Airbus is well ahead of Boeing in aircraft production

In February, Airbus delivered 49 aircraft to its customers, while Boeing - only 27 machines. Since the beginning of the year, Airbus share prices have increased by almost 20 percent, while Boeing's shares have lost more than 30 percent. Why have the results of these two companies diverged so much, even as demand for flying and airplanes continues to grow?

After the pandemic, travelers returned to flying

As a result, there is a visible recovery in countries with a large share tourism sector in GDP (such as Spain), the number of airline passengers is also increasing. All this, in turn, translates into orders for new planes.

In 2023, the two largest aircraft manufacturers: European Airbus and American Boeing received orders for 3775 aircraft. As much as 61 percent of them (2319) went to Airbus, and 39 percent (1456) – to Boeing. Both companies delivered 1263 aircraft last year, 58 percent. (735) were delivered by Airbus, and 42 percent (528) came out of the Boeing factory. Both companies have a record number of orders for new aircraft: Airbus had 2023 at the end of 8598, while Boeing recorded 6216. Over the next three years, Airbus will be able to produce and deliver over 1000 machines per year.

Boeing is also increasing production, but has been delivering fewer planes than Airbus for 5 years. The competition overtook the American manufacturer as a result of problems and the first grounding of the Boeing 737 Max aircraft in 2018. The plane, which was supposed to be the most important financial success for the company, turned out to be the source of many problems. After the incident on January 9, when a fragment of the fuselage skin that had been plugged in by the manufacturer was torn off on an Alaska Airlines Boeing 737 Max, the crisis clearly intensified. This situation exposed serious problems, both at the aircraft design and certification stage, and in production. This significantly weakened the company's reputation as one of the leaders of the American economy and, which is extremely important in aviation, a company focused on safety. The company is currently struggling with the effects of this crisis. It allowed Airbus to take over in the market, but Boeing still receives many orders and increases production. However, it has problems because, in addition to serious aircraft failures, airlines also report many smaller defects in new planes. The company is trying to respond to this by making changes in management and production, but the road to rebuilding its good reputation remains long and bumpy.

Aviation industry on the stock exchange

Data on orders for new aircraft affect the stock exchange quotes of both companies. Since the beginning of the year, Boeing's shares on the stock exchange have fallen by 30,94%, while Airbus's shares have increased by 19,58%. Even in a situation where in many other industries, European companies are doing worse than their American counterparts. S & P500 index since the beginning of the year it has increased by 8,5%, and the European STOXX600, by 5,3 percent However, Airbus is one of the few European companies that wins against competition from overseas.

One Airbus share currently costs EUR 166, which is a record level in history. The company expects that the record level of orders will translate into record financial results in 2024. Although the stock has reached an all-time high, future P/E ratio (forward P/E) remains at a healthy level of 23,15. The company will present the results for the first quarter of 2024 at the turn of April and May.

Meanwhile, Boeing shares are currently trading at half of their high. Problems with planes translate into financial results and the company has been recording losses since 2020. In the fourth quarter of 2023, the company's net loss amounted to PLN 30 million. dollars, or $0,04 per share. Boeing will report its next quarterly results on April 24.

About the author

Pawel Majtkowski - analyst eToro on the Polish market, which shares its weekly commentary on the latest stock market information. Paweł is a recognized expert on financial markets with extensive experience as an analyst in financial institutions. He is also one of the most cited experts in the field of economy and financial markets in Poland. He graduated from law studies at the University of Warsaw. He is also the author of many publications in the field of investing, personal finance and economy.