Reggaebird
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Analysis Of Airbus/Boeing 2005 Sales Figures

Mon Jan 02, 2006 1:50 am

I found this simple chart very helpful in understanding how significantly Boeing trounced Airbus in sales this year. Despite the obvious larger total number of firm orders, Boeing beat Airbus in every category except single aisle. It should be noted that the single aisle category was severely skewed by China's "political purchase" of 150 machines from Airbus. It should also be noted that Boeing was also originally tapped for a sale of 150 machines but lost 80 of those after the US President criticized China for human rights violations just prior to his visit with the Chinese President. Additionally, Boeing has not counted those 70 machines in their numbers.

What is most astonishing about these numbers is the fact that Boeing has finally figured out how to counter the Airbus wunderkind's (Leahy) sales tactics.

http://seattletimes.nwsource.com/new...business/links/boeingorders30.html

[Edited 2006-01-01 17:59:43]
 
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USAF336TFS
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RE: Analysis Of Airbus/Boeing 2005 Sales Figures

Mon Jan 02, 2006 1:56 am

Quoting Reggaebird (Thread starter):
It should be noted that the single aisle category was severely skewed by China's "political purchases" of 150 machines from Airbus and 70 from Boeing.

That's a very astute observation. China had floated rumors, before the meeting with President Bush, that they were prepared to order 150 737s. It then turned out to be 70, which is still a nice order for Boeing...

That 150 number can be substantially lower when finalized.

Regards, and Happy New Year to all,

Sal
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ikramerica
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RE: Analysis Of Airbus/Boeing 2005 Sales Figures

Mon Jan 02, 2006 1:56 am

Another thread?

News flash: Boeing sold way more widebodies in 2005 accounting for a huge lead in future revenue, but the A320 family is pulling ahead of the 737NG especially with new carriers, so Boeing's Y1 (797) is on the way sooner than many others predicted despite huge backlog.

With so many other threads on the topic, no reason to add anything to this thread beyond that!
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Lumberton
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RE: Analysis Of Airbus/Boeing 2005 Sales Figures

Mon Jan 02, 2006 1:57 am

Interesting comparison even though the value of the sales figures are somewhat speculative since they use "list prices" rather than actual sales figures, which aren't in the public domain. I found Mr. Humbert's comments at the Dubai Air Show very interesting regarding market share. It seemed to imply, for me at any rate, that he wasn't concerned with out selling Boeing, just for the sake of playing the numbers game. I took this as a his main focus would be on profitability. Right? Wrong?
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ikramerica
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RE: Analysis Of Airbus/Boeing 2005 Sales Figures

Mon Jan 02, 2006 1:59 am

BTW - in that table, did they just squish a 777 for the 767/787 graphic? The APU exhaust cone shape is not 767/787 at all...
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Stitch
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RE: Analysis Of Airbus/Boeing 2005 Sales Figures

Mon Jan 02, 2006 2:00 am

Quoting Reggaebird (Thread starter):
It should be noted that the single aisle category was severely skewed by China's "political purchases" of 150 machines from Airbus and 70 from Boeing. It should also be noted that Boeing was also originally tapped for a sale of 150 machines but lost 80 of those after the US President criticized China for human rights violations just prior to the contract signing.

Boeing should get those orders in 2006, probably in late Q1 or early Q2, to maintain political "parity", so in the end both companies should log 150 sales in 2006.

[Edited 2006-01-01 18:15:24]
 
Scorpio
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RE: Analysis Of Airbus/Boeing 2005 Sales Figures

Mon Jan 02, 2006 2:02 am

Quoting Reggaebird (Thread starter):
It should be noted that the single aisle category was severely skewed by China's "political purchases" of 150 machines from Airbus and 70 from Boeing.

Nope. Neither of those are counted in the totals for 2005.
 
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RE: Analysis Of Airbus/Boeing 2005 Sales Figures

Mon Jan 02, 2006 2:04 am

Quoting Lumberton (Reply 3):
I took this as a his main focus would be on profitability. Right? Wrong?

