In February, Airbus delivered 49 aircraft to its clients, while Boeing only managed to deliver 27. Since the beginning of the year, Airbus’ stock prices have risen by nearly 20%, while Boeing’s shares have decreased in value by more than 30%. So what has caused the performance gap between these two companies, especially when the increasing demand for air travel and airplanes persists?
After the pandemic, travelers have returned to the skies. As a result, countries with a strong tourism sector such as Spain have begun to thrive, and the number of airline passengers has increased. Consequently, orders for new aircraft are on the rise.
In 2023, the two biggest aircraft manufacturers, European Airbus and American Boeing, received orders for 3,775 planes. Airbus retained 61% of those orders (2,319), while Boeing received 39% (1,456). Both companies delivered 1,263 planes last year, with Airbus delivering 58% (735) against Boeing’s 42% (528). Both companies have record orders for new aircraft: Airbus ended the year with 8,598 orders while Boeing recorded 6,216. Over the next three years, Airbus will be able to produce and deliver more than 1,000 machines annually.
Boeing too is ramping up production, but it has been delivering fewer aircraft than Airbus for 5 years now. It fell behind its competitors in the aftermath of the grounding of the Boeing 737 Max in 2018 – an airplane that was supposed to be a significant financial success for the company, but instead became a source of numerous challenges. The crisis was heightened after an incident on January 9th, when a sealed section of the fuselage in a Boeing 737 Max tore away. The situation revealed serious issues at the craft’s design, certification, and production stages, significantly damaging the company’s reputation as a leader in the American economy and airborne safety. At present, the company is grappling with the effects of this crisis. Although the situation allowed Airbus to take the lead in the market, Boeing still receives many orders and is increasing production. However, they face challenges as the airlines report numerous minor defects in the new aircraft, alongside the serious malfunctions.
New airplane orders are affecting the stock market performance of both companies. Since the beginning of the year, Boeing’s shares have fallen by 30.94%, while Airbus’s have increased by 19.58%. Even in a situation where most European companies lag behind their American counterparts, Airbus stands out as one of the few European companies outperforming the competition across the Atlantic.
Currently, Airbus’ share price stands at a record 166 euros. The company expects that the record level of orders will translate into record financial results in 2024. Although the shares have reached their highest level, the forward price-to-earnings (P/E) ratio remains at a healthy level of 23.15. The results for the first quarter of 2024 will be presented at the turn of April and May.
Meanwhile, Boeing’s shares are currently half their peak value. The aircraft issues are impacting the financial performance of the company, and it has been recording losses since 2020. In the fourth quarter of 2023, the company’s net loss was 30 million dollars, or 0.04 dollars per share. Boeing will present its next quarterly results on April 24th.
Paweł Majtkowski, eToro Analyst in Poland.
