For the first time in several years, Boeing (BA +0.47%) recorded more net orders for commercial jets than Airbus (EADSY 3.89%) in 2021. The U.S. aerospace giant booked 535 orders, net of cancellations and changes in its estimates of whether existing orders may fall through. For comparison, its European rival booked 507 net orders last year.
However, this achievement was a bit of a hollow victory for Boeing. The company remains far behind Airbus in terms of total backlog. If anything, that gap could widen further in 2022.
Boeing wins on orders
Boeing held a big order-activity lead over Airbus for most of 2021. However, Airbus booked three times as many net orders in November and December as it had recorded in the first 10 months of the year combined, thanks to a strong performance at the Dubai Airshow.
As a result, Boeing needed a strong December of its own to best Airbus' full-year net order total of 507 commercial jets. It booked several orders near the end of the year, including a firm order for 50 737 MAX jets from Allegiant Travel that allowed it to fend off Airbus for the full-year crown.
Image source: Boeing.
The backlog rises for bad reasons
Boeing's 535 net orders in 2021 exceeded the 340 jets its commercial-airplanes segment delivered. As a result, the company's backlog of commercial-jet orders grew by 195 units, to 4,250 aircraft.
This accomplishment wasn't very impressive, though. Indeed, a slew of quality problems that hindered jet deliveries drove this backlog increase. Entering 2021, Boeing had undelivered inventory of approximately 425 737 MAX and 80 787 Dreamliner jets. At the time, it expected to deliver half of its 737 MAX inventory and the majority of its 787 inventory by year-end.
Instead, as of the end of September, Boeing had only reduced its 737 MAX inventory by about 45 units, while its Dreamliner inventory had actually increased by 25 units to 105 aircraft. Based on its fourth-quarter production and deliveries, the company likely exited 2021 with combined 737 MAX and 787 inventory down by just 40 to 50 units, compared to the beginning of the year. This implies that it missed its delivery goal for the year by over 200 units.
Airbus maintains a huge advantage
On the other side of the Atlantic, Airbus' backlog shrank slightly in 2021, as it delivered 611 jets, exceeding its order intake by 104 units. Nevertheless, Airbus' backlog stands at over 7,000 aircraft, giving it a massive lead over Boeing.
While Airbus' backlog advantage over Boeing shrank somewhat in 2021, it remains much bigger than it was before the 737 MAX grounding and COVID-19 pandemic. At the end of 2018, Boeing's commercial-jet backlog stood at 5,873 orders, compared to 7,577 for Airbus.
Expect more of the same in 2022
Looking ahead to 2022, Boeing will face an uphill climb to continue rebuilding its backlog. First, the company's pace of jet deliveries is likely to accelerate significantly, barring any further quality setbacks. As a result, Boeing could need 600 or more net orders to keep its backlog steady.
Image source: Boeing.
Second, Boeing's 2021 order activity was driven disproportionately by its two biggest customers: United Airlines and Southwest Airlines. The two U.S. airline giants together ordered over 400 737 MAX jets last year. While Boeing could benefit from some incremental option exercises by Southwest this year, it will need to look beyond its traditional customer base for the bulk of its 2022 orders.
Third, two longtime Boeing 737 customers -- Air France-KLM and Qantas -- recently selected Airbus for fleet-renewal campaigns. While Boeing has the inside track for an order from British Airways parent IAG, it probably needs a thawing of U.S.-China relations and an accompanying order surge from China to grow its backlog again in 2022.
Even if Boeing does beat the odds by expanding its backlog in 2022, it could still fall further behind Airbus, which enters the year with a big pipeline of upcoming orders (including the Air France-KLM and Qantas deals). Thus, while Boeing's order victory in 2021 represents a bright spot in an otherwise disappointing year, it doesn't appear to mark a long-term turning point for the struggling aircraft manufacturer.