Absolutely right.... The same thing Mr. Condit said, when faced with dwindling marketshare at Boeing.
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Reggaebird
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RE: Analysis Of Airbus/Boeing 2005 Sales Figures

Mon Jan 02, 2006 2:12 am

Quoting Ikramerica (Reply 2):
News flash: Boeing sold way more widebodies in 2005 accounting for a huge lead in future revenue, but the A320 family is pulling ahead of the 737NG especially with new carriers, so Boeing's Y1 (797) is on the way sooner than many others predicted despite huge backlog.

Airbus is pulling ahead with the A320 because they are known to sell them at outrageously huge discounts. It is the most public secret in the commercial aviation industry. I also think that Boeing tends to do pretty well with established and stable carriers. It's nice to sell to new carriers but manufacturers have to be weary of having too much of their backlog in the hands of airlines that may not be around when the inevitable LCC shakeouts occur (already happening in the north american markets).

On your other point, Boeing and Airbus would be foolish if they did not heed the call of the marketplace and improve fuel-efficiency of their entire product line. I think that Boeing's 737 replacement is moving forward because Boeing has technology and money to do it now . This is in contrast to Airbus, which is severely tied down with development costs for the A380 and the new A350 and does not appear to have any new technology to run with.

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RE: Analysis Of Airbus/Boeing 2005 Sales Figures

Mon Jan 02, 2006 2:17 am

Quoting Reggaebird (Reply 8):
Airbus is pulling ahead with the A320 because they are known to sell them at outrageously huge discounts

Name one airline CEO that has publically stated that they 'Raped' Airbus before you make such a stupid statement.
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ikramerica
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RE: Analysis Of Airbus/Boeing 2005 Sales Figures

Mon Jan 02, 2006 2:34 am

The A320 is pulling ahead because it is a good aircraft even if a little heavier. Cost to own is roughly the same, but has better space inside. 737NG saving grace is it's range (especially the 738), which was tailor made for USA transcons, while A320 was designed just a bit short on that one. Okay for airlines hubbed 1/3 to 1/2 way across the country or who also have 757s in the fleet, but not for some carriers who want to use the plane on all domestic routes should they need to.

Newest A320s perform better, and one would assume Virgin America won't have any issues, but had the A320 had the range the 738 does, one would guess it would have sold even better, sooner.
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Scorpio
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RE: Analysis Of Airbus/Boeing 2005 Sales Figures

Mon Jan 02, 2006 2:42 am

Quoting Reggaebird (Reply 8):
Airbus is pulling ahead with the A320 because they are known to sell them at outrageously huge discounts. It is the most public secret in the commercial aviation industry.

Aah yes, that explains why Airbus has, over the last few years, been more profitable than the Boeing Commercial Airplanes division, and has higher margins.

Oh no wait, it doesn't...

Seriously: change the tune, this one's getting pretty old.
 
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RE: Analysis Of Airbus/Boeing 2005 Sales Figures

Mon Jan 02, 2006 2:57 am

Quoting Scorpio (Reply 11):
Seriously: change the tune, this one's getting pretty old.

Hey, I agree with you! Shock and awe...

I mean, if a company consistently sells a product below profit, they fail. Airbus is doing fine.

If the A320 sells for less than the 737NG on average (a big if, but let's assume it does), maybe it costs less to make? Maybe they can offer better volume discounts for new carriers due to production efficiencies? Maybe they can offer better maintenance contracts?

Either way, that is part of what makes the A320 a more desirable aircraft for many. You can't separate that out from the product, which also happens to carry more cargo and has better passenger space.

Thus the only way B can overcome this advantage is to introduce the 797 with lower production costs in line with the savings introduced in the 787.

PS - I fly in the 737NG all the time and think it's a great little plane. But I also think it could be a better plane than it is with a clean sheet redesign. And so does Boeing.
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RE: Analysis Of Airbus/Boeing 2005 Sales Figures

Mon Jan 02, 2006 11:04 am

This thread will stay on topic. If you are going to post stuff, please ensure it is backed up with facts. I don't want to have to remove low-quality flamebait from this topic. If I do, the offending posters can expect to have their posting privileges suspended.

V/F
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whitehatter
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RE: Analysis Of Airbus/Boeing 2005 Sales Figures

Mon Jan 02, 2006 11:12 am

Quoting Reggaebird (Reply 8):
Airbus is pulling ahead with the A320 because they are known to sell them at outrageously huge discounts. It is the most public secret in the commercial aviation industry.

something which is no secret at all is that Airbus is profitable, and substantially profitable.

