Through the first nine months of 2019, aircraft order activity was sluggish at both Boeing (BA -0.04%) and Airbus (EADSY 0.35%). For Boeing, the 737 MAX safety crisis was the obvious culprit. No airlines were eager to commit to the 737 MAX while the type was grounded and its fundamental safety was in question.

Airbus didn't have an obvious excuse. Nevertheless, as of the end of September, the European aerospace giant had booked just 127 net firm orders in 2019. Airbus turned things around in a hurry in October, though. Just in the past two weeks it has announced firm orders and commitments for more than 400 A320neo-family jets from three budget airlines. This has put Airbus back on pace to report a respectable full-year net order total.

Ultra-low cost carriers line up for more Airbus jets

Airbus' recent order surge began on Oct. 23, when Spirit Airlines (SAVE 0.78%) announced that it had signed a memorandum of understanding to buy 100 new Airbus jets between 2022 and 2027, with an additional 50 options. The order will be split between the A319neo, A320neo, and A321neo models, with the exact breakdown to be finalized at a later date. This will allow Spirit to maintain its high growth rate in the years ahead, while also starting to replace some of its older aircraft. The deal is likely to be finalized and added to Airbus' backlog by year-end.

A rendering of a Spirit Airlines A320neo jet

As expected, Spirit Airlines picked the Airbus A320neo family for its next big aircraft order. Image source: Airbus.

Less than a week later, Airbus announced an even bigger order. Budget carrier IndiGo -- the largest airline in India -- placed a firm order for 300 A320neo-family jets. The order will be split between the A320neo, A321neo, and A321XLR models. This represents one of the largest orders in Airbus' history, and it boosts IndiGo's firm order backlog to a record 633 A320neo-family jets.

Finally, on Oct. 31, Airbus announced a firm order for 15 A321XLRs from VietJet. This brought the aircraft manufacturer's order total for the last nine days of October to 415 jets, including the Spirit Airlines deal, which still needs to be firmed up.

The IndiGo order is a bit suspect

Even before its latest order, IndiGo was the largest customer for Airbus' A320neo family. It has grown rapidly in recent years, capitalizing on rising air travel demand in India and the collapse of some rivals, most notably Jet Airways.

That said, IndiGo already had more than 300 firm orders with Airbus prior to its latest deal: enough to roughly double the airline's size while also retiring all of its prior-generation Airbus jets. Ordering an additional 300 jets seems highly speculative. Even if IndiGo retires some of its oldest A320neos in the late 2020s -- when they would be just 10 to 12 years old -- this aircraft order would still cause the carrier's fleet size to triple over the next decade.

Air travel demand may continue to grow quickly in India, but IndiGo already holds nearly 50% market share, so it can't count on further share gains to drive growth. Thus, it wouldn't be surprising if IndiGo never takes delivery of all 633 A320neo-family jets it currently has on order.

Production problems are a more pressing concern

An even bigger reason for investors to curb their enthusiasm about these deals is that Airbus has run into huge problems while trying to increase production over the past few years. These recent orders will push Airbus' backlog of A320neo-family orders past the 6,000 mark. Yet in a best-case scenario, A320neo-family output will rise to around 700 jets annually by 2021, putting the backlog at nine years of production.

Investors can't count on this best-case scenario coming to fruition. Just last week, in conjunction with its Q3 earnings report, Airbus slashed its full-year guidance for aircraft deliveries, due to production problems for the new "cabin-flex" version of the A321neo. The company now expects to deliver about 860 commercial jets this year, down from its previous guidance of 880 to 890 deliveries.

Moreover, Airbus' production woes are hurting its earnings and cash flow. In fact, Airbus burned nearly three times as much cash as Boeing in the first nine months of 2019, even though the latter has been unable to deliver its most popular jet model since mid-March. (To be fair, Airbus does expect full-year free cash flow to be positive, unlike Boeing.) Until Airbus can figure out how to build its aircraft more reliably and without going over budget, its order-gathering prowess won't do investors much good.