Summary
- Airbus order tally surged 90% in one month.
- Deliveries continue to be under pressure.
- Strong order inflow is a gauge of future demand and potential for higher production rates.
In a previous report , I showed that The Boeing Company (BA) could mark itself the winner of a somewhat slow Farnborough International Airshow in July. However, I also pointed out that Airbus did not really have to come up with a big order inflow during the airshow since it already had secured a big order from China that would likely keep the European jet maker ahead in the annual order battle.
In this report, I discuss the orders, deliveries, cancellations and other mutations to the order book for Airbus in July, showing how Airbus had an extremely strong month despite weak momentum during the airshow. In order to get a comprehensive overview with capabilities to get to the fine details, The Aerospace Forum has developed data analytics solutions for the big aircraft manufacturers that will be used in this report. Using these tools, we are able to analyze orders and deliveries and see where manufacturers are falling short, meeting or exceeding expectations.
China Gives Airbus Orders Wing
During the month, Airbus gathered 401 orders, which is a sequential increase of 323 units. In total, 399 single-aisle aircraft were ordered along with two wide-body aircraft:
- American Airlines ( AAL ) ordered four Airbus A321neos.
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Jet2 exercised options for three Airbus A321neos.
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Spirit Airlines ( SAVE
) ordered five Airbus A321neos.
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An unidentified customer ordered ten Airbus A321neos.
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Turkish Airlines ordered 2 Airbus A350-900s
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Farnborough Airshow order: Delta Air Lines ( DAL
) exercised options for 12 Airbus A220-300s.
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Farnborough Airshow order: easyJet ( EJTTF
) ordered 56 Airbus A320neos.
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Farnborough Airshow order: LATAM Airlines Group ( LTMAQ
) ordered 17 Airbus A321neo aircraft.
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China Southern Airlines ordered nine Airbus A319neos, 23 Airbus A320neos and 64 Airbus A321neos.
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Air China ordered five Airbus A319neos, nine Airbus A320neos and 50 Airbus A321neos.
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Shenzhen Airlines ordered 18 Airbus A320neos and 14 Airbus A321neos.
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China Eastern Airlines ordered 32 Airbus A320neos and 68 Airbus A321neos.
In July, as expected, sales momentum improved further helped by almost 300 orders from China covering nearly 75 percent of the order inflow while Farnborough International Airshow announcements accounted for nearly 20 percent of the order inflow. So, a rather weak airshow was offset by strong sales momentum in China and that is something that the European jet maker already knew before the airshow started in mid-July
During the month, the following changes were made to the order book:
- Azul ( AZUL ) converted orders for 13 Airbus A320neos to 13 Airbus A321neos.
- JetSmart converted one Airbus A320neo order to an order for the Airbus A321neo while 6 of its orders are now assigned to the undisclosed customer category.
- LATAM Airlines Group converted orders for five Airbus A320neos to five Airbus A321neos.
- easyJet converted orders for 18 Airbus A320neos to orders for 18 Airbus A321neos.
- SMBC Aviation Capital Group converted orders for three Airbus A320neos to orders for three Airbus A321neos.
- Ethiopian Airlines converted orders for four Airbus A350-900s to orders for four Airbus A350-1000s.
- BOC Aviation was identified as the customer for 6 Airbus A320neos.
- Bocomm Leasing was identified as the customer for one Airbus A320neo.
- Bocomm Leasing was identified as the customer for one Airbus A321neo.
- China Express Airlines was identified as the customer for one Airbus A320neo.
- Qingdao Airlines was identified as the customer for one Airbus A320neo.
- Etihad Airways was identified as the customer for 7 Airbus A350Fs.
- Airbus cancelled orders for four Airbus A350-900s destined for sanctioned Aeroflot.
During the month we saw some usual conversions taking place as lessors and airlines align their orders with their fleet requirements leveraging the contract flexibility that Airbus provides. Cancellations only came from Aeroflot. The cancellation for four Airbus A350s was initiated by Airbus to comply with the sanctions against Russia and enabling the European jet maker to remarket the delivery slots.
In July, Airbus logged 401 gross orders valued at $22.2 billion while it scrapped 4 orders valued $622.4 million from the books bringing the net orders to 397 orders valued $521.5 billion. A year ago, Airbus booked two orders and seven cancellations, bringing its net orders to -5 units with a negative value of $231.7 million. So, we see that order inflow increased significantly year-over-year.
Year-to-date, the European jet maker booked 843 gross orders and 187 cancellations bringing the net orders to 656 units with a net order value of $17.2 billion. In the first seven months of 2021, Airbus booked 167 gross orders and 33 net orders with a net value of $2.1 billion. So, we're seeing that Airbus is having a far better year so far with improving net order quantities and value.
Airbus Deliveries Reflect Supply Chain Stress
In June, Airbus delivered 46 jets compared to 59 in the previous month. The European jet maker delivered 40 single-aisle jets and 6 wide-body aircraft with a combined value of $3.0 billion:
- Airbus delivered five Airbus A220s, all five were the bigger -300 model.
- A total of 35 Airbus A320neo families were delivered, consisting of one Airbus A319neo, 14 Airbus A320neos and 20 Airbus A321neos.
- Airbus delivered one Airbus A330-300.
- Five Airbus A350s were delivered, all -900 models.
In July, deliveries decreased sequentially but that was not completely unexpected as the surge in deliveries in June was driven by the quarter-end push to get deliveries out and cash in before the quarter came to an end. Deliveries on the Airbus A320neo program remain largely underwhelming and that is driven by supply chain disruptions which simply don't allow Airbus to build and deliver at the targeted rate of 45 aircraft per month.
Compared to last year, deliveries decreased by one unit while the delivery value decreased by $0.3 billion. Year-to-date, Airbus delivered 343 aircraft valued at $22.8 billion compared to 344 aircraft valued at $22.3 billion last year. Year-to-date numbers show that Airbus lost the delivery lead compared to last year while the value of the deliveries just 2% higher.
The book-to-bill ratio for the month was 8.7 and 7.4 in terms of value, which are good numbers showing the strong order inflow during the quarter but also reflecting the low delivery numbers. For the first seven months of the year, the gross book-to-bill is 2.5 in terms of units and 2.1 in terms of value.
Conclusion: Airbus Stock Is A Long-Term Buy Despite Delivery Headwinds
The July order and delivery numbers have not changed my view on Airbus. Last month I already anticipated that Airbus would lower its delivery target and that did indeed happen. The current strain in the supply chain is simply not providing any solid base to reach the targeted production and delivery levels, and while that is unfortunate, that is a reality faced across the industry and the order numbers provide a solid skyline to improve production rates in the coming years as supply chains should ease.
So, I continue to like shares of Airbus and continue to be invested in the company. Sales boomed in July, adding 90% to this year's order tally so far this year, and while short-term delivery profiles are underwhelming at best, the orders clearly show a strong demand and base for future performance.
For further details see:
Airbus Order Tally Explodes To Upside