So if the A320 is their main product and it is sold at massive discounts, where do the profits come from?

You cannot just make the bold statement that Airbus sells at huge discounts to gain market share and then ignore the bottom line, which is REAL profit. The A320 also pays royalties on the design to investors, yet still those profits stack up. Despite all the 'political' and 'impossible' deals, the money keeps rolling in.

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NAV20
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RE: Analysis Of Airbus/Boeing 2005 Sales Figures

Mon Jan 02, 2006 12:00 pm

Neither firm makes large profits, expressed as a percentage of turnover. That's pretty well inevitable in a field like aeroplane manufacture, given the need for high research and development expenditure, long lead times, expensive materials and technology etc.

But there is another factor reducing profits - the existence of a classical duopoly, two firms only serving a given market, each offering comparable products. Both Airbus and Boeing, up to the present time, have been producing broadly similar products - so both have been forced to keep prices at marginal levels. And both have had, in broad terms, to be satisfied with about half the available market for some time.

The outcome of a duopoly is usually a 'Nash equilibrium'; neither firm able to raise prices without sacrificing market share. The only way out of the deadlock is for one firm either to raise the quality of its products so that they command higher prices than its competitor's, or to lower its production costs and thus be enabled to reduce its prices while remaining profitable.

More info. on here:-

http://en.wikipedia.org/wiki/Bertrand_duopoly

That duopoly is basically why both firms have been paying a lot of attention to keeping production costs down. And why Boeing, in particular, have put a lot of effort into improving its product quality; particularly, seems to me, in the area of fuel economy.

On the face of it, Boeing have made a lot of progress this year in breaking the duopolistic deadlock in the midsize sector. Most significantly, there seems to be little doubt that the 777 is selling at quite high prices because it is quite simply a better product. The fact that Boeing claims very low production costs for the 787, as well as better quality, may prove to be even more significant in the next couple of years.

It is up to Airbus to respond quickly and effectively, particularly in the midsize sector; otherwise, seems to me, Boeing's prices (and profits) will no longer be constrained by 'duopoly' conditions, at least where midsizes are concerned.
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qutaiba
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RE: Analysis Of Airbus/Boeing 2005 Sales Figures

Mon Jan 02, 2006 12:37 pm

Quoting NAV20 (Reply 15):
It is up to Airbus to respond quickly and effectively, particularly in the midsize sector; otherwise, seems to me, Boeing's prices (and profits) will no longer be constrained by 'duopoly' conditions, at least where midsizes are concerned.

Airbus initial response is the A350, as for production efficiencies contributing to cost reductions that is a bit out of my league, but it is advertised to be 'several' tonnes lighter than the A330.

Also wouldn't a higher price 787 per say increase the ownership costs, especially for finance purchase, which may make some airlines look at the short-medium range savings in procurement?
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NAV20
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RE: Analysis Of Airbus/Boeing 2005 Sales Figures

Mon Jan 02, 2006 1:14 pm

Quoting Qutaiba (Reply 16):
Also wouldn't a higher price 787 per say increase the ownership costs, especially for finance purchase

Yes it would, Qutaiba - but only marginally. The cost of operating a capital asset like an airliner over its working life dwarfs the original acquisition cost. People mostly don't buy cheap thirsty cars, they are usually prepared to trade off a higher price against greater economy in use. In any case, as far as I know the 787's current list price is some $30M. below that of the A350; so all the signs are that it is cheaper as well as better.

I agree that the A350 is Airbus' initial response - but they've had to aim it midway between the 787 and the 777, trying to use one model to compete with two. Personally I don't think the A350 alone is anything like an adequate response; and the order situation so far seems to vindicate that view.

There is one aspect of classical duopoly theory that could operate in Airbus' favour, and that is production capacity. If one of the two firms succeeds in breaking the doupoly, the next question that faces it is how far it should press home its advantage.

In theory it could 'go in for the kill' - shoot for 100% of the market. But - starting from a fifty-fifty situation - that would literally require a doubling of its production capacity; which would entail a doubling of the commercial risk. In addition, it would mean diverting a high proportion of future cash flow into developing that extra capacity, which in turn means paying smaller dividends to the shareholders for long periods.

