Airbus versus Boeing: The Rivalry Reaches New Heights
There have been many great business rivalries throughout the ages, but few have been quite as turbulent as that between aircraft manufacturing giants Airbus and Boeing.
Ford versus GM, Apple versus Microsoft, Coke versus Pepsi: all high profile business rivalries that most people have heard of. However, one of the biggest rivalries in business history, Boeing and Airbus, tends to fly a little under the radar (we cannot promise that this will be the last air travel pun).
Man takes to the skies...
Over a century ago, on a beach in Florida, a single passenger undertook the first-ever commercial flight. Now, commercial airlines generate revenue of over $850 billion annually. This staggering growth is thanks to the competition between Airbus and Boeing, which has been the driving force behind continued innovation growth.
For a long time, Boeing was the only real market leader with Airbus not becoming a troublesome competitor until the 1990s. Boeing’s first commercial airliner, the 707, was launched in 1958 with the much larger 747 performing its inaugural flight in 1970. Its larger seating capacity and price was the catalyst for Boeing’s ascension to the throne of airline king.
Airbus had more modest beginnings with the launch of the A300B, receiving its first order in 1970 from Air France. Not until 20 years later did it begin to threaten Boeing’s market share as it began to launch multiple competing products such as the A330 and A340.
As it stands today, both Boeing and Airbus control 99% of the aeronautic manufacturing industry.
Airbus’s gain is Boeing’s loss
On paper, it seems like Boeing is the clear winner in the battle for control of the skies. In 2018, Boeing brought in revenue of $101 billion versus Airbus’s $71 billion, on top of profit of $10.4 billion versus $5.68 billion. Boeing also had almost 150 more orders than its rivals.
These figures do not tell the entire story, however, as Boeing has experienced major issues over the past 6 months alone. Due to a pair of fatal crashes in October last year and March of this year, Boeing has lost a large chunk of business as well as the grounding of their hugely successful 737 MAX line.
These disasters, though tragic, were also a massive blow financially to the airline giant, while waiting in the wings to usurp the crown were Airbus.
Held back by the grounding of its 737 MAX, Boeing has been passed out in 2019 by Airbus in orders as the European-based firm announced the delivery of 458 aircraft in the year from July 2018 to July 2019. Boeing managed only 258 orders during this time, down 38% on the year previous. In July of this year alone, Airbus reported 69 deliveries last month, including 52 A320neo and A321neo jets that compete with the 737 Max.
Airbus has been hot on the heels of their American counterparts for some time now, and it seems they have outright blown them out of the sky (we did warn you about the puns).
As it stands
On 31 July Airbus reported stronger than expected earnings, with revenue rising 23% to $18.32 billion, while Boeing reported its worst-ever quarterly loss of nearly $3 billion, not helped by the $4.9 billion that had to pay in compensation for the loss of the 737 MAX, beating down their stock price.
Boeing’s troubles have had a knock-on effect on other businesses, with Norwegian Airlines ditching their budget transatlantic flights to the U.S, and the European based travel agency Tui announcing they have taken huge losses due to the MAX grounding.
There is little doubt that Boeing will recover from this year's setback. The only question that remains is if they can climb (or fly) their way back to the top. Airbus is not without its own vulnerabilities as Brexit threatens a portion of its business, while it too failed to capitalize fully on Boeing’s failures with the cancellation of its own A380 line earlier in the year.
It is no small task to continuously create new and improved aircraft which meet all customer and safety regulations. Both Airbus and Boeing are well-positioned to continue as leaders in this duopolistic industry, but only time will tell if any competitors should come to the fore. After all, Airbus caught up with Boeing in less than 25 years.
Who knows, perhaps in the future these great rivals may even need to work together. Anyone else picturing two planes holding hands (or wings?) and flying off into the sunset?
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