Airbus’ strong defense business performance in 2020 underscores the relative success of the firm in a year rocked by the COVID-19 pandemic. A thickening defense order book is a sign that Airbus may be gaining on its rival Boeing, which is especially noteworthy as it is an area in which it has historically trailed. Now, with Boeing recommending operators ground their 777 aircraft after a mid-flight engine failure, Airbus looks poised to pull ahead of the US firm, says GlobalData, a leading data and analytics company.
According to GlobalData analysis, all models of the 777 aircraft account for 4.8% of the global commercial fixed wing market, and 13.2% of Boeing’s market share. Of that, it is recommended that only a subset operating Pratt & Whitney 4000-112 engines be grounded. The grounding comes as a major setback, representing yet another blow to consumer confidence, which has already been rattled by the protracted 737 MAX saga. This may drive customers to rivals such as Airbus, just at a time when they are strengthening in other areas.
Harry Boneham, Associate Analyst at GlobalData, comments: “Large defense contracts such as the 38 new Eurofighter aircraft for the German Air Force have played a large part in growing Airbus’ defense order book in 2020. While defense revenues were down 4.2%, this can be attributed, in some part, to COVID-19-related facility closures in France and Spain. However, Airbus recorded a 39.2% increase in net orders, indicating a strong performance in an historically weaker business segment coming out of the COVID-19 pandemic.
“For some time, Airbus has surpassed Boeing in terms of revenue, particularly in the commercial aircraft market. In 2019, before COVID-19-related disruption, Airbus’ commercial aircraft revenue came to $65.5bn compared to Boeing’s $32.2bn. Boeing, however, could count on a stronger defense business to make up some of the lost ground on its European rival.
“Finally, three targets have been set by which the company can benchmark its success in the coming year. These include very manageable targets such as delivering the same number of commercial aircraft deliveries as in 2020 (566). This indicates the security and confidence of Airbus in its business position. Boeing, on the other hand, has just reached a $2.5bn settlement with the Department of Justice over the last grounding of the 737 MAX, and is now faced with a new 777 grounding. This contrast is stark going into 2021.”
