Boeing (NYSE:BA) and Airbus are the two largest airplane manufacturers in the world.
In this clip from Industry Focus: Industrials, Sean O'Reilly and Adam Levine-Weinberg answer the question: Who makes the better plane? Find out the differences between the two companies' most popular models, who really controls how much space per passenger a plane gets, which company has better cabin pressure and why it matters for travelers, how the two companies compare with each other in terms of seat size, and more. Also, the hosts go into the difference in fuel efficiency between the two companies. Find out how much it matters, how it's calculated, which company comes out on top, and more.
A full transcript follows the video.
This podcast was recorded on Jan. 26, 2017.
Sean O'Reilly: I wanted to get you in here and answer the eternal question: Who makes a better plane, Boeing or Airbus?
Adam Levine-Weinberg: It's a great question. We're going to slice this a few different ways.
O'Reilly: I remember when I first posted this to you, and you were like, "Oh, that's a good one." Anyway, go ahead.
Levine-Weinberg: To start off, I wanted to say, safety-wise, both of these companies make very safe airplanes these days. There's really no difference. Both of them have incredible safety records. Obviously, there are accidents sometimes. Most of the time, it's pilot error or some kind of human error. So, safety-wise, both of these companies know what they're doing; they make very reliable planes. When you get beyond that, there's some really interesting comparisons between the planes of both companies. We'll start off with what's probably the most important for a lot of the Fools listening to this show out there, which is passenger comfort. How do you feel when you're on the plane? Is there space? Do you feel like you're cramped in like a sardine? A lot of that actually doesn't depend so much on the airplane as much as it does on the airline itself, because the airlines have a lot of leeway to set up the plane the way they like.
O'Reilly: So they can move the seats, is what you're saying?
Levine-Weinberg: They can move the seats around in their own configuration. There are some limits to that, but not a lot. What's interesting is that, in general, Airbus planes tend to have wider seats than Boeing. And there's a few reasons for that. On the narrow-body side, these are the single-aisle planes that you see flying all around the United States and on some of the shorter international flights, the Boeing 737 is the best-selling plane in history. The runner-up is Airbus' A320, which is their competitor. And it just happens that the Boeing 737 has been around since the 1960s, and Boeing keeps just redesigning it and redesigning it.
O'Reilly: Wow. So this is a 50-some-year-old plane now?
Levine-Weinberg: When it was originally designed, it was a small plane meant to carry about 100 passengers. And now it's gotten up to 150 and even 200 passengers in many configurations. They made it longer; they have obviously upgraded of the engines several times; they've upgraded all of the interiors and the cockpits. But what they haven't done --
O'Reilly: They downgraded leg room -- I'm kidding.
Levine-Weinberg: That's true, but again, that's up to the airlines. But what hasn't changed is the width. This was a plane that was originally meant for relatively short flights, so it's a little narrower than the Airbus A320, which was designed about 20 years later, in the '80s. The result is, generally speaking, the seats on a Boeing 737 are about a half inch to an inch narrower than the seats you'd see on an A320, and the aisle is often usually narrower, about a 7- or 8-inch difference.
O'Reilly: Which doesn't sound like a lot, but you're talking about that on every seat. It adds up.
Levine-Weinberg: Yeah. Critics of the industry have said that the average weight is going up, especially in the United States --
O'Reilly: I was going to make a joke, like, it's interesting that the European plane has the wider seats; what's up with that?
Levine-Weinberg: Yeah, it's just from when it was designed and what it was designed for. The 737 grew into its current mission. Five or 10 years ago, Boeing was really strongly considering sunsetting the 737, getting a completely new design. But the problem is, when you think about the cost of a completely new plane compared to what it costs to upgrade one when it's already selling --
O'Reilly: There's no incentive, yeah.
Levine-Weinberg: They've sold thousands of these, looking out five and even 10 years. So there's just no reason right now.
O'Reilly: That's so funny, because the joke is obviously, oh, you Americans and your big cars, and Europe makes the slightly bigger plane.
