Boeing and Airbus are the two dominant manufacturers in the global aircraft industry. While Boeing currently has a larger market share and generated higher revenues in the first half of 2015, Airbus has received more net orders so far in 2015 with 815 orders compared to Boeing's 447. Both companies are taking steps to grow their presence in important markets - Boeing is developing its first aircraft assembly facility in China, while Airbus opened a new facility in the US. However, Airbus faces pressure to meet its deadline to deliver the first A320neo aircraft by the end of 2015 after engine problems caused further delays in testing. Overall, while Boeing's financial performance has improved, Airbus has a larger backlog of orders that will support

1. Airbus Vs. Boeing; Which Stock’s Gaining
Altitude
Shoulder:BidnessEtc providesa snapshotof allyou need to know aboutBoeing and Airbus
The global aircraft manufacturing industry is largelydominated by two keyplayers, US-based Boeing Co
(NYSE:BA) andFrance-basedEuropeangroup AIRBUS(OTCMKTS:EADSY).Whichmanufacturer’sstock isa
better bet?
As illustrated in the pie chart below, Boeing is the current global commercial aircraft market leader, in
terms of revenues.
(Place 2014 Global Commercial Aircraft Revenues Pie Chart Here)
For the first half of 2015, Boeing generated total revenues—including those from Commercial and the
Defense, Space & Security (DSS) segment—of $46.69 billion, compared to Airbus’ 28.89 billion euros
($32.57 billion)—includingthose fromthe CommercialAircraft,Helicopters,Defense andSpace segments.
Boeing Ready To Give Airbus Tough Competition In China
Airbus built an A320 assembly facility in Tianjin,China in 2008. In September, Boeing announcedthat it
will be developing a 737 assembly facility in China,in partnership with Commercial Aircraft Corporation
of China, Ltd., (COMAC).
Despite having joined the party late, the development of Boeing’s China facility would give tough
competition to Airbus’ market share in the country. As of mid-2015, according to Airbus, 1,150 aircrafts
were being operated by Chinese airlines, representing a 50% market share in the region, with the rest
being Boeing.
47%
44%
6% 3%
2014 Global Commercial Aircraft Revenues
Boeing Airbus Bombardier Embraer

2. In addition to this, the 737 facility marks the first time the US-based manufacturer has stepped outside
the country witha productionfacility.Thiswouldallow the companytocushionitself fromthe impactof
Congressdecidingagainstrenewingthe USImport-ExportBank’scharter,whichis expectedtoadversely
impact foreign orders.
Alongside the announcement of the development of the assembly plant,Boeing also announcedthat it
hadenteredaGeneral Termsagreementwith ChinaAviationSuppliesHoldingCompany,asapartof which
the manufacturerwoulddeliver300aircraft—including250737 aircraft,and50 widebodyplanes—valued
at $38 billion at list prices.
Airbus Hits Boeing At Home
While Boeingtriesto increase itsfootprintinthe Chinese airlinermarket,Airbus istryingtosteal Boeing’s
market share at home. The company formally inaugurated an A320 final assembly facility in Mobile,
Alabama on September 14. The first delivery from the facility is scheduled for 2016, with the company
aimingtoincrease productionrate atthe $600-millionfacilityuptobetween40and50aircrafts permonth
by the end of 2018.
With both aircraft manufacturers projecting the need for close to 5,000 aircrafts in the North American
regionoverthe nexttwodecades,Airbus’facilityinthe USisseenasa threatto Boeing’smarketshare at
home.
Moreover,Airbuscollaborateswithanumberof US-basedcompanies,such as Pratt & Whitney,General
Electric,Honeywell,andAlcoa,forthe developmentandmanufacturingof itsaircraft.The establishment
of a manufacturing facility on US soil is likely to improve operational performance at the aircraft
manufacturer.
The illustrationbelowshowsBoeingandAirbus’respective marketsharesinEurope and North America.
{Place Region Wise Revenue Pie Charts Here}
A320neo Engine Damage
According to Airbus’ website, the companyhas received around 4,200 orders for its A320neo aircraft. It
has a deadline of delivering the first A320neo aircraft by the end of 2015.
39.74
12.93
North America (In $ Billion)
Boeing Airbus
11.9
26.91
Europe (In $ Billion)
Boeing Airbus

