Will Airbus Profit from The Boeing Crisis?
The stiff competition between Boeing and Airbus has been pigeonholed as a giant duopoly in the jet airliner industry since the 1990s. Could the recent Boeing’s 737 Max crisis lead to Airbus profit outpacing Boeing?
The new Europe’s Airbus sales chief hinted as such with forecasted orders for the latest versions of A321jet. However, the market projection shows that Boeing might emerge quickly from its grounded 737 MAX to reclaim its glory. Airbus is currently trying to seize this marketing opportunity with experiencing high demand for the longer-range versions of approximately 200-seat aircraft previously used for short routes.
"Our sales for the A321 have gone up. People are demanding more of it, and they claim it's a great module." Christian Scherer said. These remarks come after a report that Airbus has launched the most awaited single-aisle franchise – A321XLR! The decision might halt the proposed new Boeing 737 MAX mid-market jet.
Airbus SE announced that its adjusted revenue for the first quarter had risen sharply. This is compelled by improved aircraft supplies with the airliner aiming to outpace Boeing Co. to be the leading jetliner in the world this year.
The European plane maker said the adjusted earnings (BIT) rose to $614 million from $16 million the previous year. But the net profit decreases by 86% to about $45million. In the first quarter, Airbus sold 162 airliners paralleled to 121 airliners in the previous year, leading to a 24% sales increment, which is $14 billion. This may also lead to an increase in deliveries this year- from 880 and boost it to 890.
Boeing was to outperform the European planemaker this year before cutting its 737 MAX production after two fatal crashes and grounding its aircraft in March. As a result, we will likely see the Airbus become the largest planemaker in the world since 2011.
Before suspending its 2019 plane delivery, the American planemaker had projected between 895 and 905 airliner supplies before the 737 MAX disaster. The drastic growth in air travel across the globe has led to the production of more fuel-efficient aircraft with BAE Systems.
Airbus aims at delivering their single-aisle A320 jet to approximately 60 airplanes per month by the middle of this year with an estimation of 63 airplanes by 2021. The American planemaker- Boeing- was to boost its 737 productions too, before halting the course due to March crisis.
Toulouse, France-based Airbus reported that it had suffered a tune of $5 billion cash outflow before customer financing, acquisitions, and mergers. This is to pave way for higher production.
Will It Last for Long?
Although Airbus has reported an increase in profit, the situation might not change from mid to long-term. " a MAX is a MAX and an A320 is an A320", Said CEO Guillaume Faury on April 30. The CEO also said that the company has a strong backlog for its A320neo and the supply chain limits them. The company is held back by suppliers, specifically, engine manufacturers. The European planemaker also suffered massive cancellations, including 31 A380s. More so, it eliminated 42 A350 orders. Negotiating airline orders cost money and time. This may hinder Airbus outpacing Boeing in the long run.
The European planemaker is overworking to overtake Boeing and become the largest jet airliner in the world. However, the glory for Airbus might not last for long if the current predictions about Boeing emerging from its crisis become a reality over the next few months.