Following Boeing Crash... Airbus Claims Top Spot in Global Commercial Aircraft Market for the First Time in 8 Years

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] French aircraft manufacturer Airbus is expected to reclaim the title of the world's largest commercial aircraft manufacturer for the first time in eight years. American aircraft manufacturer Boeing, which had maintained the 'world number one' position for the past seven years, suffered its worst year due to a series of crashes involving its main model, the 737 Max, benefiting its rival Airbus.

According to major foreign media and data released by Airbus and Boeing on the 1st (local time), Airbus's commercial aircraft deliveries last year are expected to reach 863 units, a 7.9% increase compared to the previous year. Major foreign media reported, citing sources, that Airbus's commercial aircraft deliveries last year were the highest since 2011. This figure also exceeds the target of 860 units set by Airbus in October. Airbus is still conducting final verification and plans to officially announce the related details when releasing its fourth-quarter earnings.

For the past seven years, Boeing has been the world's largest commercial aircraft manufacturer. Looking at the delivery trends of the two companies, Airbus delivered 534 units in 2011, surpassing Boeing's 477 units, but since then, Airbus has consistently lagged behind Boeing. The delivery volume difference ranged from as little as 20 units to as much as about 130 units annually.

However, Boeing is expected to receive its worst performance in over a decade this year. From January to November last year, Boeing's commercial aircraft deliveries totaled 345 units, less than half of the 704 units delivered during the same period in 2018. Comparing Airbus and Boeing's performance in November last year, deliveries were 77 to 24, and orders were 219 to 11, showing a significant gap. CNBC stated, "At the current pace, Boeing is expected to have its lowest delivery volume since 2008." Especially in orders, Airbus has recently been standing out even more. The U.S. low-cost airline Spirit Airlines ordered 100 Airbus A320s last month.

Airbus's overtaking of Boeing this time is largely attributed to the impact of Boeing 737 Max crashes in Indonesia in October 2018 and Ethiopia in March last year. Both accidents resulted in the loss of 346 lives, leading countries worldwide to declare the suspension of 737 Max operations. The Ethiopian plane crash was also named the worst aviation accident of last year by aviation consulting firm T070 on the 1st.

Along with the decrease in commercial aircraft orders, Boeing has faced increased cost burdens due to difficulties in delivering the already manufactured 737 Max models. Earlier this year, the Donald Trump administration actively supported Boeing by filing a complaint with the World Trade Organization (WTO) against the European Union (EU) for illegal subsidies to Airbus, eventually winning the case and imposing retaliatory tariffs. However, the biggest adversity?the 'crash'?rendered even this support ineffective.

The stock price trends of the two aircraft manufacturers last year also showed contrasting fortunes. Airbus's stock rose 15% from March last year, after the second crash, until the end of the year. In contrast, Boeing's stock fell more than 20% after the March accident. Until early last year, Boeing's stock had been on the rise as its fourth-quarter 2018 earnings exceeded market expectations.

Boeing has actively sought to resolve the situation by abruptly replacing its CEO. On the 23rd of last month, Boeing dismissed CEO Dennis Muilenburg and is aiming for a turnaround with the inauguration of new CEO Dave Calhoun on the 13th. Calhoun's first task will be the announcement of the fourth-quarter earnings for last year, scheduled for the 29th of this month. Attention is focused on Boeing's future response to the 737 Max, which had a temporary production halt in January. Aviation consulting firm T070 predicted, "The 737 Max will receive operational approval in 2020."

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