Yahoo Finance Boeing and Airbus Log Another Month of Anemic Aircraft Orders
In the first three months of 2019, Boeing (NYSE: BA) reported decent -- but hardly impressive -- order activity, while Airbus (NASDAQOTH: EADSY) experienced more cancellations than new orders.
Aircraft demand remained ice cold in April. In fact, not only did Airbus' year-to-date order total stay in negative territory, but Boeing joined its European rival there after removing more than 200 orders from its backlog due to the impending demise of a key airline customer.
Another slow month for Airbus
Airbus received orders for just five commercial jets during April. The good news is that they were all widebodies, which have higher selling prices and shorter order backlogs than Airbus' popular A320neo-family planes. An arm of Lufthansa bought three A350-900s for the German government, while Uganda Airlines firmed up an order for two A330-800neos that was first announced as a commitment last year.
Unfortunately, Airbus also recorded an order cancellation for five older-generation A330-200 widebodies during April. That put its net order activity for the month at zero. Through the first four months of 2019, Airbus brought in just 67 new orders, offset by 125 cancellations, giving it a net order total of negative 58.
Boeing crashes into negative territory
On this side of the Atlantic, the Boeing 737 MAX safety crisis finally hit home in April, as Boeing did not book a single aircraft order in the entire month. Meanwhile, it reported four order cancellations.
The Boeing 737 MAX safety crisis is starting to weigh on order activity. Image source: Boeing.
More significantly, Boeing removed more than 200 aircraft orders -- mainly for the 737 MAX -- from its official order backlog during April. This had nothing to do with the grounding of the 737 MAX, though. These orders had been destined for Jet Airways, which until recently was the second-largest airline in India.
Unfortunately, Jet Airways' finances have deteriorated dramatically in recent years. As a result, aircraft leasing companies have repossessed virtually all of its fleet since the beginning of 2019, culminating in the airline's grounding last month. Even more recently, most of the company's top leaders resigned. While Jet Airways has not officially gone out of business yet -- and the carrier hasn't canceled its aircraft orders -- it now seems very unlikely that it will survive. That meant Boeing had to remove all of Jet Airways' orders from its backlog for accounting purposes.
More order cancellations could be looming for Boeing. Lion Air, which suffered the first of two fatal 737 MAX crashes, has indicated that it wants to cancel its remaining 187 Boeing 737 MAX orders. Fellow Indonesian airline Garuda Indonesia plans to do the same for the 49 737 MAX jets it has on order.
Will things turn around at the Paris Air Show?
Airbus and Boeing collectively are off to the worst start to a year in quite some time. Both aircraft manufacturing giants have seen their backlogs shrink significantly in the first four months of 2019.
The good news is that the Paris Air Show -- which functions as the biggest sales event of the year -- is coming up in just a month. Airbus and Boeing routinely announce orders and letters of intent for hundreds of aircraft at the big air shows.
That said, a cloud is still hanging over Boeing. The 737 MAX grounding is likely to remain in effect until the late summer, if not longer. Moreover, the traveling public appears to have lost its trust in Boeing, due to a series of negative reports about the company's handling of the 737 MAX safety issues.
As a result, airlines may be wary of ordering the Boeing 737 MAX until it returns to service and starts to fix its track record for safety. That could give Airbus an opportunity to dominate the order activity at this year's Paris Air Show.
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Adam Levine-Weinberg has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
