Airbus Secures $35B Deal from China, as Boeing Loss Rises

Amid ongoing controversy regarding Boeing BA 737 Max, its arch rival Airbus Group SE EADSY announced that it has secured a mega deal from China. The order consists of 290 A320-series narrow-body planes and 10 A350 wide-bodies, which amounts to $35 billion at the current list prices.

Generally, the commercial carriers select A320neo for their fleet due to its fuel efficiency, ability to carry two tonnes more payload and fly up to 500 nautical miles compared with other aircraft in the same class. Thanks to two engines choice, one from Pratt & Whitney, a unit of United Technologies Corp. UTX, and another from the LEAP-1A from CFM International, A320neo also lowers emissions and engine noise. 

 According to the company, “We have noticed worldwide grounding of 737 Max fleet after fatal crashes of two of its jets. At present nearly 350 aircraft of 737 Max variant are grounded due to security concerns, while Boeing is currently trying to find a solution for this problem.

“Winning back trust of the passengers will be a big challenge for Boeing in the days to come. Garuda, Indonesia’s flag carrier, which ordered 50 737 Max 8 jets at a list price of $4.9 billion in 2014 has send a letter to Boeing cancelling the order for the remaining jets. Garuda just received delivery of one jet since 2014.”

A recent long-term outlook provided by Airbus mentioned the requirement of nearly 37,390 aircraft over the 2018-2037 time frame, out of which nearly 76% or 28,550 aircraft will be of the single-aisle category.It is quite evident that the single-aisle fuel efficient aircraft is going to dominate the sky in the next two decades. Boeing’s 737 Max is a direct competitor of Airbus’ A320 airplanes and both manufacturers control the global single aisle commercial aircraft.

Air travel is going to increase on a global scale, and per the new estimates from Airbus, developing markets will see more of this demand surge than the matured ones. Meanwhile, the demand for new aircraft is moving up across all categories, creating opportunities for all manufacturers in the space.



While the large category aircraft is dominated by Boeing and Airbus, the 70-130 seat commercial jet market is ruled by the Brazilian aircraft maker — Embraer SA ERJ.Undoubtedly, the demand for single-aisle aircraft will be the largest among all other categories and the fatal crashes of Boeing’s 737 Max jets have raised serious doubts about the quality of the product supplied by Boeing, which in a way proved beneficial for Airbus.Airbus to date has over 6,501 orders for the A320neo from 103 customers across globe. We expect the orders for A320neo will continue to rise, given the current security concerns pertaining to Boeing’s 737 MAX.Price Performance.

Since the crash of first Boeing 737 Max on Mar 10, 2019, to date shares of Boeing have decreased against Airbus’ gain in the same time frame.

CULLED FROM YAHOO