Airbus shares soar to record high as Boeing faces hard landing ahead

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The timeless Latin maxim “mors tua vita mea” – your death is my life – resonates deeply in the ongoing battle for supremacy within the aircraft manufacturing duopoly.

On Tuesday, 9 January 2023, the French aircraft manufacturer Airbus SE achieved an extraordinary milestone as its shares reached an all-time high of €145. This remarkable accomplishment followed Boeing’s dramatic 8% decline just a day earlier, marking the American company’s most significant one-day drop since October 2022.

While Airbus sets its sights on unprecedented heights in the stock market, its American counterpart Boeing grapples with severe safety concerns looming over its reputation.

Boeing’s Turbulence: Safety concerns and groundings

Boeing is battling significant challenges with the Federal Aviation Administration’s grounding of 171 of its 737-MAX 9 planes following a troubling incident involving an Alaska Airlines flight. Shortly after takeoff, the flight witnessed the unexpected ejection of a mid-cabin door plug. Fortunately, the plane completed an emergency landing without any reported injuries.

The FAA’s decision was swiftly echoed by European regulators, amplifying the impact on Boeing. The grounding is reminiscent of a similar crisis four years ago when the 737 MAX was benched worldwide after two fatal crashes, later attributed to flaws in flight-control software.

Bank of America issued a cautionary note this week, expressing serious concerns about an aircraft delivered as recently as 31 October, 2023, and stressing that Boeing must navigate this reputational hazard zone with utmost caution. The bank’s analysts have warned that continued troubles could undermine public trust in the 737 MAX and potentially hurt sales.

“The incident is alarming, and grounding a fleet of this aircraft type raises questions about what corrective actions will be required and how long they will take to perform,” noted Goldman Sachs in a separate statement. “Any quality control issues introduce risk to the production and delivery schedule,” analysts added.

Ryanair’s Chief Executive Officer, Michael O’Leary, mentioned that Boeing “needs to significantly improve quality control” as they strive to catch up on production delays. 

“The 737 is fine, but it doesn’t need these kinds of short-term reputational issues,” O’Leary said in an interview with the Financial Times. He also expressed concern that traffic and profits at his airline would be impacted due to the incident. Ryanair, a major Boeing client and Europe’s leading airline by passenger numbers, relies exclusively on Boeing 737s for its mainline fleet.

Airbus’ ascent: Sealing deals and expanding horizons

Reports from industry insiders, as cited by Reuters on Monday, indicate that Airbus is on the brink of finalising a significant contract with Delta Air Lines, one of the US’s major carriers. The proposed agreement could potentially include dozens of jets, including extra A350-1000 aircraft, and is poised to play a pivotal role in Airbus’s strategic expansion efforts, particularly in the Asia-Pacific region. An eagerly anticipated official announcement could arrive as early as this Friday.

In another triumph for Airbus, the company recently secured a substantial order from Taiwan’s EVA Air. The order includes 18 long-range A350-1000s and 15 single-aisle A321neo jets, as announced in a press release on Tuesday.

At present, Boeing maintains a higher market valuation at €126 billion compared to Airbus’s €113 billion. Over the past year, Boeing has generated €71.6 billion in revenue, surpassing Airbus’s €63.2 billion in revenue.

Nonetheless, the tides may soon turn in Airbus’s favour, as Boeing’s reputation may suffer a significant blow due to recent events. This could potentially result in Airbus surpassing its American counterpart in the coming weeks.

All eyes are now on 31 January, 2024, when Boeing is scheduled to report its fourth-quarter 2023 results. The management is likely to provide further insights into the economic challenges and potential setbacks that Boeing may face following the incident. Airbus, is set to report its results on 15 February, 2024.