The clock is ticking down to the final days of 2014. And in these waning hours, Europe's Airbus (NASDAQOTH:EADSY) is making a last-ditch attempt to steal Boeing's (NYSE:BA) crown as "best-selling plane maker in the world" -- and steal away the glory from Boeing's coterie of aerospace and defense investors as well.
But can Airbus do it?
Over the weekend, Airbus updated investors on a successful November that saw it book 248 new plane orders. Chief among customers for the month was U.S. airline Delta (NYSE:DAL), which placed a firm order for 25 A350-900 wide-body aircraft and a further 25 A330-900s -- which, when delivered, will nearly double the airline's fleet of A330s.
Counting these, Airbus has now collected orders this year for:
- 1,173 single-aisle A319s, A320s, and A321s (an increase of 179 from last month);
- 86 of the larger A330-class aircraft (40 more);
- 49 wide-body A350s (up nearly 150%); and
- 20 more megajumbo A380s (unchanged).
Add 'em all up, and gross orders for 2014 now total 1,328 jetliners. Subtract cancellations recorded so far -- 297 planes -- and you're left with Airbus' total net new orders for planes this year: 1,031. Says Airbus, these new orders "brought its backlog to more than 6,000 aircraft for the first time ever" -- and there's still three weeks left in the year.
How does this compare to Boeing?
Boeing goes boom (like the dynamite)
Not bad, but not quite good enough -- at least, not if Airbus wants to catch up to its rival by year-end. Boeing released its latest report on airplane orders last week. Here's how they stand for the year:
- 1,062 single-aisle 737 aircraft (lagging Airbus's single-aisle tally, but up by 105 planes since Thanksgiving);
- 263 units of its 777 wide body (unchanged);
- 49 new 787 Dreamliners (up one);
- four 767s (unchanged); and
- a single pair of 747 jumbo jets (likewise).
Altogether, Boeing grosses 1,380 plane orders for the year, just barely edging out Airbus.
You've got to know how to hold [on to] 'em...
Crucially, Boeing does a better job of holding on to those orders than its rival does. To date in 2014, Boeing has suffered only 106 cancellations of orders already placed. Result: its net orders for the year now stand at 1,274 jets -- 243 more more than Airbus can claim.
Boeing also holds an even bigger lead over Airbus in the race to sell bigger, bigger-ticket airplanes. To date, Boeing's orders for wide-body jets total 318 planes. In 2014, Boeing has taken in more than twice as many orders as Airbus for these more profitable jets.
Consider this: Airbus' A350 lists for upward of $250 million apiece, while Boeing charges $300 million and up for its similarly sized 777. Each A350 sold is worth two Airbus A320-series aircraft. But each Boeing 777 is worth three Boeing 737 MAX 8s. Boeing sells more big planes and almost certainly makes more profit from each wide-body sold.
The moral of this story
According to S&P Capital IQ, Airbus last year earned a 4.4% operating profit margin on $81.6 billion in revenue. Boeing, in contrast, earned a 7.4% operating margin on $86.6 billion.
So if you were wondering why Airbus and Boeing, rivals of similar size in sales and booking similar numbers of "gross" plane orders, are so vastly different in terms of profitability -- now you know.