) has announced that it has received an order from Xiamen Airlines,
a subsidiary of China Southern Airlines for 40 Boeing
Next-Generation 737-800s; and an order commitment from SilkAir, the
regional wing of Singapore Airlines for 31 737-MAXs and 23
Next-Generation 737-800s. The orders awaiting final
confirmation will further Boeing's lead on Airbus in the race for
new orders in 2012. Boeing has so far received new orders, net of
cancellations for 700 airplanes in 2012, compared to 270 orders
received by Airbus during the same period. If the current trend
continues then Boeing will end 2012 with a large lead on Airbus.
This is in stark contrast to the previous decade which was
dominated by Airbus in terms of net new orders.
At the moment, Boeing and Airbus are locked in a tough
competition for market share in the global market for large
commercial jets in order to gain benefits that come from higher
volumes. This has lead to aggressive pricing on both sides, with
steep discounts offered on list prices of airplanes. Apart from
aggressive pricing, Boeing's current lead in 2012 can also be
attributed to the launch of the single-aisle B-737MAX in response
to the A-320neo, which garnered a historic 1348 orders in 2011 to
drive Airbus' order book for that year.
On the whole, the fight for market share has resulted in list
price discounting, and Boeing at its end shall need to avoid
delivery delays as in the case of B-787 Dreamliner to keep the
pressure up on Airbus.
We currently have
price estimate of $91 for Boeing
, approximately 20% above its current market price.
See our complete analysis for Boeing here
New orders from Xiamen and SilkAir
Xiamen Airlines has placed an order for 40 Boeing
Next-Generation 737-800s, valued at $3.5 billion at list
prices. The order is currently awaiting mandatory approval from the
Chinese government. And SilkAir has placed an order commitment for
54 B-737s, valued at $4.9 billion at list prices. Even though, this
order too is pending final confirmation, it has sparked accusations
from Airbus of aggressive price discounting by Boeing. As
SilkAir was a client of Airbus and currently operates an all Airbus
fleet. "We have no comment to make on the purchase decision by
Silkair. However, Boeing has clearly made an extremely aggressive
offer to win this deal in an attempt to catch up with the huge
success worldwide of the A320 family," said Airbus spokesman Stefan
Boeing spokesman Marc Birtel said, "Our customers recognize the
difference between products and make decisions that suit their
needs. Price alone is not always the discriminator for the services
and packages that appeal to our customers. While we will be
competitive in negotiations and want to win, there are limits to
how deeply we'll discount an order."
Boeing Vs. Airbus: Race for higher number of new
Boeing currently leads in the race for new orders in 2012 with
700 net new orders by July 31. In comparison, Airbus has managed
270 net new orders during the same period. This is in stark
contrast to the previous decade, which saw Airbus ending in lead at
the end of each year except for 2005 and 2006, in between. In 2011,
Airbus had bagged 1419 orders, compared to 805 by Boeing.
Boeing and Airbus are locked in a duopoly in the global market
for large commercial jets. From 2002-11, Airbus received 7,181
orders while delivering 4,218 airplanes, and Boeing received 6,360
orders while delivering 3,871 airplanes. A large portion of these
orders comes from single-aisle aircraft, which constitute the
largest portion of fleet of low-cost carriers. Boeing has its B-737
series and Airbus its A-320 series in the single-aisle aircraft
category. Of the 700 net new orders for Boeing in 2012, 666 are for
737s, and of the 270 net new orders for Airbus in 2012, 244 are for
the A-320 family. Single-aisle aircraft primarily operate on
domestic routes and feed traffic to hubs for international
Aggressive pricing and launch of the single-aisle
Boeing's lead in 2012, can be attributed in part to the launch
of the single-aisle 737MAX that offers fuel saving of 15% compared
to its previous version, B-737. B-737MAX was in response to Airbus'
A-320neo, which offered similar levels of fuel savings on A-320.
A320neo received tremendous response globally as airlines sought to
reduce their largest expense item, jet fuel. Also, up gradation
demand from U.S. and fresh demand from Asia-Pacific and South-Asia
weighed heavily in favor of single-aisle aircraft. Boeing took
advantage of this demand by launching 737MAX, and coupled with
aggressive pricing took the lead in new orders in 2012.
Going forward we anticipate the tough competition between Airbus
and Boeing to continue. However, Boeing will have to keep delivery
schedules avoiding delays to keep pressure on Airbus.
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