My guess is that Airbus' best hope is that Boeing will not take the risk of jacking up 787 production too high - leading to long delivery times for the 787, which will make room for some A350 sales because it will be available earlier. But I still feel that the A350 can only be a stopgap - Airbus MUST aim to develop at least one completely new model, matching or bettering the quality of the 787 in all respects, as soon as possible.
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iwok
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RE: Analysis Of Airbus/Boeing 2005 Sales Figures

Mon Jan 02, 2006 1:44 pm

Quoting Reggaebird (Reply 8):
This is in contrast to Airbus, which is severely tied down with development costs for the A380 and the new A350 and does not appear to have any new technology to run with.

I'd be willing to bet that both companies have contingency plans in place for rapid development of the next generation single isle twin. If A or B makes a move, the other will respond immediately, and they'll make the resources available. This segment of the market is just too critical to ignore. I bet both are probably waiting for the next engine upgrades to be made availably.

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qutaiba
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RE: Analysis Of Airbus/Boeing 2005 Sales Figures

Mon Jan 02, 2006 6:21 pm

thank you for the excellent reponse NAV20, you're on my RR list
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Glom
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RE: Analysis Of Airbus/Boeing 2005 Sales Figures

Mon Jan 02, 2006 9:16 pm

Can anyone normalise this year's order to pounds of payload sold? I think that's more of an accurate indication of the relative success of the manufacturers.
 
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RE: Analysis Of Airbus/Boeing 2005 Sales Figures

Mon Jan 02, 2006 9:41 pm

Quoting Ikramerica (Reply 12):
If the A320 sells for less than the 737NG on average (a big if, but let's assume it does), maybe it costs less to make? Maybe they can offer better volume discounts for new carriers due to production efficiencies? Maybe they can offer better maintenance contracts?

Good points, Ikramerica. Whatever the mythology that abounds about the A320, two points are unquestionable.
Firstly,the A320 accounts for about 60% of Airbus operating profit. If this figure were any less, then they either sell the widebodys at very advantageous prices, or they cost next to nothing to build (neither of which I believe to be fundamentally true)

Also, in the past few years, Airbus has made more profit per frame on the A320 than Boeing have on the 737 (not by much, but it has to have done for the accounts to show what they do).

FWIW, I think the dramatic increase in 737 turnover will substantially increase its profitability for Boeing - i.e. past performance may not be a guide to the future)

Whatever, Airbus make a LOT of money from the A32x series.

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TNboy
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RE: Analysis Of Airbus/Boeing 2005 Sales Figures

Mon Jan 02, 2006 9:42 pm

Interesting that only ten years ago, Boeing said it had secured 69.7% share of the market for new commercial jets; Mc Donnell Douglas had 9.9 per cent, and Airbus had 14.8 per cent. It has been an interesting ten years!
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RE: Analysis Of Airbus/Boeing 2005 Sales Figures

Mon Jan 02, 2006 10:25 pm

Quoting NAV20 (Reply 17):
My guess is that Airbus' best hope is that Boeing will not take the risk of jacking up 787 production too high - leading to long delivery times for the 787, which will make room for some A350 sales because it will be available earlier. But I still feel that the A350 can only be a stopgap - Airbus MUST aim to develop at least one completely new model, matching or bettering the quality of the 787 in all respects, as soon as possible.

As always, right on the money NAV. I believe that the boys and girls in Chicago are planning just what you alluded to... Word is that they will start building 787 frames in 2007 and park them prior to EIS. I've also read that they are seriously looking at substantial production increases and capacity to support those higher production goals. I don't see how Boeing has any other choice. The demand for both the 777 and 787 must be testing their current production capability.

Regards and Happy New Year to all,
Sal
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manni
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RE: Analysis Of Airbus/Boeing 2005 Sales Figures

Mon Jan 02, 2006 10:38 pm

Quoting NAV20 (Reply 17):
My guess is that Airbus' best hope is that Boeing will not take the risk of jacking up 787 production too high - leading to long delivery times for the 787, which will make room for some A350 sales because it will be available earlier.

