Blogs

Boeing woes makes way for Airbus to become the world’s largest plane maker – but this will not open gap for other rivals


  • Airbus tops the global commercial aircraft market
  • Prominent competitors now and over the years of Airbus and Boeing
  • Road ahead for the two giant plane manufacturers

 

With the crisis of its 737 MAX dragging on to 2020, Boeing has lost the title as the world’s biggest plane maker in 2019 after its delivery numbers fell drastically to 345 aircrafts as compared to 863 aircrafts deliveries from Airbus. This new achievement for Airbus will push it to the top of the ranking in the market duopoly (with a combined market share of 90%+) between the two aerospace giants, a first since 2011 when Boeing took the top spot. Airbus, had its own share of glitches with some industrial problems, forcing it to cut its 2019 delivery goals by 2%-3%, but still delivered 863 aircrafts against its revised target of 860 aircrafts, as per exclusive reports by Reuters. Deliveries for Airbus rose by 7.9% in 2019 from that of 2018, highlighting a huge gap in performance between Airbus and Boeing during the year. As per estimates by Forbes, Airbus which had a market share of about 45.3% in 2018 is estimated to have spiked to almost 62.5% as of September 2019 due to the reduced deliveries from Boeing. Also, the order backlog for Airbus as on September 2019 is sizably larger with 7,482 aircrafts as compared with Boeing which had an order backlog of 5,662 aircrafts.

The past couple of years haven’t been kind to Boeing with two devastating crashes involving the Boeing 737 MAX that killed 346 people. It’s the type of year that most companies across most industries would never recover from. But since the aircraft building space is not like most industries with barriers to entry like no other, any new company is not simply going to enter and start building aircrafts worth hundreds of millions of dollars. It’s no secret that the giants enjoy a duopoly status in the aircraft manufacturing industry and with both history and money on their side, the rival companies have not been able to penetrate their dominance. More importantly, even the rivals tiny market share has been getting smaller over the years, so breaking into the stronghold of Airbus and Boeing is a task next to impossible, considering all the huge financial requirements and complexities of the business.

Example of instances where some of the smaller companies have tried to enter the aircraft manufacturing space includes Bombardier without much success with its C-Series aircraft to compete against the likes of Airbus A320 and Boeing 737 models. The company launched its C-Series aircraft program in 2005 and spent almost $15 billion over the course of its development, which is a lot of investment for a company which had a market value of less than $15 billion. This program was ultimately bought by Airbus which acquired a majority stake in the Canadian aircraft manufacturer after much controversy between Bombardier and Boeing with regards to order for the Bombardier jets by the US airliner, Delta.

Another potential competitor is China’s COMAC (Chinese state-owned aircraft manufacturer) which is building its own C919 aircraft to compete with the likes of Boeing 737 sized jets and the Airbus A320 series. The company has already completed its test flight, though it took the company almost 10 years to complete the same (financial investment on its program is not available since the company does not publish any financial statements or related information). As per reports, the C919 has only about 300 firm orders as of now, compared to Boeing and Airbus which have more than 10,000 firm orders for similar sized aircrafts. Plus, the commercial delivery of the aircraft of COMAC are expected by 2021, which is nearly five years behind schedule. Perhaps COMAC can compete with the two giants but it has still a long way to go and considering it is yet to hit the markets, maybe it will take another generation to actually make an impact, that too, if it delivers as expected.

The crisis of the Boeing 737 MAX is not a first for Boeing, which in 1965 faced similar issues when three of its Boeing 727 aircraft crashed in less than three months. The Boeing 727, which was stated as one of the most advanced aircraft of its time, had some issue with its wing flap system which was not fully understood by the pilots and made the planes to descend at great speed. Then in the 1990s, Boeing had another issue with its rudder with the 737 resulting in multiple incidents and killing passengers on board. Also, in 2013, Boeing had issues with its 787 Dreamliner, where its battery caught fire.

As Boeing works to restore the confidence of the public after its deadly crashes, they will have their history play book of their crisis that they can use. The company has also done several rejigs in the top management to take control of the situation and find itself out of crisis. No doubt, 2019 was the year for Airbus with more cash inflow for future projects while for Boeing it has not been the easiest year as it is being hit with cash-crunch situation with everything that has happened over the past couple of years. But Boeing for its part is certainly not out as they still have their Boeing 787 series which is far more popular than the similar category, Airbus’s A330 and also enjoy better profit margins. Additionally, Boeing still leads the deliveries for wide-body aircrafts, delivering 224 wide-body aircrafts compared with Airbus’ 147 aircrafts in the past year. And with the new Boeing 777X launch, it could give some serious competition to the Airbus A350. Considering the complexity of the business, not only its smaller rivals but even its biggest rival Airbus cannot simply increase production and benefit from the woes of Boeing. Also, as per Airbus’ CEO Guillaume Faury, Airbus has an order backlog of more than 7,000 aircrafts as of September 2019 which in itself will take the company between eight to ten years to fulfil. Net to net, though Airbus flipped Boeing from its top position in 2019 due to unforeseen accidents, the latter is likely to comeback over the next few years and may once again regain the top spot.

