Boeing and Airbus – Post Pandemic Position

The two aerospace giants enter the post-pandemic era in very different positions. Both companies encountered sharp financial impacts from the unprecedented drop in commercial air transportation demand and the resulting decline in aircraft deliveries and new orders. It will take time for the industry to rebound and these two companies will enter the revived marketplace in different ways.

Airbus

Airbus is in an exceptionally strong position and it is embracing its position as a commercial airliner manufacturer. While the COVID pandemic has tempered its generally sustained advance, the company’s fundamentals align well with long-term market requirements.

The global pandemic placed significant stress on Airbus’ financial performance. Given the expected rebound in market demand as the pandemic recedes, the financial challenges are expected to abate. However it may take until 2025 before conditions return to pre-pandemic levels.

Airbus’ total company revenues were €52.149 billion in 2021, up 4% from 2020’s €49.912, but well behind 2019’s pre-pandemic €70.478.

Profitability as measured by unadjusted earnings before interest and taxes (EBIT) was a solid €5.342 in 2021 versus a negative €510 million in 2020. EBIT margin was a10% in 2021, the first time the company has moved above double digit margins.

Long-term debt rose significantly because of the pandemic. It was €8.2 billion in 2019, before increasing to €14.1 billion in 2020 and then dropping to €13.1 billion in 2021.

Boeing

Boeing is working hard to restore trust following two crashes of 737 MAX aircraft and a disastrous effort at crisis management. The damage to the Boeing brand and the resulting impact to the company’s financials was catastrophic. It will take years for the company to overcome the damage.

The global COVID pandemic has exacerbated the difficulties due to the deep decline in demand for air travel and commercial jet transports. Boeing lost billions of dollars and it will be difficult to regains its previous grandeur and market presence.

The fallout from its commercial transport business problems will impact its other segments due to the financial strain and limitation on resources. Funding new initiatives or advancing other core strengths may find that investment funds are not available. This is likely to hinder market competitiveness across all segments.

In its most recent reported full year, revenues appear to have bottomed out and started to turn upward. Total company revenues, across its four segments, totaled $62.286 billion in 2021, up 7% from $58.158 in 2020, but down 38% from a high of $101.127 billion in 2018, the year before the 737 MAX disasters and the subsequent onset of the global COVID pandemic.

Cumulative operating losses over the 2019-2021 period totaled $17.6 billion, with $12.8 billion coming in 2020 and another $2.9 billion in 2021.

In response to the devastating losses, the company was forced to take on debt. In 2018 Long-term debt was $10.7 billion, increasing to $61.9 billion in 2020 and dropping slightly to $56.8 billion by year-end 2021.

As aircraft orders have been delayed and cancelled, Boeing’s backlog has also dropped from a peak of $490 billion in 2018 to $377 billion in 2021.