In recent years, Airbus (EADSY -1.21%) has turned its edge over Boeing in the commercial jet market into a massive lead. The A220 small jet family acquired from Bombardier is gaining traction, and the A320neo family is capitalizing on the 737 MAX's poor reputation and technical shortcomings to gain market share.
On Monday, the European plane maker reported strong order and delivery activity for the month of December. That bodes well for Airbus' fourth-quarter results, which the company will report next month. Airbus is in great position to build on its 2021 successes in 2022, as well.
Beating the full-year delivery target
In 2020, Airbus delivered 566 commercial aircraft -- down 34% year over year -- as the COVID-19 pandemic caused many airlines to slash their near-term capital spending. Last February, the plane maker projected that it would deliver a similar number of jets in 2021.
In July, Airbus raised its full-year delivery forecast to 600 aircraft, reflecting a rebound in air travel demand in many key markets. That said, it only delivered 518 aircraft in the first 11 months of 2021, leaving it well short of its updated target with one month to go.
Investors had no reason to worry, though. Following its typical pattern, Airbus dramatically accelerated its delivery activity at the end of the year. The company handed over 93 commercial jets in December, including 30 in the last five days of the month. That brought its full-year delivery total to 611: up 8% from 2020. The end-of-year delivery surge likely enabled Airbus to generate strong cash flow last quarter.
As usual, the A320 family accounted for the vast majority of Airbus' output, with 483 deliveries in 2021. A220 deliveries reached a new record of 50. As for wide-bodies, Airbus delivered 18 A330s, 55 A350s, and the last five A380 jumbo jets.
Strong order activity, too
Airbus also posted impressive order numbers last month. The aircraft manufacturer logged 161 gross commercial jet orders in December and 139 orders net of cancellations. This gave it a respectable 507 net orders for the full year, leaving it with a remarkable backlog of 7,082 orders: enough to cover the bulk of Airbus' projected output through 2030.
Most of Airbus' December orders came from finalizing a letter of intent signed with aircraft leasing giant Air Lease in November. Air Lease ultimately placed a firm order for 116 jets: five more than originally planned. A deal with Aviation Capital Group for 40 A320neo-family aircraft announced late last month accounted for most of Airbus' remaining orders for December.
The recovery should continue in 2022
Airbus already has numerous orders in the pipeline for this year. For example, on Monday, it announced that new aircraft leasing company Azorra had agreed to buy 20 A220s. Aviation Capital Group signed a memorandum of understanding for 20 A220s in December. Moreover, Air France-KLM and Qantas each selected Airbus for major fleet renewal initiatives last month. Together, they plan to place firm orders for 140 jets, with another 154 options and purchase rights.
Today, the A320-family backlog stands at more than 5,800 aircraft. To meet that demand, Airbus plans to ramp up production to a rate of 64 per month -- or more than 700 per year -- by the second quarter of 2023. That alone implies a big step-up in output this year. Airbus also intends to boost A220 production to a record rate of six per month in early 2022.
In short, Airbus can confidently raise production in 2022 and beyond based on its existing order backlog. The company isn't resting on its laurels, either: order activity is starting to accelerate following a lull during the pandemic. That could eventually support even bigger production increases in the future. As a result, Airbus stock could continue flying higher over the next few years.