Demand for commercial airplanes fell sharply in 2024, posing a bigger problem for Boeing than even a 25% drop in deliveries.
As Boeing‘s (BA 3.00%) protracted labor strike entered its fourth week, the airplane manufacturer got some more bad news: Airplane deliveries have fallen for a fourth straight month. As local daily The Seattle Times reported on Tuesday, Boeing delivered 44 commercial airplanes to its customers in June, 43 planes in July, and just 40 in August. Tuesday’s tally for September — 33 planes — marks the fourth straight down month for the airplane builder.
Boeing’s bad news
This news isn’t entirely unexpected. Negotiations with the International Association of Machinists that broke down last month resulted in 33,000 machinists walking off the job on Sept. 13. Meaning, for more than half the month of September, Boeing wasn’t building any new 737s, 767s, or 777s in Washington. (Boeing 787s are built at a non-union plant in South Carolina).
Plus, Boeing had already been slowing production of its 737s (the company’s best-selling airplane) to focus on quality, hoping to avoid the repeat of an incident when a door plug blew off of a 737 midair back in January.
Still, the numbers are disturbing.
Earlier this week, Boeing updated its orders and deliveries data to reflect airplane orders and deliveries received through the end of September. Year to date, Boeing has delivered 291 commercial airplanes to its airline customers. Boeing did book 315 gross new orders, including 65 orders in September, which should have been enough to replenish its backlog (currently at 6,197 planes).
However, cancellations, conversions, and changes to the order tally to account for planes that have been ordered — but customers might not actually end up buying — reduced net new orders year to date to just 121 planes.
Result: Boeing’s backlog is still shrinking.
How does Boeing compare to Airbus?
To fully appreciate how bad these numbers are, it’s important to put them in context. Globally, Boeing’s biggest competitor in selling commercial airplanes to airline customers is Airbus (EADSY 3.86%). In September, Airbus reported 50 planes delivered — so 52% better than Boeing. Airbus also raked in 235 gross new orders. That’s 261% more new orders than Boeing.
So clearly, the strike (which hurts manufacturing and deliveries, but shouldn’t greatly affect plane orders) isn’t Boeing’s only problem. And year to date, Airbus has delivered 497 airplanes to its customers, or 71% more than Boeing.
Long story short, Airbus is beating Boeing soundly in the growth rate race.
The bigger picture for investors
Investors also need to view all of the above within the wider context of how these two companies are growing — or failing to grow — over time. And here, the story turns to a tale of slowing airplane demand more generally.
In the case of Boeing, gross orders of 315 through the first three quarters of 2024 equals a 63% slowdown in sales year over year. In Airbus’ case, gross orders through the first three quarters of 2024 stand at 667 planes. That’s as compared to 1,280 gross orders taken in through this time last year — a 48% reduction in demand for Airbus airplanes.
That being said, despite the slowdown in demand for new planes — and in stark contrast to Boeing — Airbus has managed to hold steady and even grow a bit its rate of planes delivered this year as compared to last. Through September 2023, Airbus delivered 488 airplanes; through September 2024, it’s delivered 497.
That’s only 2% year-over-year growth, granted. But that’s still better than Boeing’s decline. And Airbus isn’t contending with a crippling labor strike that will slow its delivery rate even further.
Even at a steep 34 times earnings (but with no net debt), Airbus looks like a better stock than unprofitable, debt-laden, and strike-hobbled Boeing.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
