Boeing Falls Further Behind Airbus
By Doug Cameron
Boeing Co. has fallen further behind in its five-decade rivalry
with Airbus SE in the global plane-making business.
Airbus easily retained its number one spot in 2020 as Boeing on
Tuesday reported a big decline in orders and deliveries. It handed
over just 84 passenger jets to airline customers, down almost 90%
from a peak in 2018. Buyers pay most of the purchase price on
delivery, so Boeing has been short of cash, forcing it to raise
debt and cut costs.
Both plane makers have been dented by the pandemic-driven slump
in air travel. With vaccines raising hopes for a recovery, Airbus
said it is preparing to increase production after slowing output
Boeing, in contrast, has become more reliant on sales of cargo
and military jets to ease the strain on its finances caused by the
prolonged grounding of the 737 MAX and manufacturing problems that
have halted deliveries of the 787 Dreamliner.
While MAX deliveries have resumed, Boeing's latest headache is
quality issues with the 787 Dreamliner that have left dozens of the
wide body planes piling up at its factories.
After widening inspections for potential defects, Boeing said
it's now addressing two quality lapses in a new area of the planes,
this time near the cargo door.
The company said it was taking the time for inspections to
ensure its Dreamliners meet the highest standards of quality.
Both problems relate to gaps where sections of the fuselage are
joined together, according to a person familiar with the matter.
They have only been found on a handful of undelivered planes and it
isn't yet clear whether any fixes might cause further delivery
delays, this person said. Neither problem has been determined to
pose a safety concern.
Boeing could face compensation claims from 787 customers for
delivery delays and may have to book a charge of as much as $3
billion against the long-term profits of the program, said analysts
at Sanford C. Bernstein & Co. All production is being moved to
a plant in South Carolina in March. Boeing didn't comment ahead of
quarterly results due on Jan. 27.
Boeing handed over 157 jets last year, including cargo and
military planes, trailing the 566 deliveries at Airbus.
The European plane maker delivered its first jetliner in 1974
and ended last year with orders for 7,184 planes compared with
4,223 at Boeing.
Most of the gap is in popular single-aisle planes, with the
long-range version of the Airbus A321 outselling a variant of the
737 MAX that can't carry as many passengers on longer routes, such
as across the Atlantic.
Boeing has also been hamstrung by more than 600 canceled MAX
orders last year, as well as almost 800 more classified as doubtful
because of airline finances. Regulators in the U.S. approved the
plane to fly again last November, paving the way for 27 deliveries
in December to carriers including American Airlines Group Inc. and
lessors such as Avolon.
Aircraft leasing companies continue to cancel MAX deals -- --
with 105 dropped last month -- -- taking advantage of contractual
rights to dump or defer orders because of excess aircraft capacity
caused by the travel slump. Almost a third of the global fleet
remains parked, awaiting a recovery in demand, according to
analysts at Jefferies.
Some airlines have started buying the MAX again, with low-cost
giant Ryanair Holdings PLC taking advantage of discounts and
compensation offered by Boeing to order 75 more last month.
The new 777X jetliner, which is being built in Boeing's original
Seattle-area manufacturing base, has faced delays because of
engineering issues and a prolonged approval process by
Airbus has shrugged off many of its own production problems,
chief executive Guillaume Faury told reporters last week. It still
plans to boost production of its A320 family of jets in the second
half of the year.
Andrew Tangel contributed to this article.
(END) Dow Jones Newswires
January 12, 2021 11:16 ET (16:16 GMT)
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