Boeing Loses Billions, and 2 Loyal Airlines, to Airbus

Boeing 737. Photo: Wikimedia Commons. 

In October, two of Boeing's loyal airlines, Japan Airlines and Mexican airline VivaAerobus, placed orders with Boeing's chief rival, European Aeronautical Defense and Space's . In October, Airbus outsold Boeing. Is it time to worry?


Clash of the titans
The two titans of commercial airline sales have battled with each other for years, with Boeing more often than not coming out on top. However, October was not Boeing's month. First, VivaAerobus placed an order for 40 A320-family jets -- a deal worth an estimated $4 billion, and then Boeing lost the JAL contract to Airbus -- estimated to be worth $9.5 billion (although discounts are likely). This came with the added displeasure of jeopardizing Boeing's manufacturing arrangements with Japanese manufacturers Kawasaki, Mitsubishi, and Fuji. 

Further, these losses were compounded by the fact that this year Airbus has outsold Boeing. As of October, Boeing had sold 1,102 jets. Airbus had sold 1,286.  

Billions to the rescue
Airbus' victory over Boeing in commercial airline sales is clearly not great news for investors. However, it's also not time to panic. In its latest quarterly report, Boeing's commercial airline third-quarter revenue increased to $14.0 billion. Plus, operating margin improved to 11.6% on higher delivery volume and continued strong operating performance. Moreover, Boeing reported that it booked 200 net orders during the quarter for commercial airplanes, and backlog remained high, with 4,800 airplanes valued at a record $345 billion. 

What to watch
It's worrisome that Airbus would take two of Boeing's airlines and beat it in orders, as it shows that Airbus is kicking the competition -- and doing a good job at that. However, Boeing is completely up to the challenge, and I imagine it'll come back fighting. Further, for its latest third-quarter results, Boeing had a total backlog of $415 billion, a revenue increase of 11% thanks to higher commercial deliveries, and an operating cash-flow increase of $4.3 billion. Consequently, Boeing has a significant safety net -- for now. If Boeing continues to lose key customers to Airbus, or any other airplane manufacturer, it might be time to re-evaluate your holdings. But for now, there isn't cause to panic.

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The article Boeing Loses Billions, and 2 Loyal Airlines, to Airbus originally appeared on Fool.com.

Fool contributor Katie Spence has no position in any stocks mentioned. Follow her on Twitter: @TMFKSpenceThe Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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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4 Comments

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C Dudley Buell

How can I get My investments now than you have them all a zero!!
It is like the Government has taken you over!
C.Dudley Buell

November 11 2013 at 11:44 PM Report abuse rate up rate down Reply
thac396174

cont from below

In 1997 Boeing did not build the double decker 747-500 &-600, or the MD-12, X-48C, Sonic Cruiser

Boeing has yet to modernize its factories with automation to meet the world need of 35,000 new aircraft over the next twenty years

Boeing CEO who is from GE has been replacing Boeing upper managements for something and moving production into Right to Work state , since the output of the 747-8 was 57 aircraft delivery in two years and 98 787 aircrafts in ten years

Boeing The Current Market Outlook see
http://www.boeing.com/boeing/commercial/cmo/

Airbus Global Market Forecast 2012-2031 see
http://www.airbus.com/company/market/forecast/

Average Fleet Age for Selected Airlines see
http://www.airsafe.com/events/airlines/fleetage.htm

November 11 2013 at 3:36 PM Report abuse rate up rate down Reply
thac396174

Correction: Boeing is losing Loyal Airlines, to Airbus

Many airlines are not replacing there existing Boeing aircraft, since Boeing CEO James McNerney, and GE CEO Jeff" Immelt are member of the board on the Import-Export Bank that have better loan to foreign airlines at a lower interest rate
Delta, and other Airline Group have file law suits against The U.S. Export-Import Bank over Air India Loan Guarantees
http://www.bloomberg.com/news/2011-11-16/airline-group-sues-
Boeing Dreamliner Lawsuit Dismissal Upheld on Appeal - …
www.bloomberg.com/.../boeing-class-action-case-dismissal-upheld-by...This may be the reason that airlines are ordering from Airbus
Delta has already has orders with Boeing for 18 787s and Delta confirms plan to buy 109 Boeing 737s
Delta Air Lines said it will buy 40 more Airbus planes
http://finance.yahoo.com/news/delta-announces-order-40-airbu
American Airlines takes first of its 260 Airbus airplanes on …
aviationblog.dallasnews.com/2013/07/american-airlines...260-airbus
British Airways Poised to Dump Boeing
British Airways Poised to Dump Boeing - 24/7 Wall St. http://247wallst.com/aerospace-defense/2013/04/08/british-ai
Singapore Airlines likely to convert orders to A350-900 & -1000
http://atwonline.com/airframes/singapore-airlines-orders-30-
Lion Air orders 234 A320 Family aircraft
www.airbus.com › Press centre › Press releases
American Airlines takes first of its 260 Airbus airplanes on order
rhttp://aviationblog.dallasnews.com/2013/07/american-airlines-takes-first-of-its-260-airbus-airplanes-on-order.html/
JAL makes first purchase from Airbus, not Boeing - Yahoo News
news.yahoo.com/jal-makes-first-purchase-airbus-not-boeing...
Airbus, ANA & JAL in Discussions For A350 Orders
www.airliners.net/aviation-forums/general_aviation/read.main/5763585
Air China Places Order for 100 Airbus SAS Aircraft
(Note Air china cancel there 787 orders for 737)
www.airport-int.com/news/air-china-places-order-for-100-airbus-sas...
Airbus wins $7 billion Philippine Air order
http://www.reuters.com/article/2012/08/28/us-philippines-air
JAL makes first purchase from Airbus, not Boeing - Yahoo News
Vietnam Airlines latest airline to order A380 superjumbo ...
usatoday30.usatoday.com/travel/flights/2009-11-13-vietnam-air-a380...
Nov 13, 2009 • Vietnam Airlines has agreed to buy six new aircraft, including four Airbus A380 superjumbo, from Airbus in a deal worth almost $1.8 billion.
Vietnam Airlines receives loan to buy Airbus A321 aircraft ...
talkvietnam.com/2012/12/vietnam-airlines...to-buy-airbus-a321-aircraft
news.yahoo.com/jal-makes-first-purchase-airbus-not-boeing...
In 1997 Boeing did not build the double decker 747-500 &-600, of the MD-12, X-48C, Sonic Cruiser
Boeing has yet to modernize its factories with automation to meet the world need of 35,000 new aircraft over the next twenty years

November 11 2013 at 3:32 PM Report abuse rate up rate down Reply
Douglas Hom MD

This event is actually beneficial for Boeing. It just might put the fear of God into it's somewhat spoiled work force who has yet to understand that they can't hurt Boeing with contract demands and manufacturing shut downs without jeopardizing the company and hence, their own very very nice jobs -- with good pay and great perks. Right now, Boeing is in negotiations with the union regarding new work and pension rules that will save the company a lot of money over time and hopefully stabilize their delivery dates. Boeing could very well move its manufacturing from the NW to the SE and has threatened to do so. A number of workers are in conflict with their leadership in that they want to "call Boeing's bluff." forgetting that if the company is serious, then a lot of people will be getting food stamps if Boeing isn't bluffing and it is called, nonetheless.

November 11 2013 at 5:58 AM Report abuse rate up rate down Reply