Trade

Boeing is Getting Crushed By Airbus

JM Ashby
Written by JM Ashby

It was not necessarily my intention to spend a great deal of time focused on the failure of Boeing's 737 Max program, but this story now intersects with other stories that we regularly discuss here.

Boeing reported the number of planes it received orders for and eventually delivered in 2019 and the numbers fell to the lowest level since 2009.

More importantly, Boeing's deliveries for the year were absolutely dwarfed by deliveries from their European rival Airbus.

Allowing for cancellations and changes to earlier orders, Chicago-based Boeing said it had received just 54 new orders for planes in 2019 and delivered less than half as many as a year earlier, losing the top spot to its European rival for the first time in eight years. [...]

By comparison, Airbus said earlier this month it racked up a net 768 orders last year after cancellations and delivered a record 863 planes.

Boeing said on Tuesday deliveries fell by 53% to 380 planes over the whole of last year, as the MAX’s grounding made it impossible for it to deliver the planes to airline customers, forcing it to halt production earlier this month.

As you know, the Trump regime has started a trade war with Europe by imposing tariffs of at least 25 percent on a board range of European agricultural products and luxury goods in response to subsidies for Airbus.

In a dispute that dates back to the latter days of the Bush administration, the U.S. government claimed that subsidies for Airbus placed Boeing at a competitive disadvantage and the Trump regime became the first to start a trade war over it.

Boeing was still the world's top planemaker before their 737 Max program literally went down in flames so I find it hard to argue that meager subsides for Airbus ever really gave the company an advantage, but it doesn't really matter now, does it? Whatever effect those subsidies had, it's been dwarfed by Boeing's own bad actions and behavior. Boeing executives ignored the warnings of their own employees and pushed sales of a dangerous aircraft that killed hundreds of people and now virtually every American will pay some price for it.

The Trump regime is currently threatening to escalate their trade war with Europe by raising Trump's tariffs from 25 to 100 percent. That won't make any difference to Boeing's bottom line, just as the previous level of tariffs didn't, and the company may not reclaim the top spot for many years if they ever do regardless of what reason Trump uses to impose tariffs on European goods.

Trump's trade war with Europe is effectively a trade war over nothing and it won't help anyone it's ostensibly suppose to help.

Considering how bad the current situation is, I expect we'll see some discussion of a bailout for Boeing in the coming months as layoffs pile up and economic growth slows. And if that happens, Americans will pay for the bailout and we'll pay for Trump's tariffs. Boeing will be the new farmers.

  • muselet

    If anyone thought the WTO ruling and the White House’s subsequent cack-fisted tariffs would be a boon for Boeing—hello, Messrs. Trump and Lighthizer!—they were sadly mistaken.

    Boeing’s problems are structural and won’t be solved by the government either trying to kneecap the company’s competition or shelling out big bucks on a bailout.

    –alopecia

    • Christopher Foxx

      Depends on what you consider “Boeing’s problems” to be. You and I may think it’s the priorities and disregard for safety in relentless pursuit of profits which, certainly, a bailout would do nothing to solve.
      But I’m certain the leadership at Boeing and the politicians that work for them believe their problem is that Boeing’s going to be out money, and that a bailout can very much help solve.

      • muselet

        I read a discussion about Boeing on another site a week or so ago, and the (seemingly reasonably informed) consensus was the merger with McDonnell Douglas is at the root of the company’s problems.

        Boeing was the larger company, goes the argument, but McDonnell Douglas execs were bigger arseholes and—as often happens with arseholes in boardrooms—gained control of the company. Boeing before then was engineering-driven, while McDonnell Douglas tended to play follow-the-leader on design and build aircraft to a price.

        That philosophy led to the continual updating of the 737, which first flew in 1967, when a new plane would have served the company and its customers better. It also led to Boeing losing ground and sales to Airbus.

        I’m not sure Boeing can survive the 737 Max debacle without a significant bailout (loan guarantees, at the very least), but without changes in management’s attitude toward innovation, it will be money down the proverbial. That’s why I say Boeing’s problems are structural rather than financial.

        –alopecia

  • Ceoltoir

    The history of the de Havilland Comet is instructive here. It was revolutionary for its time and was the first jet airliner in service in 1952. The plane however tended to shed its skin in flight. The vacuum left by the failure of the Comet was an opening that an American company, Boeing, which was better known for making bombers for the Air Force at that point, was able exploit with the then new 707.

  • gescove

    “I expect we’ll see some discussion of a bailout for Boeing in the coming months.” I vote for not one single dime unless outgoing CEO Muilenburg pays back his $60M+ cash out.