After averaging 1,162 net firm orders annually between 2011 and 2017, order activity slowed at Airbus (NASDAQOTH:EADSY) 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 (NYSE:BA) 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.
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.