Boeing Nabs a $30 Billion Deal, but Airbus Isn't Far Behind
Jun 19th 2013 10:59AM
Updated Jun 19th 2013 5:25PM
The battle for airplane supremacy rages on with Boeing nabbing a deal worth $30 billion, and rival European Aeronautical Defense and Space's Airbus, receiving an order worth $11.5 billion. Boeing's order was for its much anticipated, but troubled, 787 Dreamliner, and Airbus' order was for its 135 A320neos. Here's what you need to know.
Boeing's Dreamliner has had its issues, and is just coming off a four-month grounding because of lithium-ion-battery issues. But some airlines seem to be letting bygones be bygones. GE Capital Services, British Airways, Air Lease, United Airlines, and Singapore Airlines all placed orders for the 787-10 version of the Dreamliner, showing that they're putting money on the Dreamliner's issues becoming a thing of the past.
However, EasyJet decided to go with Boeing's rival, and placed an order for 135 planes from Airbus -- 100 of which will be the A320neos. EasyJet's decision came after 18 months of comparing Boeing's planes to Airbus'. What cinched the deal, according to EasyJet's CEO, Carolyn McCal, was a "substantial discount" for the A320 planes.
The winner is...
Both Boeing and Airbus have touted their planes as being the best of the best in an attempt to be the top dog for commercial aircraft production -- and there's good reason. With an estimated $100 billion-a-year jet market, potential profits from aircraft orders are substantial.
And while both Airbus and Boeing received lucrative orders, Airbus' win over Boeing for the EasyJet order may be especially hard for Boeing to swallow. EasyJet is one of the world's largest budget airlines, and Boeing used to be it's main supplier. However, a decade ago, Airbus beat out Boeing to become the main supplier for EasyJet, and Boeing has been trying to regain its position since.
What to watch for
The showdown between Boeing and Airbus is far from over; they've been battling it out for years, and that's unlikely to change. But what makes this round especially exciting is that both Boeing and Airbus are touting next-generation planes, and clearly have high stakes in the game. Whose next-gen plane is superior is still undecided, but considering the potential profit to both companies, this is something investors should closely monitor.
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The article Boeing Nabs a $30 Billion Deal, but Airbus Isn't Far Behind originally appeared on Fool.com.Fool contributor Katie Spence has no position in any stocks mentioned. Follow her on Twitter @TMFKSpence. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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