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Aircraft Orders Up Big in 2017

By Motley Fool Staff - Feb 12, 2018 at 10:45PM

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Deliveries were up big for Airbus and Boeing last year, and both companies grew out their backlog with increased orders.

Aircraft companies Boeing (BA 5.64%) and Airbus put in a stellar 2017 in terms of deliveries, and their order numbers for the year were nothing to sneeze at, either. In this clip from the Industry Focus: Energy podcast, host Sarah Priestley and Motley Fool contributor Adam Levine-Weinberg discuss how Airbus and Boeing did with their orders in 2017. Find out which models netted the most orders for each company, how Boeing and Airbus did compared to each other, why investors tend to focus on delivery numbers more than orders for aircraft makers; and more.

A full transcript follows the video.

This video was recorded on Feb. 8, 2018.

Sarah Priestley: We talked a lot about delivery figures here, because investors are tending to focus much more closely on these delivery figures and cash flow, almost more than order figures, in the current climate where they both have these huge backlogs. But, how were orders in 2017?

Adam Levine-Weinberg: Coming into 2017, both Boeing and Airbus had very muted expectations. They told investors that they should expect to see lower orders than the previous year, probably not as many orders as deliveries. But, in fact, it was a very good year for orders. A lot of that demand materialized toward the very end of the year. So, Airbus recorded 1,109 net orders in 2017, which was its best result since 2014. Of that, the vast, vast majority were for that A320 single-aisle family. That was 1,054, compared to only 55 orders across all of its different wide-body models. Meanwhile, Boeing brought in 912 net orders, which was also its best result since 2014. And again, the 737 family was the big driver of those orders with 745 orders. But, Boeing did do significantly better than Airbus in terms of bringing in orders for its larger wide-body planes. It had 167 net orders spread across those four models, but more than half of those were for the 787 Dreamliner, which really has been the biggest growth driver for Boeing on that wide-body side.

Looking at a high level, this was the fifth consecutive year that Airbus outpaced Boeing in terms of net orders. During this whole time, Boeing has been producing more airplanes than Airbus. The result is that Airbus has been building up a backlog much faster than Boeing because of the combination of higher orders and lower production. So, Airbus ended 2017 with 7,265 aircraft in its backlog, compared to 5,864 for Boeing. Combined, this is eight or nine years of production at current rates. Even with some of the production increases that are planned, it's going to take five or six years at least to build most of these planes.

Priestley: To finish the year, then, Boeing wins in terms of delivery, Airbus wins in terms of orders. But, that delivery advantage probably shouldn't be overlooked. This year, we had Qatar Airways cancel orders for four Airbus planes that were months overdue at this point. That on-time delivery that Boeing has demonstrated, albeit very marginally, actually attracted those buyers to them with four orders for new 737 models. So, it just shows you that everything's to play for in this industry, and any advantage that they can offer in terms of reliability will win.

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