Your Rating

Slack set out to kill E-mail

Started as a side project for internal use in a gaming company High revenue growth with recurring revenues Went Public by offering shares through the Direct Public Offering ...

Will the Big Bang merger drive, of Indian Public Sector banks, provide the required impetus to the slowing economy?

India’s Government announces plans to merge 10 of the country’s public sector banks Probable impact of the mergers   India’s Finance Minister, Nirmala Sitharaman,...

Is Mothercare on the verge of collapse?

History of Mothercare What went wrong? Company moved into administration   Mothercare, an iconic brand for babies, children and parents to be, went into...

Rapidly growing Indian online food delivery industry and its unrealised profits

Evolution of online food delivery industry in India Geographical penetration and scope for expansion Key players and their zeal to balance revenue and costs   Online...

An analysis of Malaysian rubber glove industry

How big is the international rubber gloves market? Reasons behind the healthy and steady growth Malaysia’s role in the industry Why are companies struggling for stable...

Tire manufacturing industry, analysing the cost and margin trends

The global market for tire manufacturing stands at $180 billion. Michelin anticipates the long-term demand to rise at the rate of 5 to 10% a year in developing markets and 1 to 2% a year in mature...

Failure of Amazon in China, an analysis

E-commerce market in China Online consumer product retailers in China Performance of Amazon in China   Amazon is a global e-commerce player selling a wide...

Can lithium-ion anode demand for needle coke reduce availability for electrode players?

What is needle coke? Uses of needle coke Lithium-ion battery manufacturers demand needle coke   Needle coke? Needle coke is a specialised form of petroleum coke...

Indian wood panel industry, growth drivers and present trends

Current market scenario in the Indian plywood industry Growth in the housing sector and rapid urbanisation to provide the boost GST rationalization to reduce price difference...

Housing finance market in India. Is affordable housing driving the growth?

Overview of the housing finance sector in India Key players dominating the segment and their dynamics Factors driving aggressive demand for housing   The housing...

Carbon black industry, strong potential for supernormal profitability?

What is carbon black? Its uses Impact of the environmental curbs in China   What is carbon black? Carbon black is a fine carbon powder and it is a disorderly...

Is the radio broadcasting industry in the U.S. dying? An analysis

Radio, the most powerful medium of reach in the U.S. Why the industry is moving at a slow pace? Radio’s health is still sound, will it continue in the long-term?   ...

Malaysian rubber glove industry, an update

Rising global demand for gloves Impact of USP 800’s implementation and the US-China trade war on Malaysia’s rubber gloves industry Key challenges for the Malaysian rubber...

Rice industry outlook 2018

Major rice producers and consumers Global rice trade Factors dominating the trade   Rice is the 3 rd largest produced agricultural commodity in the world, after...

Blockchain, an emerging concept, a disruptive technology (Part 1)

What is blockchain? How is blockchain revolutionary? Cryptocurrency, the new money ICOs, the new way of raising money Summary Blockchain is a software architecture...

Rise of Ant Financial, will the success story continue?

What is Ant Financial? Journey to become king of unicorn Will regulatory curbs hinder its success journey?    Ant Financial, an affiliate and integral part...

Sri Lankan economic and political crisis

Sri Lanka’s latest political crisis, who governs the nation? Poor economic indicators adding to the nation’s woes   Sri Lanka is currently embroiled in a political crisis,...

Battle for the textile and apparel industry in Southeast Asia

The reasons for China’s decreasing presence in the industry Initiatives by the governments in Southeast Asia to boost the textile trade Vietnam and Bangladesh’s quest to conquer...

Education industry in India, an overview

Growth of private universities in the nation Future potential of the education industry in India   The education sector in India is estimated to be worth USD 91.7 billion...

Unnoticed growth of the media and entertainment industry in India

Overall industry brief Growth of the M&E industry and its segments Major supporting elements of this growth   Media and Entertainment (M&E) is a very wide industry...