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Boeing vs Airbus

With Gulf airlines hastily expanding, the two largest aircraft manufacturers in the world are fighting to pocket the most orders. Who's flying higher?

Emirates Airlines has just become the proud owner of its first Airbus A380 superjumbo. The world’s biggest passenger plane, it will be making its maiden flight from Dubai to New York on August 1. Emirates, which will be receiving 58 more A380s, also firmed up an order for another 60 Airbus planes on Monday, worth around $12bn.

In spite of the rising fuel costs, airlines in the Gulf region are rapidly expanding their fleets, and aircraft makers Airbus and its rival Boeing, have been vying for their attention.

During the recent Farnborough airshow in the UK, Airbus gained an upper hand over Boeing, by winning more than 60 percent of the $64bn plane orders. Abu Dhabi’s Middle East Etihad Airways was the single highest buyer at the event, and placed 55 firm orders with Airbus worth $12bn, including 10 A380s and 25 A350s. Boeing received orders for 45 aircraft from Etihad worth $9.4bn, including 35 787 Dreamliners and 10 Boeing 777-30.

While Dubai Aerospace Enterprise placed an order for 100 Airbus planes worth $12.6bn, Fly Dubai, Emirates’ low cost carrier is buying 50 Boeing 737-800s, worth around $3.7bn at list prices. Saudi Arabian airlines and Qatar airways also placed big orders at Farnborough.

Overview

Airbus SAS is an aircraft manufacturing subsidiary of European Aeronautic, Defence and Space (EADS), a European aerospace consortium. It was formed by a government initiative between France, Germany and the UK in 1970. Based in Toulouse, France, Airbus is a consolidation of European defense and aerospace companies, and was made a joint stock company in 2001.

Its competitor Boeing, is an American aerospace and defense corporation, originally founded by William Boeing in 1916 (in 1917, the company took on the current name). It merged with another American aerospace manufacturer McDonnell Douglas in 1997, and is listed on the New York stock exchange. Boeing is currently headquartered in Chicago.

The two rivals enjoy a near-duopoly in the global market for commercial jets, and so have been constantly competing for the top-spot. Both make narrow-body and wide-body aircrafts and jumbo jets.

Delays

Recently, Boeing and Airbus have been selling more short-haul planes, such as the 737 and the A320, while building sales of their new 787 and A380 programs, both of which have been facing delays. The 787 focuses on light materials to aid fuel efficiency, while its competitor A380 superjumbo carries more than twice as many passengers.

The first A380 to Emirates was scheduled to be delivered by October 2007, but finally reached the company only this week. Five A380 planes have been delivered to Singapore Airlines.

Boeing’s 787 Dreamliner was supposed to enter service in May this year, but has already been postponed three times. The company has now confirmed that the program would be ready for test flights later this year, and initial deliveries will begin in the third quarter of 2009. Boeing has won orders for around 900 Dreamliners and deliveries have been delayed because of vendor delays, parts shortages and changes to the wing section.

In 2007, Airbus had orders for 1,341 aircraft, valued at around $157bn, and managed to deliver 453 aircraft. While Boeing took the top spot last year with 1,413 orders, the aircraft maker delivered 441 aircraft, 12 less than its rival.

Profits

Earlier this month, Boeing reported a 19 percent drop in quarterly profit to $852m. Boeing said its profit was affected by the delay in the 787 Dreamliner program. The company recently promised to compensate Indian government backed Air India, for the delay in the 787 delivery.
While EADS is yet to announce its second quarter profit figures, Bloomberg estimates that net income for the group may have increased to $611m from $127m, over the same period a year ago. It also says that sales at EADS could have risen 4.2 percent to $15bn. Bloomberg attributes the rise in profit to higher deliveries of Airbus planes and lower costs from production delays.

Airbus though, has been facing losses because of the weak dollar, which has reduced the value of each sale when converted into euros.

Middle East

After 9/11, for a period of three years, Boeing’s regional market share experienced a temporary setback. However its commercial orders have now expanded significantly in the region and its clients include Emirates, Qatar Airways, Etihad, Oman Air and Egypt Air.

The Boeing Service Center based in Dubai, is one of the company’s eight spares distribution facilities worldwide. The company says it houses about $25m worth of parts and an inventory of more than 24,000 items that are shipped around the region.

Airbus’s Middle East hub is also headquartered in Dubai, in the Airport Free Zone. It operates a training centre along with CAE, and offers a multi-function training device and full-flight simulators for the A330/A340 and A320. Flight crew courses are offered by a team of eight training captains. In April this year, Airbus also opened a new material and logistics centre in Dubai.

In June this year, the International Air Transport Association reported that Middle East airlines saw an 11 percent rise in passengers in the previous year. It comes as no surprise that the two are stocking up in the region.

 
 

2 Comments

  1. WallStreetNizzoria on August 10, 2008 6:14 pm

    Boeing is 100 a share 1st quarter 09′

     
  2. Brian on August 10, 2008 7:36 pm

    Why do you state that the competitor to the Boeing 787 is the Airbus A380? The direct competitor to the Boeing 787 is the Airbus A350 which is designed to compete in the same market sector, as opposed to the A380 which is aimed at a totally different market.

     

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