Levine-Weinberg: Yeah. You've seen the same thing on the widebody side. These are the planes with two aisles that you typically see on the longer haul international routes. The Airbus A330 and A350 were designed with 18-inch seats. If you talk to Airbus, they'll talk to you about how they love passenger comfort and they have decided that 18 inches is the correct width, and the seat can't be any less than that or you're going to be uncomfortable, especially when you're trying to sleep, or just stuck in your seat for a 12-hour flight. The funny thing is that Boeing didn't intend to have narrower seats on its widebody planes, which are the 777 and the 787, which is also popularly known as the Dreamliner. Those were actually designed with wider seats. The planes are actually so wide that airlines realized they could fit an extra seat in each row --
O'Reilly: Oh, here we go.
Levine-Weinberg: -- so that's what they did. So, originally, these were meant to have 18-and-a-half-inch or 19-inch seats, even wider than the Airbus ones, and now virtually every airline, especially the ones that are taking the airplanes now as opposed to the ones that got them 15 or 20 years ago, in the case of the 777, they're all configuring them with an extra seat in each row. So, now, they have 17 inches of seat width, which is OK for a while, but a lot of passengers find that uncomfortable if you're traveling for a really long time.
Other aspects of travel, the newest planes from both Boeing and Airbus, so this is the 787 from Boeing and the Airbus A350, they have some really innovative changes because of the new materials they're working with, they can keep the cabin a lot more humid than it used to be possible to do. They've also increased the air pressure so it's closer to the ground level pressure. Usually, it's pressurized now at about 6,000 feet instead of 8,000 feet. They've said that it greatly increases passenger comfort, and can also help a lot with reducing jet lag. So, those are two big improvements that both manufacturers have made. But just based on the seat width alone, Airbus has a bit of an edge over Boeing in terms of passenger comfort.
O'Reilly: Got it. So I just took over an airline. I'm an executive at an airline. I was completely sold by Buffett's extremely modest investment in the sector. And I am coming to you and I am talking to Boeing and Airbus, and I'm like, "So, guys, biggest cost is fuel, it's oil, it's gasoline. Oil prices are cheap right now, gasoline, too, it's actually been a huge boon for the industry, but that might not last forever. Which of you guys is more fuel efficient?"
Levine-Weinberg: Yeah, this is another big point where the two manufacturers disagree with each other and put out all kinds of statistics that are usually doctored in one way or another to show why their planes are so much more fuel efficient. The best people to talk to on this are actually the airlines, because they don't have a dog in the fight. Generally, when you talk to either the airlines or the aircraft leasing companies, historically, Boeing has had a small advantage in terms of fuel efficiency. It's not a lot --
O'Reilly: What do you mean by small?
Levine-Weinberg: We're talking about maybe 2% or 3%, for a comparable generation of planes. So, obviously, a 20-year-old Airbus plane is going to be way behind a Boeing plane that just rolled off the assembly line today. But for what they're building at the same time, they've been pretty similar. On the narrowbody side, so, this is the 737 and the A320, historically, Boeing has had an advantage, and that may have disappeared just now. One of the problems with Boeing having this really old design that it keeps reusing for the 737 is that it can't use the same type of engines as Airbus has been able to use because the plane is very short. It's not very high off the ground. So without making really big changes to the landing gear to prop up the plane higher, they can't use bigger engines. And those bigger engines tend to have better fuel efficiency.
O'Reilly: Yeah, just because of more surface area on the blades and stuff.
Levine-Weinberg: It's very complicated science. The bigger engine creates more drag, which reduces the fuel efficiency, but the engine itself tends to be more efficient, and that usually more than balances it out. Boeing has found some workarounds. It got pretty close. But Boeing has typically talked about its next-generation plane, the 737 MAX, which is going to be available to the first airlines this year, as being about 13% better than the previous generation, whereas the new A320neo, which is the version of the A320 with upgraded engines, that's about a 15%-16% advantage in terms of fuel consumption. So that alone probably closed the 2%-3% advantage that Boeing had previously held over Airbus. So now, they're pretty much neck-and-neck on that.
On the widebody side, the Boeing planes are also probably a little bit better, but it's pretty close, especially with the new A350, which is a new Airbus plane that came out a couple years ago. Then there's an upgraded engine version of the A330 that will be available early next year. With those coming from Airbus, it's pretty much neck-and-neck. And that's really not that surprising, because these two companies are using the same engine suppliers. And the engine, obviously, is the most important part of the plane in terms of determining how much fuel it uses.