Boeing faces steep climb in catching up to Airbus

Four years ago, Airbus scored a major victory: For the first time in its history, more of its passenger planes were flying around the world than those made by its rival, Boeing. Airbus has only tightened its grip on the market since.

Shifting the balance of power back in Boeing’s favor will be one of the most difficult challenges facing its new CEO, Kelly Ortberg, who started last week. Pulling that off will require navigating the industrywide challenges hampering both companies while also landing a string of successes — starting with getting plane production back on track.

“Boeing is in a situation that is way more difficult than Airbus,” said Saïma Hussain, an analyst at AlphaValue, an equity research firm. “Airbus is gaining market share while Boeing needs to recover.”

The two companies form a duopoly in the global passenger plane market, but Airbus has far outproduced and outsold Boeing in recent years. Airbus has delivered over 3,800 planes to customers since the start of 2019, while Boeing has delivered about 2,100, according to Cirium, an aviation data provider.

Of late, however, both companies are struggling to make planes fast enough for their customers, who are desperate for aircraft to serve rising global demand for travel.

“Is it frustrating? Of course. Would we love to get more aircraft more quickly? Of course,” Campbell Wilson, CEO of Air India, a Boeing and Airbus customer, said last month during a panel discussion at the Farnborough Air Show near London. But there is a silver lining, he added: “We’re all on the same boat. We’re all suffering.”

Unlike Airbus, however, Boeing has faced twin crises: a pair of fatal crashes in 2018 and 2019 that led to a nearly two-year global ban of its popular 737 Max plane, and a flight in January during which a panel blew off a Max jet at an altitude of about 16,000 feet.

Those events prompted intense scrutiny from regulators and forced Boeing to rethink its culture and practices. And while the January incident resulted in no major injuries, it led to a management shake-up that produced a new CEO, Ortberg, the former head of Rockwell Collins, a major supplier to Boeing and Airbus.

Even with his background in the industry, Ortberg has his work cut out for him.

Most immediately, he will have to oversee negotiations with the union representing production workers, with the aim of avoiding a strike when its contract expires in mid-September. He will also oversee efforts to stabilize production and address quality concerns.

When asked to comment, a Boeing spokesperson referred to a message Ortberg sent to company employees on his first day as CEO.

“While we clearly have a lot of work to do in restoring trust, I’m confident that working together, we will return the company to be the industry leader we all expect,” he said then.

The contrast in the recent fortunes of Airbus and Boeing was on display at the Farnborough show, a biennial gathering that is a venue for deal-making in the aerospace industry. Airbus was celebrating having just secured certification from European aviation authorities of its A321XLR, a long-range variant of the A321neo, by far its most popular passenger plane. Boeing had been working on a similar plane, but the company shelved that project as it dealt with fallout from the Max crashes.

The A321XLR already has more than 500 orders. “That’s been a bigger success than anyone would have thought,” said Cai von Rumohr, a research analyst at investment bank TD Cowen. “Boeing does not have an answer.”

Through July, Airbus has reported 386 new airplane orders, compared with 228 for Boeing. The gap was even wider after accounting for cancellations of previous orders.

In an interview at the air show, Airbus’ CEO, Guillaume Faury, laid out ambitions to build on Airbus’ success. Having taken the lead in the market for single-aisle planes, which drive global aviation, Airbus now seeks to do the same for larger twin-aisle, or wide-body, planes often used on long international flights.

“We would love to do on the wide-body business versus Boeing what we’ve managed to do on the single-aisle,” he said. “We think that’s doable with the products we have.”

But Boeing’s pain isn’t necessarily Airbus’ gain. The companies’ fates are somewhat intertwined: When either stumbles, the supply chain that supports both can suffer.

The two rivals are having trouble finishing planes as fast as customers would like because suppliers have struggled to keep up. The problem is a bottleneck in the delivery of parts, including engines, and industrywide difficulty in replacing the years of experience lost after workers retired early — or were laid off — during the COVID-19 pandemic.

After Boeing’s panel blowout, the Federal Aviation Administration limited the company to producing no more than 38 Max jets per month until it proved it had made sufficient quality improvements. Boeing is producing 20 to 30 a month, but the company has said it seeks to reach the FAA limit by the end of the year.

Boeing has also faced long delays in bringing a handful of important planes to market. The Max 10, the largest Max variant and Boeing’s answer to the popular A321neo, has yet to be approved, for example.

In addition, Boeing is negotiating a new contract with its largest union, District Lodge 751 of the International Association of Machinists and Aerospace Workers, whose 33,000 members are still smarting from concessions a decade ago on pensions and other issues. In a symbolic move last month, the union’s members voted nearly unanimously to authorize a strike, though another vote would take place before a walkout. Negotiations over core economic issues began this week, and the current contract expires Sept. 12.

Airbus is facing its own challenges. Its production rate exceeds Boeing’s, but it has been stymied by delays in receiving engines from CFM International, which is a joint venture between General Electric and Safran Aircraft Engines, a French manufacturer. Faury also told investor analysts last month that the company had faced delays in receiving landing gear and seats.

The company has postponed plans to increase production of the A320 family of planes, competitor to the Max, saying in June that it expected to reach a rate of 75 A320s per month in 2027, a year later than previously forecast. At the time, it slightly cut its production forecast for this year, citing a shortage of parts from suppliers.

While Boeing’s problems are more deeply entrenched, the company has made some progress toward addressing them in recent months.

To improve quality, Boeing has increased training for new hires, expanded oversight of its own operations and of its suppliers, and it is working to simplify its plans and procedures. Boeing has also limited when it allows manufacturing tasks to be performed outside the normal sequence, a practice known as traveled work, which can introduce mistakes. And the company is completing the acquisition of Spirit AeroSystems, an important supplier based in Kansas, which Ortberg visited Monday.

Boeing is working closely with regulators on improving safety and quality and recently started FAA test flights of the 777-9, a wide-body plane designed to fly hundreds of passengers very long distances and for which the company has more than 380 unfilled orders.

Experts say bringing balance back to the competition with Airbus will probably rest largely on Boeing’s next new plane, which may not arrive for another decade. Ortberg will be responsible for laying the groundwork for that undertaking, if not overseeing it, depending on his tenure.

This article originally appeared in The New York Times.