By Chris Isidore, CNN
New York (CNN) — While Boeing is starting 2024 with yet another crisis about its safety and reliability, it reported record orders for the end of 2023 Tuesday.
The American plane maker capped its best year since the 737 Max grounding in 2019 following two fatal crashes, reporting record new plane orders in December and one of its best years for sales ever.
Even more important to its bottom line, since most of the money from selling aircraft is only at the time of delivery, Boeing had the largest number of planes delivered to customers since 2018, the year before the 737 Max grounding kicked off a series of safety and production problems, which together with the pandemic, plunged the company into five years of red ink.
But even Boeing’s good news is getting overshadowed by its latest safety problem, the Alaska Air 737 Max that had a window blow out minutes into a flight Friday night, leading to a grounding of its 737 Max 9 jets and additional canceled flights for its airline customers. Boeing is holding an all-hands meeting Tuesday – not to discuss its strong sales and deliveries, but instead its safety problems.
And its successful sales year still left it far behind rival Airbus in both orders and deliveries.
Boeing reported 1,456 gross orders for the year, which was one of its best years ever. Adjusted for canceled orders, the annual total came to 1,314 commercial aircraft, its third best year on record by that measure and its best total since 2014. In addition, the company was able to add back more than 200 orders which it had previously classified as unlikely to be completed, which lifted its total net orders to 1,576 jets.
It ended the year with 369 total net orders in December, a record month for the company, and a sign that its airline customers have recovered from the pandemic and are eager to add new aircraft to their fleets.
Deliveries for the year reached 528 jets, up 10% from 2022, and more than it delivered in 2020 and 2021, combined.
But the bad news for Boeing is that what used to be a close race with Airbus, the world’s other major commercial jet maker, has turned into a rout. Boeing is now far behind its European rival in both orders and deliveries, with no sign of being able to catch up any time soon.
Airbus has yet to report full-year orders and deliveries, but its totals for the first 11 months of the year are far ahead of Boeing’s total, with 1,395 net orders, compared to the 1,314 annual total for Boeing, with one month of orders yet to report at Airbus. Its 11-month delivery total reached 623, or 18% ahead ahead of Boeing’s total.
Among the problems putting Boeing in the hole vs Airbus is the challenge of orders and deliveries of passenger jets to China in the face of US-Chinese trade tensions. Boeing did book orders for 18 of its 737 Max jets to China in 2023, but that was its first orders of passenger jets since 2017. And it was a fraction of China’s orders from Airbus. As recently as 2015 it was booked 210 passenger jet orders from Chinese customers.
Airbus’ lead is even greater in the single aisle passenger jet portion of the market, which is the best-selling segment of commercial aircraft sales. Boeing’s strength is in widebody jets, used primarily on international routes, and freighter aircraft.
The good news for Boeing is that airline customers, once they pick one type of aircraft in a segment of the market, are unlikely to shift to a different version. Operating two types of aircraft in the same segment can significantly increase costs, both for spare parts it needs to keep on hands to make repairs and for training of pilots, who can’t move between aircraft types without new certification. Those training costs can be significant.
The fact that Boeing and Airbus are the only two major global aviation companies means that Boeing probably doesn’t have to worry about being forced out of business, no matter how extensive its mistakes. Neither company could accommodate all commercial aircraft demand, and both have a backlog of orders stretching back years.
With the latest orders and deliveries numbers, Boeing’s backlog of orders now stands at 5,626 jets, up from 5,324 a year ago.
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