Interesting that people keep repeating this dubious theory. However I strongly disagree. Airbus latest customer for the A350, Bangkok Airways, will not take delivery of their aircraft before 2012. No doubt, would they have wanted the 787, they would have been able to get them aswell in 2012. Qatar Airways, apparently had production slots reserved for up to 60 787, right from the start. Instead they choose the A350 and let, apparently, Qantas fill in their slots. Just 2 examples, where, despite the 787 being available earlier or at the time the airline wishes to take delivery of their aircraft, the airlines opted for the A350 instead. Nav's theory doesn't stand a chance here.
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NAV20
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RE: Analysis Of Airbus/Boeing 2005 Sales Figures

Mon Jan 02, 2006 10:42 pm

Quoting USAF336TFS (Reply 23):
I believe that the boys and girls in Chicago are planning just what you alluded to...

Happy New Year to you too, Sal.

So they're inclined to go in for the kill? I suppose I'd maybe have done the same, given the circumstances. But then I never had the luxury of seeing a competitor get himself into such a vulnerable position.

It would be in the best American tradition, anyway. "Go for broke." Or, alternatively, "I purpose to fight it out on this line if it takes all summer."

[Edited 2006-01-02 15:13:50]
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USAF336TFS
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RE: Analysis Of Airbus/Boeing 2005 Sales Figures

Mon Jan 02, 2006 11:04 pm

Quoting Manni (Reply 24):
Nav's theory doesn't stand a chance here.

With respect, NAV's "theory" as you called it, is based on the fact that the customer either wants:

1) A clean sheet designed aircraft or
2) A derivative aircraft (Whether you agree the A350 is or is not is irrelevant... The market perceives it as such).

Therefore, while delivery times are certainly a consideration, the product's strenghths and weaknesses are the major factors that determine sales.
And yet again, the numbers speak for themselves.

Happy New Year to you too Nav. I think 2006 will hold many surprises for all of us aviation nuts.  bigthumbsup 

[Edited 2006-01-02 15:09:30]
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NAV20
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RE: Analysis Of Airbus/Boeing 2005 Sales Figures

Mon Jan 02, 2006 11:29 pm

Manni, with respect, I wasn't really advancing a 'theory' - more an economic principle, namely the nature and consequences of the duopoly.

If you said that economic theory doesn't govern the whole of business, I'd agree with you. But some understanding of economics is essential to business, in the same way that you have to know the alphabet before you can start learning to read.

I can probably boil my prevailing view down to one more quote - from another distinguished American from what I consider to be the 'finest hour' of the United States, the 19th. Century - Ralph Waldo Emerson:-

"Build a better mousetrap and the world will beat a path to your door."

In aviation terms - like the DH4, the Tiger Moth, the DC3, the Mosquito, the Boeing 707, and other revolutionary designs - the 787 shows every sign of being the next 'better mousetrap' of our time.

[Edited 2006-01-02 15:34:34]
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JayinKitsap
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RE: Analysis Of Airbus/Boeing 2005 Sales Figures

Tue Jan 03, 2006 10:20 am

Starting a 2nd 787 line has some big financial risks, but not starting it could possibly be worse. Running a line at max capacity usually involves overtime and also little cushion for correcting problems on the line. Overtime is not effective in the long run and boosts labor costs substantially. I think one of the problems with Boeings buildup in the 90's is they were running like 60 hour weeks almost constantly. It just burned out the workers. It also would entail telling your customers "Sorry, but we have a 3-5 year backlog", that can cause them to look elsewhere.

Boeing is getting their 2nd 737 line going, so they already see that as the solution to boost capacity. Considering that the 737 replacement is likely a composite barrel, the 2nd line might only be making 737's for like 5 years.

A second line would take a substantial investment for Boeing and their partners. I would expect that this 2nd line would need to produce 250 planes to break even itself. I've read that currently the limit on production is between 8 & 10 frames a month maximum. With 2, something like 14 could be produced per month, or about 160 per year. Could Boeing sell 160 per year, I think yes for several years, but it might fall off in the future.

A positive of the 2nd line is if the 737 replacement is composite, a properly designed plant could produce in low volume the prototypes, return to 787 production, then switch over to the new plane. The 737 replacement would need 2 or 3 lines to reach 30 per month itself.

A 2nd postive would be more 787 capacity would take some pressure off of the 777 line. With 131 orders this year and 40 produced it is also sold out for years to come. Having capacity in the 787 would give the sales people some options to either sell a 787 or a 747, instead of losing the sale.

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