3. AirbusannouncedonWednesdaythatone of twoA320neotest aircraftengineswasdamagedduringhot
weather testing in Al Ain, United Arab Emirates (UAE). This incident puts even further pressure on the
company meeting its delivery schedule, as the test aircraft was made idle.
An earlier problemwith Pratt & Whitney engine on a test A320neo aircraft had led to the aircraft being
made idle forthree months.Thishad ledtoAirbusbeingunableto unveilthe aircraftatthe ParisAirShow
in June this year.
KC-46 First Flight—A Relief For Boeing DSS
Boeing had announced prior to the second quarter earnings release that it would be booking a $536
millionafter-tax charge duringthe quarter,due to cost overrunson the KC-46A PegasusAerial Refueling
Tanker Program. As a result, the company had lowered its full-year adjustedearnings per share (EPS)
guidance from $8.2-$8.4 to $7.7-$7.9.
Following the news, investors had viewed any further delays or cost overruns on the program to be an
impediment to Boeing stock’s growth. Investors found some relief, when the company announced in
Septemberthatithadsuccessfullycompletedthe tanker’sfirsttest flight, withthe plane flyingforatotal
of four hours between Everett and Seattle, at an altitude of 35,000 feet.
News of the first flight provides some relief to analysts and investors, with expectations of the aircraft
manufacturer meeting the production schedule having spurred. Boeing is scheduled to deliver 18 KC-46
aircrafts to the US Air Force by 2018, and manufacture a total of 179 by 2027.
Itisourbelief,gettingbackontrackwiththe KC-46aerial tankerprogramwouldreapbenefitsforBoeing’s
stock. Boeing’s DSSsegmentwouldbe able to cultivate astrongrelationshipwiththe Pentagonif itisable
to deliver on the KC-46A program, aiding future orders from the US Department of Defense.
This would be similar to the relationship that Lockheed Martin enjoys with the Pentagon, with its F-35
Joint Striker Program. Even though the development of the stealth jet has seen its fair share of cost
overruns and delays, analysts believe that it is one of the major reasons behindthe company’s revenue
growth, despite the slowdown in US military spending.
What The Order Book Suggests For Airbus And Boeing
While Boeinghasbeenable to delivermore aircraftcomparedto Airbusso far thisyear, the demandfor
Airbus’ planes has been higher—as indicated by their respective order books. Orders and deliveries for
both companies during the first 9 months of the year are illustrated in the table below.
{Place Order And Delivery Table Here}
Boeing Airbus
YTD Orders (NetOf Cancellations) 447 815
YTD Deliveries 580 446
Air France Long-Haul Route Closures
AirFrance KLM announcedearlierthismonththatitwouldbe restructuringits long-haul routes,asa part
of whichthe airline wouldbe operating93aircraft on itsleastprofitableroutes—mostlythe onesserving
Asia and the Middle East—by the summer of 2017, 14 lower than those operating currently. Thiswould

4. leadtothe carrieroptingtono longertakingdeliveryof the 787DreamlinerfromBoeing,earlierintended
to replace its A340s.
This gives rise to the questions: Is Air France the first of many European carriers to embark on route
closures?Will Middle-Easterncarrierscapitalize onthe absenceof capacityandincrease theirfrequency?
And if so, Airbus and Boeing’s outlook could be heavily impacted.
Conclusion
While things look to be turning around for Boeing with recent developments, recent order numbers
suggestthat the demandfor Airbus’offerings hasbeen greatercomparedto Boeing. Moreover,Airbus’
massive industry-leadingbacklog–northof 6,700 aircraft,equivalentto10 yearsof productionatcurrent
production rates—ensures strong cash flow generation capabilities for Airbus in the long-run.