Airbus and Boeing have record years despite weak stock

Business, Winter 2015

Airbus and Boeing have record years despite weak stock

January 21, 2015

By Ezra Kaplan

After a year of consistently declining stock value, Airbus announced a new company record for planes delivered in 2014. Boeing also broke a company record after delivering nearly 100 more planes than Airbus during the year.

Over the past decade the demand for narrow body aircraft has dominated wide body aircraft. This reflects a trend in the aviation industry toward more regional flights using smaller planes. Airbus dominated the decade in total planes delivered until 2012 when Boeing claimed the lead and has held it in the three years since. — The demand for narrow body aircraft has dominated wide body aircraft reflecting a trend in the aviation industry toward more regional flights using smaller planes. Airbus dominated in total planes delivered until 2012 when Boeing claimed the lead and has held it in the three years since. (Airbus Group NV, Boeing CO., Ezra Kaplan/Medill)

“Last year was a real paradox,” said Joseph Schwieterman, director of the Chaddick Institute for Metropolitan Development & Professor of Transportation at DePaul University. “Strong airplane sales with bad profits, and they’re taking it on the chin in the stock markets.”

Both Airbus Group NV, registered in the Netherlands and headquartered in France, and Seattle based Boeing Co. announced their record-breaking years early in January. Boeing reported 723 planes delivered while Airbus produced 629.

As Boeing continues to dominate the aviation industry, investors have taken notice. After two years of steadily climbing stock, Airbus saw its stock value plummet by 30 percent over the past year.

While Airbus claims to be the “world’s leading aircraft manufacturer of passenger airliners, ranging in capacity from 100 to more than 500 seats,” it has struggled to break into the smaller regional jet market.

Simultaneously, the large size aircraft that Airbus is well known for just hasn’t been as economically successful as the company had hopped.

The interior of Airbus’ A350X wide body airplane. Wide body planes have two aisles and are used for long haul flights. Both Airbus and Boeing have produced double-decker models in recent years. The Airbus A380 is the world’s largest passenger plane holding up to 525 passengers. (Airbus Group NV)

“They are getting squeezed on both ends,” Schwieterman said. “The big planes aren’t making as much money as they had hoped and the smaller planes aren’t selling the way they would like, and that’s where the cash is.”

Schwieterman added that Airbus hasn’t been particularly successful in the military business– an area where its top competitor has thrived.

This is the third year in a row that Boeing won out over Airbus while simultaneously setting yearly industry records.

The interior of Boeing’s 373-900ER. Narrow body planes have only one aisle and fit no more than six people in a row. These planes have been preferred in recent years both because of their fuel economy and the industry’s preference for regional flights. Narrow body planes have always dominated the aviation industry. (Boeing Co.)

“What the Boeing team achieved in 2014 is truly unprecedented, especially in the face of fierce competition,” said Boeing Commercial Airplanes President and CEO Ray Conner.

Conner saw his company’s stock rise over 2013 and over the past year has been relatively devoid of volatility.

Both companies have a common enemy potentially resting on the horizon. Lower fuel prices will take away some of the motivation to modernize aging, fuel-guzzling fleets. This could mean a drop in sales for both aviation giants.

Photo at top: A new Airbus A380 rolling out. (Airbus Group NV)