Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Airbus' Order Book Shrank Again in February

By Adam Levine-Weinberg - Updated Apr 13, 2019 at 1:54PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Airbus has booked far more order cancellations than new orders since 2019 began.

After averaging 1,162 net firm orders annually between 2011 and 2017, order activity slowed at Airbus ( EADSY 3.62% ) in 2018. The European aerospace giant booked 747 net firm orders last year, falling short of its output for the first time since 2009 -- and trailing chief rival Boeing ( BA 3.72% ) for the first time since 2012.

Furthermore, 2019 started on a weak note for Airbus, as the company booked eight cancellations and not a single new order in January. While Airbus finalized one small order in February, additional cancellations put it even further into the red on a year-to-date basis.

Another dismal month for Airbus

In late February, Airbus announced that Air Vanuatu had chosen A220-series jets to expand its fleet. The flag carrier for the small Pacific island nation placed a firm order for four aircraft. This was the only order finalized by Airbus during February.

Meanwhile, Airbus continued to suffer a raft of order cancellations, mainly related to its decision to wind down production of the A380 jumbo jet in 2021. The aircraft manufacturer removed a total of 23 A380 orders from Air Accord and aircraft leasing company Amedeo from its backlog last month. Both deals had been dead in the water for years, but Airbus had not acknowledged the inevitable until now.

An Airbus A380 in the Emirates livery

Airbus has canceled most of the A380 orders in its backlog. Image source: Emirates.

Airbus also lost 42 orders for its A350-family jets in February, as struggling Middle Eastern carrier Etihad Airways slashed its order book for the next-generation jet from 62 aircraft to just 20. Finally, 25 A320neo orders were canceled last month. At least some of these also appear to be related to the upheaval at Etihad, which no longer plans to place 10 A320neos at Air Serbia, one of several European airlines it has invested in.

The net result is that by the end of February, Airbus had orders for just four aircraft year to date, offset by 103 cancellations. For comparison, Boeing booked 51 firm orders in the first two months of 2019, offset by just three cancellations.

Check out the latest earnings call transcript for Boeing.

More cancellations coming -- but some orders, too

During February, Airbus and Emirates agreed to cancel 39 of the airline giant's 53 remaining A380 orders, in line with Airbus' plan for winding down production of that model. However, this change was not reflected in Airbus' February order book.

On the bright side, in conjunction with canceling most of its A380 orders, Emirates agreed to buy 30 A350-900s and 40 A330-900neos. Those orders didn't show up in Airbus' backlog last month, either. The A380 cancellation and the new orders for smaller widebodies will almost certainly be booked at the same time -- perhaps in March -- and will be a net positive for Airbus' backlog.

Additionally, earlier this week, Lufthansa placed an order for 20 A350-900s (along with 20 Boeing 787-9s), which will also help Airbus turn things around.

Airbus is still behind

Losing A380 orders doesn't hurt Airbus much, because the jumbo jet wasn't profitable to build in the first place. However, even excluding the A380 -- and including the pending Emirates and Lufthansa widebody orders -- Airbus has eight net orders for the A350 family and 40 A330neo orders year to date, offset by 26 net cancellations for its narrowbody aircraft families, the A220 and A320neo.

By contrast, after beginning 2019 with 48 net firm orders in the first two months of the year, Boeing has another 38 firm orders in the pipeline: Lufthansa's order for 20 787-9s and a deal to sell at least 18 777-9s to British Airways.

Capitalizing on the recent worldwide grounding of the 737 MAX following a second fatal crash for the aircraft type could be critical to Airbus' success in 2019. While it wouldn't be feasible for airlines to cancel their 737 MAX orders en masse, Airbus' A320neo family may be able to modestly improve on its industry-leading market share.

In other words, Airbus could see an uptick in order activity at some point later this year. But for now, Boeing has a comfortable lead in the race to accumulate the most orders in 2019.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Airbus Stock Quote
Airbus
EADSY
$28.94 (3.62%) $1.01
The Boeing Company Stock Quote
The Boeing Company
BA
$205.88 (3.72%) $7.39

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
624%
 
S&P 500 Returns
140%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/07/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.