European aerospace behemoth, Airbus Group N.V. EADSY is set to fly high with its fuel-efficient narrow-body A320 jetliner. Media reports have it that the company is geared up to hike production of its best-selling medium-haul A320 aircraft.
Ambitious plans to push up production are an outcome of increased market demand from low-cost carriers and the company’s swelling order book. Airbus Group targets to release 60 passenger jets per month from the A320 family starting from 2018. Before that, the airplane manufacturer has definite plans to boost its current production of 42 A320 jetliner per month to 50 jets per month from the first quarter of 2017. This announcement was made only three months back in Feb 2015.
The latest incarnation of the A320 family – the A320neo – has concluded more than 130 test flights to date. Although Airbus has temporarily suspended test flights for the Pratt & Whitney PW1100G-powered A320neos due to a production-quality issue, the first A320neo delivery to Qatar Airways remains on track before the end of 2015.
With Airbus’ fresh plans of increasing production of A320, the question is whether the latest variant will be able to eat into The Boeing Company’s BA market of 737 MAX. Both A320neo and 737 MAX are in a head-to-head competition.
Running the race at an equal pace, Chicago based Boeing also announced that it plans to increase output of its 737 jetliner to 52 aircraft a month from 2018 from 42 presently. The company also hinted that it could manufacture 60 737 jets each month. This however leads to a crucial concern of mounting pressure on the suppliers as Airbus shares around 60% of its suppliers with its archrival Boeing.
While Airbus reported a total customer order backlog of 6,353 aircraft at the end of Mar 2015, Boeing’s customer backlog stood at 5,715 aircraft. New single-aisle aircraft ruled the order book for both the companies.
Airbus’ A320neo has been able to clinch a higher market share than Boeing’s 737 MAX giving it a lead in the narrow-body segment. A320neo’s superior passenger comfort feature gives it an edge over 737 MAX’s lighter weight and more fuel efficient attributes.
Yet, Boeing’s Next Generation 737 jets as well as its MAX model continue to be the pillar of its strength in the commercial airplane sector. Recently, Boeing nabbed a big order from a Chinese consortium for 737 Max. The unprecedented rise in passenger traffic in the Asia-Pacific region is bringing a steady in-flow of orders.
Jet aircraft manufacturers will see strong demand in the commercial aircraft market, primarily in China, India, the Middle East and Africa, and other emerging countries due to the growing popularity of the low-cost carrier business. The companies’ continuous rollout of advanced features will decide who stays in the front line.
Zacks Rank
Airbus Group currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the same industry are Leidos Holdings, Inc. LDOS and Northrop Grumman Corporation NOC, both carrying a Zacks Rank #2 (Buy).
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