Over the past several years, Boeing (BA 1.96%) has fallen far behind Airbus (EADSY 1.79%) in virtually every respect. The U.S. aerospace giant is building far fewer commercial jets than its top rival. As a result, it continues to lose money and burn cash, even as Airbus has returned to profitability.
Making matters worse, Airbus is extending its already-sizable lead on aircraft orders. That will keep Boeing at a disadvantage for the foreseeable future.
Airbus finalizes a big order in June
Through the first five months of 2022, Airbus recorded 364 gross aircraft orders and 191 net orders. As usual, the ultra-popular A320neo aircraft family accounted for the bulk of its orders. Meanwhile, the backlog for Airbus' A330neo wide-body family took a big hit as former top customer AirAsia X canceled 63 of its 78 orders as part of its bankruptcy restructuring.
OTC: EADSY
Key Data Points
Over the same period, Boeing booked 236 gross orders and 107 net orders. The troubled 737 MAX family drove the bulk of its orders, but Boeing also got a substantial contribution from its current and next-generation 777 freighter models.
Airbus likely widened its lead last month. The company reported 78 new firm orders, offset by 10 cancellations. Most significantly, Qantas firmed up previously announced plans to acquire 40 narrow-body jets to upgrade its domestic fleet and 12 A350-1000s to launch nonstop service from Sydney (and perhaps Melbourne and Brisbane) to far-away cities like London and New York.
Solid order activity in June gave Airbus 259 net orders year to date. That's keeping its order backlog at more than 7,000 aircraft, compared to 4,192 for Boeing.
Can Boeing catch up?
In May, Boeing announced an order for 50 737 MAX jets from International Airlines Group (IAG), which owns several major European carriers including British Airways. That deal will be added to Boeing's backlog after receiving IAG shareholder approval.
NYSE: BA
Key Data Points
Many analysts are optimistic that Boeing will reveal a slew of additional orders at this month's Farnborough Airshow. That could include an order for 100 737 MAX 10s from Delta Air Lines.
However, Airbus is surely lining up orders to announce at Farnborough, too. Additionally, Boeing CEO Dave Calhoun recently warned that the company may scrap the 737 MAX 10 if Congress doesn't push back a year-end deadline to certify the model in its current design. While Calhoun may be posturing to put pressure on U.S. lawmakers, the resulting uncertainty could also make customers wary of ordering the 737 MAX 10.
Finally, Airbus has already stolen another march on Boeing. On July 1, it announced deals to sell 292 jets to several Chinese airlines. As it firms up those orders, Airbus' lead will grow further.
What it means in the long run
Due to supply chain snafus and a continuing overhang of undelivered jets built in 2019, Boeing hasn't been able to maintain 737 production at its 2022 target rate of 31 per month.
Image source: Boeing.
By contrast, Airbus is on track to increase A320-family production to a record pace of 65 per month by next summer. It is also setting plans to ramp up output to 75 per month by 2025 while boosting production of the smaller A220 model from six per month today to 14 per month within a few years.
In short, Airbus is running circles around Boeing in the narrow-body jet market. That's where the vast majority of demand lies today, due to narrow-bodies' superior cost profile and improving range.
Higher order activity and the resumption of 787 Dreamliner deliveries could soon help Boeing stock start to recover from a 40% plunge over the past year. However, investors looking to bet on the aerospace industry should probably choose Airbus instead. Despite having a clear product advantage and a dramatically larger commercial jet backlog than Boeing, Airbus has a lower market cap than its U.S. competitor. That makes it a much more attractive investment opportunity.
