(Corrects name of Wolfe Research in 13th paragraph.)
Boeing Co. (BA) and Airbus SAS pulled in $129 billion in fresh business at the Paris Air Show with orders for 848 aircraft, straining their production lines as much as the patience of buyers forced to wait years for their jets.
Airbus moved ahead with deals for 466 planes worth $69 billion, edging out Boeing’s haul of 382 aircraft valued at $60 billion. The value at list price exceeded that of last year’s aviation expo in Farnborough in the U.K., where the two combined for about $53 billion.
While Airbus struck an upbeat note at its round-up press conference, saying its 2013 targets were all but clinched, some buyers are showing less enthusiasm at the prospect of the bulging backlog. Qatar Airways Ltd. Chief Executive Officer Akbar Al Baker said he’s pushing Boeing to move him up in line to get more Dreamliners before 2020.
“It’s difficult,” Al Baker said of the prospects of converting into firm orders the options he has on the plane. “It’s a very hot-selling item. If they give us slots next decade we will not be interested.”
The manufacturers are boosting production to respond to the risk of longer delivery times, with Toulouse, France-based Airbus saying it would go to 50 A320neos, a re-engined version of the single-aisle jet, a month by 2020 from 42. Boeing is increasing single-aisle monthly output to 42 by 2014 from 35 last year. At the same time, their ability to lift output further is being stymied by a strain on suppliers.
“People are frustrated they can’t get earlier delivery slots,” John Leahy, the Airbus sales chief, said in Paris. Customers wanting the newest planes -- the re-engined version of Airbus’s best-selling A320, and the A350 wide-body -- now have to wait until 2020.
Carriers looking to buy a 787 Dreamliner or a 737 narrow-body also need patience toward the end of the decade to take delivery, said Randy Tinseth, marketing vice president for commercial airplanes at Chicago-based Boeing.
Based on the number of orders and deliveries, Airbus’s first-quarter book-to-bill ratio on narrow-body jets was the highest since September 2011, according to data compiled by Bloomberg.
Boeing’s backlog of unfilled orders for twin-aisle jetliners, which can cost three times as much as single-aisle aircraft, totaled 1,281 planes through May, compared with 1,031 for Airbus. The tallies were even larger for the smaller models: 3,253 for Boeing versus 3,850 for Airbus, the data show.
The trove of orders is translating into higher stock prices, with shares of both planemakers trouncing equity benchmarks in their home markets. Airbus parent European Aeronautic, Defence & Space Co. (EAD) has surged 40 percent this year, the biggest gain in France’s CAC 40 Index, while Boeing’s 32 percent advance is almost triple the 11 percent increase in the Standard & Poor’s 500 Index.
Boeing secured commitments in Paris for 125 long-range planes, where margins are higher. That compares with 95 for Airbus, even as the European planemaker continued its success in the larger single-aisle plane market, securing 61 percent of the market for the upgraded narrow-body aircraft.
Even for the current A320 family, Airbus may face a shortage of delivery positions “very soon” after signing deals for 88 planes in Paris, CEO Fabrice Bregier said. Airbus is studying higher output on its A350 to meet demand once the largest model becomes available around 2017, he said.
Long waits aren’t unalloyed bad news for the airline industry, because lag times until deliveries can discipline buyers and keep them from adding too much capacity, said Hunter Keay, a New York-based analyst for Wolfe Research.
“Airlines like to tell you these are all replacement aircraft,” Keay said yesterday in an interview. “The reality is they are not. Some are bigger and some are just new additions altogether.”
While planemakers say the slot shortage risks complicating efforts to win more customers, the bottleneck hands them a means to push buyers toward more expensive models. With the lack of A350 positions, Leahy said he’s not even trying to sell the smallest and cheapest version, encouraging buyers instead to sign up for the two largest of the three available models.
Boeing, which booked 105 Dreamliner orders at the show, faces pressure to lift output beyond the 10 a month it is set to reach by year’s end, CEO Jim McNerney said in an interview.
“That’s a great problem to have,” he said.
As the manufacturers churn out ever-higher numbers of twin-engine aircraft, their largest models have struggled to find buyers. Boeing has scaled back output of its 747-8 jumbo, while Airbus fell short of an order goal last year on its A380 double-decker and still has some open production slots in 2015.
In Paris this year, both models logged surprise wins, with Korean Air Lines Co. (003490) agreeing to buy five 747-8s, and Airbus securing an accord with lessor Doric Asset Finance Ltd. for 20 of the A380.
Ryanair Holdings Plc (RYA), Europe’s largest discount carrier, signed the biggest order at the show, for 175 Boeing 737 narrow-bodies valued at $15.6 billion. CEO Michael O’Leary said availability of the product played a role in his choice, as he considers coming back for more before the end of the year.
“It’s easier for us at this point in time to do another Boeing deal because they have the aircraft,” O’Leary said in Paris. “It’s harder for Airbus to do a deal with us because frankly they don’t need the business. They’ve sold a huge number of aircraft.”