Last week, the global aviation community gathered in Dubai for the first major air show in two years. The previous years, Boeing (NYSE: BA), Airbus (OTC: EADSY), and their customers – especially airlines based in the Middle East and neighboring regions – have used the Dubai Airshow to announce massive aircraft orders.
Orders activity was somewhat more subdued at this year’s Dubai Airshow, due to the persistence of the COVID-19 pandemic. Airbus has won most of the deals that have come to fruition, helping it reduce Boeing’s lead on orders since the start of the year.
Two big victories for Airbus
At the 2017 Dubai Airshow, Airbus announced that it had signed a memorandum of understanding for its largest order ever: an agreement with investment company Indigo Partners for 430 A320neo family aircraft. The planes were to be split between four Ultra Low Cost Carriers (ULCCs) from Indigo’s portfolio, including Frontier airlines in the United States and Volaris in Mexico.
On day one of this year’s Dubai Airshow, Indigo Partners returned for more, signing a firm order for 255 A321neo and A321XLR. ULCCs are rapidly gaining market share globally, tapping into an insatiable thirst for cheap air travel, and the airlines in Indigo’s portfolio want to take advantage of that. Hungarian companies Wizz Air and Frontier Airlines will take the bulk of the planes in this order (102 and 91, respectively).
Airbus announced only one other firm order this week: a relatively modest contract with Nigerian Ibom Air for 10 A220s. However, he also signed a letter of intent with Air lease covering 111 aircraft: 25 A220-300, 55 A321neo, 20 A321XLR, four A330neo and seven A350F. It should be noted that this is the first public engagement for the new A350 freighter. Finally, Airbus and the Kuwaiti company Jazeera Airways signed a memorandum of understanding for 28 aircraft of the A320neo family.
Not much activity for Boeing
Over the past week, Boeing announced several deals for its service unit to convert passenger jets into freighters. But when it comes to the announcement of new aircraft orders, the performance of the US aerospace giant at the Dubai Airshow pales in comparison to that of Airbus.
Boeing landed a large order last week: a contract for 72 737 MAX jets from Indian company Akasa Air. Apart from that, it only announced two small orders: a pair of 777 freighters for Emirates and four planes (two 737 MAX jets, a 787-8 Dreamliner and a 767-300 freighter) for Air Tanzania.
Moreover, Akasa Air has not even launched a service yet. While the start-up is backed by billionaire Rakesh Jhunjhunwala and led by experienced CEO Vinay Dube, there is no guarantee that it will be successful. The Indian airline industry has been marked by intense competition and a high failure rate. Low-cost airline IndiGo (not to be confused with the investment firm that placed the big Airbus order last week) is a formidable competitor and now holds nearly 60% of the domestic market. If Akasa Air can’t make the money, its orders could go out the window (as it did for Dube’s former company, Jet Airways, which closed in 2019).
Closing the order deficit for 2021
In the first 10 months of 2021, Boeing recorded 373 net orders for commercial aircraft, including changes in its estimate of orders that could be canceled. This easily eclipsed Airbus’ 125 net orders over the same period.
However, Airbus significantly reduced this deficit last week. In total, it has accumulated more than 400 engagements at the Dubai Airshow, including 265 firm orders for commercial aircraft, plus two orders for a military version of the A330. Boeing received only 78 firm orders.
Adding Boeing’s Dubai Airshow deals to its previous net order total, it would have 451 net orders so far this year. At the same time, Airbus is approaching 400 net orders for the year. And if Airbus could convert Air Lease and Jazeera Airways commitments to firm orders by the end of the year, it would overtake Boeing with more than 500 net orders.
Above all, Airbus started the year with a huge backlog advantage over Boeing. The results from the Dubai Airshow simply reinforce the global aviation industry’s preference for the Airbus A220 and A320neo families over the competing Boeing 737 MAX. This bodes well for Airbus, which is fully recovering from the COVID-19 pandemic, while leaving Boeing in an uncertain position.
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