4 reasons why European Airbus is doing better than Boeing

• On Wednesday, Airbus reported a third-quarter profit of $1 billion. Boeing lost $6 billion in the same period.
• The European company has more orders and appears to be better able to cope with supply chain issues.
• Airbus’s market value is about $28 billion higher than Boeing’s.

Airbus reported its third-quarter earnings on Wednesday, showing its advantage over rival Boeing.

The European aircraft maker reported quarterly profits of 983 million euros ($1 billion), in stark contrast to Boeing’s loss is $6.1 billion. for the same period announced last week.

UBS analyst Ian Douglas-Pennant said investors should be reassured by Airbus’ earnings, “although comments about supply chain weakness may offset that.”

The stock fell before turning positive on Thursday. Although Airbus shares have been flat year-to-date, Airbus shares are worth about $123 billion—$28 billion more than Boeing. Its shares are down nearly 40% this year.

Here are four key ways Airbus has outperformed its US rival this year.

1. Customer trust

Airbus has surpassed Boeing in sales since 2019, when 737 Max. suffered the longest airliner grounding in the United States after two fatal crashes that killed nearly 350 people.

Customers became disillusioned with Boeing after the Alaska Airlines 737 Max crash in January as it signaled quality control problems and affected production.

In the first nine months of this year, Airbus’ total orders stood at 667, more than double Boeing’s 315.

The Airbus A320 family leads the single-aisle aircraft industry and looks set to achieve further success with its revolutionary solutions. A321 XLRwhich will open up longer routes. The first was delivered to Spanish Iberia on Wednesday.

On the same day Riyadh Air ordered 60 Airbus A321neos, despite rumors late last year that the new Saudi airline would choose Boeing 737 Max aircraft for its narrowbody fleet.

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2. Better deal with huge delays

Sales are one piece of the puzzle, along with on-time delivery of aircraft.

“We believe investors’ focus is on aircraft deliveries,” Royal Bank of Canada analyst Ken Herbert said in a note to clients.

Both planemakers have huge backlogs: Boeing has more than 5,400 orders and Airbus has about 8,750.

Supply Chain Constraints labor and raw material costs have held back the industry’s growth this year, but Airbus is doing better. The company has delivered 497 planes this year, compared with Boeing’s 291.

“Airbus’s key challenge is to ramp up production of its popular jetliners beyond even pre-pandemic levels,” Morningstar’s Nicholas Owens said in a note.

Just like last year, Airbus awaits deliveries will increase in the last three months of the year, meaning the company will reach its target of 770 aircraft. The confirmation of the forecast was “perhaps the biggest surprise since the publication,” Deutsche Bank analyst Christophe Menard said in a note.

The main problem for Airbus is a shortage of jet engines, which Bank of America analysts said remains “concerning” but added: “Airbus appears to have much of what they need to meet the recommendations.”

Boeing has much more problems. Regulators 737 Max production limitedand assembly lines slowed down after careful scrutiny of manufacturing processes. Boeing workers also went on strike. in a dispute that is now in its seventh week.

3. Defense and space

Commercial aircraft make up the bulk of both companies’ business, but both have defense and space divisions.

Boeing’s operations were in the red by $2.3 billion in the quarter, largely blamed on losses on military programs.

This also required $250 million spent on Starliner project. The spacecraft has suffered a helium leak and its astronauts are due to return to Earth in eight months rather than eight days – thanks to Elon Musk. SpaceX instead of.

Defense and space Airbus The division has also been hit, with the company announcing 2,500 layoffs earlier this month and taking 989 million euros ($1.08 billion) in costs in the second quarter.

Airbus posted an EBIT profit of €143 million ($155 million) in the quarter, including a €51 million gain from the acquisition of the remaining 50% of OneWeb, a satellite constellation similar to Starlink.

It looks like SpaceX could jeopardize the business of both Boeing and Airbus. Faury did not name Musk’s company during Wednesday’s earnings call, but said the European space industry “needs to transform to remain competitive with other global players, including some new players.”

4. Stability

In a duopoly, it can be tempting to twist the knife and criticize the problems of a struggling rival, but Airbus has been careful with its words in the face of Boeing’s problems.

Faury said in February that Alaska Airlines collapse ‘makes us very humble’ and “it’s never a good thing when an incident occurs, regardless of the type of aircraft.”

Commercial Aircraft CEO Christian Scherer said at the Farnborough Airshow in July: “When one of the players goes astray, the first thing we focus on is what we need to do at Airbus.”

Investors and customers can also gain confidence in Airbus’s greater stability, with CEO Faury announcing in an earnings call that shareholders will vote on whether to extend his contract.

Since Faury took over Airbus in 2019, Boeing has been run by three people.

Dennis Muilenburg and Dave Calhoun both were forced out of Boeing after various crises with the 737 Max. Kelly Ortberg he has only been in power since August but has a plan to turn things around after a turbulent time with strikes, layoffs and regulatory scrutiny.