The battle for airplane supremacy rages on with The Boeing Company (NYSE:BA) nabbing a deal worth $30 billion, and rival European Aeronautical Defense and Space‘s Airbus, receiving an order worth $11.5 billion. The Boeing Company (NYSE:BA)’s order was for its much anticipated, but troubled, 787 Dreamliner, and Airbus’ order was for its 135 A320neos. Here’s what you need to know.
The Boeing Company (NYSE:BA)’s Dreamliner has had its issues, and is just coming off a four-month grounding because of lithium-ion-battery issues. But some airlines seem to be letting bygones be bygones. GE Capital Services, British Airways, Air Lease, United Airlines, and Singapore Airlines all placed orders for the 787-10 version of the Dreamliner, showing that they’re putting money on the Dreamliner’s issues becoming a thing of the past.
However, easyJet plc (LON:EZJ) decided to go with Boeing’s rival, and placed an order for 135 planes from Airbus — 100 of which will be the A320neos. easyJet plc (LON:EZJ)’s decision came after 18 months of comparing The Boeing Company (NYSE:BA)’s Dreamliner to the A320. What cinched the deal, according to EasyJet’s CEO, Carolyn McCal, was a “substantial discount” for the A320 planes.
The winner is…
Both Boeing and Airbus have touted their planes as being the best of the best in an attempt to be the top dog for commercial aircraft production — and there’s good reason. With an estimated $100 billion-a-year jet market, potential profits from aircraft orders are substantial.
And while both Airbus and The Boeing Company (NYSE:BA) received lucrative orders, Airbus’ win over Boeing for the EasyJet order may be especially hard for Boeing to swallow. easyJet plc (LON:EZJ) is one of the world’s largest budget airlines, and Boeing used to be it’s main supplier. However, a decade ago, Airbus beat out Boeing to become the main supplier for EasyJet, and Boeing has been trying to regain its position since.
What to watch for
The showdown between The Boeing Company (NYSE:BA) and Airbus is far from over; they’ve been battling it out for years, and that’s unlikely to change. But what makes this round especially exciting is that both Boeing and Airbus are touting next-generation planes, and clearly have high stakes in the game. Whose next-gen plane is superior is still undecided, but considering the potential profit to both companies, this is something investors should closely monitor.
The article Boeing Nabs a $30 Billion Deal, but Airbus Isn’t Far Behind originally appeared on Fool.com and is written by Katie Spence.
Fool contributor Katie Spence has no position in any stocks mentioned. Follow her on Twitter @TMFKSpence. The Motley Fool has no position in any of the stocks mentioned.
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