Boeing (NYSE:BA) has hit the halfway mark in the final month of the year -- and its chances of beating Airbus (OTC:EADSY) in the race to sell the most planes in 2015 seem exceedingly slim. On Thursday, Boeing released its third plane-orders update of the month, covering orders received through Dec. 15, 2015. According to the airplane maker, 10 new orders were received during the past week -- and eight orders lost.
Specifically, Boeing received new orders for two 737s (of unidentified subclass) from "Business Jet/VIP Customer(s)." The plane maker also received eight new orders for 737s from "ALC" -- Air Lease Corporation (NYSE:AL) -- and probably not coincidentally, it suffered cancellations of eight 737s from customers not named.
Digging into the details
Boeing's order update webpage doesn't have the ability to tell us this in detail, but we know from past conversations with Boeing that whenever "an equal number of orders and cancellations" of 737 airliners shows up in one of these order updates, "it is almost always an NG to MAX conversion." The fact that ALC ordered eight 737s, therefore, while someone cancelled eight 737s, implies it was ALC that was that "someone."
This likelihood grows stronger when we examine Air Lease Corp's own fleet composition (gleaned from the German-language Wikipedia page on the company, which, in turn, mined historical plane orders data published by Boeing). According to this data, at last report, ALC was in line to buy 104 single-aisle 737 MAX 8 aircraft from Boeing -- and 47 737-800 NGs, as well.
What's my best guess? I'd say that the chances are better than 50-50 that the orders Boeing lost were for 737-800 airliners (list price: $96 million) destined for ALC, while the ALC orders that were gained were for 737 MAX 8 aircraft, listed at $110 million apiece.
Translation: Boeing really only sold two more planes during the past week. But the value of the planes it sold, plus the planes it subbed, was likely ($110 million x two business customers buying 737 MAXes) + ($14 million price differential between cancelled 737-800s and substituted 737 MAX 8s) = $332 million.
For a business like Boeing Commercial Airplanes, which, according to S&P Capital IQ, did $60 billion in sales last year (about $1.15 billion per week), that means the past week was a bit subpar -- but at least it was positive.
It also confirms a continuing trend that we've seen across multiple airlines and aircraft leasing corporations during the past couple of years. To wit, buyers who ordered Boeing's 737 NG aircraft are continuing to drop those orders and replace them with 737 MAX aircraft, of equal size but greater fuel efficiency. And each time that happens, Boeing collects a $14 million price premium on the substitution. Nice.
Nice -- but what about the horse race?
Ah, yes. As far as the competition goes between Boeing and Airbus to sell the most planes this year, it's still advantage Airbus. And by a nautical mile. Here's how Boeing's order book looks as of mid-December:
- 467 gross orders for single-aisle 737s
- 97 Dreamliner 787s
- 58 widebody 777s
- 49 Boeing 767s
- six 747s
That works out to 677 gross orders for Boeing planes. Minus an even 100 cancellations, net orders for Boeing for the year to date now total 577 planes. Meanwhile, Airbus' tally stands at 1,007 aircraft. It will stay stuck at that level until Airbus issues its year-end update in early January, because Airbus only updates orders monthly.
For Boeing to beat Airbus at this point, the Seattle plane maker would need to sell 430 new airplanes in the next 14 days. In that regard, simultaneous with the release of Thursday's orders report, Boeing made happy noises about a pending sale of 80 new 737s to China Southern Airlines (NYSE:ZNH), and reported that U.K. leisure airline Jet2.com has finalized an order for three more 737s. China Southern Airlines, by the way, operates a mixed fleet of Boeing, Airbus, and a handful of Embraer aircraft. China Southern has been tilting more heavily in favor of orders from Boeing, however, and this new order will accelerate that switch.
If Boeing keeps up this pace, and gets these orders onto the books quickly enough, I suppose it's still possible that a Christmas miracle could permit Boeing to beat Airbus in 2015.
But I still wouldn't bet on it.