News analysis - Boom - bust

Airbus and Boeing have seen a surge in sales but are preparing for a drop in orders as the economic slowdown bites

Max Kingsley-Jones/LONDON Julian Moxon/PARIS

Airbus and Boeing's combined order intake for 2000 was up 23% on the year before at over 1,130 aircraft. This time the US manufacturer has taken the honours with a 54% share of the market - reversing the 1999 result. Meanwhile, Airbus is warning that sales will be substantially reduced over the next 12 months due to a slow down in economic growth.

Flight International calculates that last year's combined gross order intake was worth almost $87 billion (at average list prices) or $82.7 billion when adjusted for cancellations which totalled 50 units. This compares to $66.5 billion in 1999.

Despite coming second, Airbus, which only released its order and delivery figures at the end of January, had a strong year with sales up 10% to 520 aircraft and turnover up from $16.7 billion to $17.2 billion. Twenty eight cancellations were recorded by the manufacturer last year.

True price obscured

The 2000 order intake was worth almost $37 billion to the European company at list prices, although heavy discounting on some deals continues to obscure the true value of orders. The list price figure was $13 billion lower than its rival. Airbus, however, has not included the 50 firm A380 commitments (worth around $11 billion) that it secured last year. If these were included it would put the European manufacturer closer than ever to its rival in value terms.

These orders, plus FedEx's January deal for 10 A380 freighters, will be firmed up during the year.

With 120 orders already on the scoreboard in 2001 - 60 A380 commitments to be firmed up and 60 A300-600Fs ordered last month by UPS - Airbus chief executive Noel Forgeard is confident that Airbus will retain its half share of the market across the narrowbody and widebody types, but he has also issued a gloomy warning: "We expect a slowdown in orders this year to between 350-400 [Airbus aircraft] due to slower economic growth in the USA and some parts of Asia." Forgeard adds "I have told our shareholders we'll sell 350 but John Leahy [the Airbus chief commercial officer] thinks he can make 400. It is definitely a softer market, but we don't see a deep falloff like we had in the early 1990s."

According to media reports, Leahy is reported to have said that he believes that Airbus and Boeing will sell a total of 750-800 aircraft between them this year.

Airbus continues to ramp up its production, with deliveries increasing from 294 in 1999 to a record 311 last year, worth an estimated $21.3 billion. Around 334 aircraft are due to be delivered from the company's Toulouse and Hamburg plants this year, as it heads towards a target of 400 units in 2002.

Despite cutting output by a fifth last year, Boeing still accounted for over 60% of the total deliveries which, with an estimated value of $38.5 billion, represented the largest share of revenues. Output in Seattle is rising from 489 aircraft last year to a stabilised 530 annually over the next two years.

A320 family sales continue to be strong, with the 388 orders taken in 2000 almost matching the performance 12 months earlier. Orders for the A330 twinjet make up the bulk of Airbus' widebody sales, with the manufacturer taking 110 of the 130 orders. Sales of the four-engined A340 continue to be sluggish, with order intake in the "low 20s" for the second year in succession, although this is apparently not causing Airbus too much worry.

"We see the A330 and A340 as being combined into a single product, so if there are more A330 sales than A340 it is not a big concern for us. This is as long as we're outselling Boeing in the sector, which we are," says Leahy. "We also have much broader market penetration, with 56 customers against 33 for the 777." The Boeing twinjet scored 117 orders last year.

US customer sought

Despite the recent deal with FedEx, Airbus is still in search of a US airline customer for the A380. "We expect United and Northwest, which are the only airlines in the USA to operate the Boeing 747, to buy the A380. It would fit exactly into their hub-based route networks," says Leahy.

Airbus may have lost the 2000 sales battle to its US rival, but it has ended a year with over half of the order backlog in unit terms for the first time. It has 1,626 aircraft on order, compared to Boeing's 1,612. The total 3,238 aircraft on order, which is 10% higher that at the end of 1999, is worth an estimated $237.4 billion at current list prices. Boeing holds a greater share of the backlog in value terms - an estimated $127 billion compared to Airbus' $110 billion.

Source: Flight International