about the stocks?
Boeing’s stock has fallen 3.6% since the start of the year amid challenges facing the aviation industry due to the war in the Middle East. Airbus shares have lost roughly the same amount (3.3%) during this period. Nevertheless, Wall Street analysts are optimistic about the U.S. aircraft manufacturer’s prospects: according to MarketWatch, 23 out of 31 analysts recommend buying the stock, seven advise holding it (Hold rating), and one recommends selling it. The average price target for Boeing shares is $270.8, which implies upside potential of 29% relative to the last closing price.
In Paris, 18 analysts recommend buying Airbus shares, while six others advise holding them in a portfolio. There are no sell recommendations for the company’s stock. The average price target implies a rise in Airbus shares of nearly 13%.
This article was AI-translated and verified by a human editor
