Trading Boeing Vs Airbus: Rivalry In The Air

January 12, 2024 13:00

Just a few days ago, an accident involving an Alaska Airlines Boeing 737 Max 9, which thankfully didn’t have any significant impact on the health of passengers, brought forward the names of aviation companies such as Boeing and Airbus which are the biggest rivals in the specific industry.

The incident triggered discussion over Boeing’s products and forced Boeing’s stock value to slump for 2 days in a row. In this article, beginner traders will have the opportunity to learn more about Boeing and Airbus which could help them shape an opinion regarding trading aviation industry companies.

Alaska Airlines 737 Max 9 Cabin Panel Makes Boeing Stock Drop

Before we review Boeing’s performance, let’s see what happened with the Alaska Airlines flight. According to media reports, a cabin panel used to fill an emergency exit that was built into the plane, but not required by Alaska Airlines, blew out mid-flight, putting in danger passengers’ lives. Pilots managed to fly the aircraft back to the airport without loss of life or significant injuries among the passengers.

Flight Security Concerns Hurt Boeing

The incident was not the first related to the 737 Max model. Two accidents involving the 737 Max 8 model in 2018 and 2019, resulted in significant loss of life and prompted concerns about the aircraft's safety as Federal Aviation Administration (FAA) investigators highlighted issues in how the autopilot system worked. Twenty months of grounding the 737 Max fleet in 2019 cost around $21 billion. 

Airlines such as United Airlines, AeroMexico, Turkish Airlines and others were forced to ground their fleet and work with Boeing specialists in order to solve any issues. The Alaska Airlines incident prompted companies to review their aircraft fleet condition.  

Boeing’s share value fell by 8% on January 8th, following the temporary grounding of some of the 737 MAX jets by the U.S. aviation regulator. Boeing CEO Dave Calhoun told CNBC reporters on January 10th that the Alaska Airlines blowout was caused by a "quality escape." Asked to explain what this term meant, Calhoun noted that it is “a description of what people are finding in their inspections... anything that could potentially contribute to an accident.” Speaking to Boeing employees, Boeing’s CEO said that “we're going to approach this number one acknowledging our mistake. We're going to approach it with 100% and complete transparency every step of the way.” 

Some analysts saw the new 737 Max 9 incident as a temporary setback for the US company. Others, however, said that “quality escapes” are not acceptable in an industry in which failures can have serious consequences, adding that 171 aircrafts have been grounded by authorities.  

Boeing Loses Ground In The War With Airbus

Until 2019, Boeing was reporting strong sales, declaring more than $100 billion in revenue. Backed by US diplomacy, Boeing gained contracts in Gulf countries against Airbus, but the next years weren’t good for the US manufacturer. Technical issues with the 737 Max airliner and the commercial war between the US and China that pushed the company out one of the biggest markets in the world took their toll.

Source: Admirals MetaTrader 5. Boeing Co. (#BA) - Monthly Chart. Date: 1 Apr 2016 to 12 Jan 2024, captured on 12 Jan 2024. Past performance is not a reliable indicator of future results or future performance.

 

Stakeholders of airlines, such as Michael O’Leary (Ryanair), using the 737 Max  are not satisfied with their fleets getting grounded as there is increasing proof that there are quality control issues.

A Reuters report noted that Boeing delivered 528 aircraft in 2023 and booked 1,314 net new orders, up from 480 deliveries and 774 net new orders in 2022 and its third-best year. It delivered 396 narrowbody 737 jets last year, meeting its revised goal of at least 375 single-aisle planes but falling short of the initial target of 400 to 450 jets.

Airbus Grows And Takes The Throne

Airbus is the European answer to Boeing, formed in 1970 by a collaboration of European aerospace companies seeking to compete with their US counterparts. The first Airbus product was the A300 in 1972, the world's first wide-body, twinjet aircraft. Ever since then, Airbus has produced a wide variety of commercial airliners, including the A340 and A320neo as well as the gigantic A380, a direct opponent of Boeing’s 747 in the long haul market.

Airbus has been the number one planemaker in the world for the last five years. On January 11th, Airbus published its scheduled orders and deliveries for 2023. The report showed that Airbus secured 2,094 plane orders in 2023, a record number for the company as the previous figure was 1,503. Despite supply chain problems, Airbus delivered 735 jets to clients last year, beating its own target of 720 deliveries.

Source: Admirals MetaTrader 5. Airbus Group SE (#AIR) - Monthly Chart. Date: 1 Apr 2016 to 12 Jan 2024, captured on 12 Jan 2024. Past performance is not a reliable indicator of future results or future performance.

 

Airbus commercial chief officer, Christian Scherer, noted that “we originally anticipated aviation to recover sometime in the 2023-2025 timeframe, but what we saw in 2023 was, alongside the single-aisle market, widebody return much sooner than expected, and with vigour.” Schered added: “We have never sold as many A320s or A350s in any given year... Travel is back and there is serious momentum.”

Trading Boeing, Airbus And Other Aviation Stocks As A Beginner Trader

Trading companies such Boeing, Airbus or other aviation companies, such as Embraer, could sound exciting to beginner traders as famous brand names sometimes may play a role in choosing financial instruments for trading. When beginner traders are involved, the challenge is the lack of trading knowledge and experience.

How can beginner traders compensate for these? A good idea would be to start with learning the trading fundamentals using educational materials provided by brokers. Watching webinars and other videos, reading educational articles and how-to guides could help beginner traders boost their knowledge.

Another part of a trading strategy that should not be neglected is using risk management tools such as the stop loss and take profit orders. Risk management tools should be used to reduce risk but also the stress when executing trading strategies. Risk management tools can reduce the loss of funds as much as possible if utilised in the correct way.

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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.

Miltos Skemperis
Miltos Skemperis Financial Content Writer

Miltos Skemperis’ background is in journalism and business management. He has worked as a reporter on various TV news channels and newspapers. Miltos has been working as a financial content writer for the last seven years.