Boeing orders up but Airbus still leads

Thu Jan 5, 2012 6:04pm EST

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(Reuters) - Boeing Co lost the 2011 order race by a wide margin and lagged its archrival Airbus on deliveries for the ninth year in a row, figures showed on Thursday, but it pledged to fight back in 2012 with big sales of a revamped narrowbody.

At Boeing, a 3 percent increase in deliveries from 2010 showed the resilience of overall aircraft production, in contrast with many other sectors of the economy. But it also confirmed difficulties in getting up to speed on the latest aircraft models, including the revolutionary carbon-composite 787 Dreamliner.

Boeing said on Thursday it delivered 477 commercial planes last year, up from 462 in 2010 and nearly in line with a company forecast of about 480 aircraft. The U.S. jet maker booked net orders for 805 planes, buoyed by the best-selling 737 narrowbody and its widebody 777, which set an annual order record for the company.

After taking longer to decide on a strategy for meeting demand for more fuel-efficient smaller jets, Boeing sank to the worst market share in the 40-year history of its rivalry with Airbus in 2011 but is expected to push the pendulum the other way with its competing 737 MAX in 2012. On average, the two aircraft manufacturers have a roughly equal share of the $100 billion annual passenger jet market.

In terms of gross orders, which are not adjusted for cancellations, Boeing had a 38 percent market share in 2011 with 921 compared with Airbus's end-November total of 1,521 orders (See graphic on orders, link.reuters.com/pak85s).

Industry sources say the European firm is set to end the year with orders well above 1,600 once its final figures are released on January 17.

Randy Tinseth, vice president of marketing for Boeing commercial airplanes, said Airbus logged "some significant orders early in 2011" but added the tide turned to Boeing's favor after the U.S. company announced plans for the MAX, a revamped 737 with new engines due to enter service in 2017.

"I think we took the momentum away in the latter part of the year, especially on the wide-body side and with the MAX," Tinseth added. "And I think this year is all going to be about the MAX."

Kenneth Herbert, an analyst with Wedbush Securities, called 2011 deliveries "disappointing" particularly for the 787 Dreamliner but said the order book was encouraging.

"Maybe 2012 isn't as strong as 2011 but I think you're going to see continued strength from the 777, the 737 MAX and I wouldn't be surprised if later in the year you start to see 787 orders come back to life," Herbert said.

Boeing delivered three 787s and nine 747s last year, missing

its combined delivery target of 15 to 20 planes for those models. Unfilled orders for the 787 and 747 stand at 857 and 97, respectively.

Herbert said increasing production of the 787 Dreamliner and banking 737 MAX orders would be critical to Boeing's performance as its defense unit faces sales pressure. This week, Boeing said it would shutter a military facility in Kansas in response to a tightening U.S. defense budget

Boeing currently produces 2.5 Dreamliners a month and has said it can steadily raise production to reach 10 a month by the end of 2013.

"Clearly you need to see a lot of the strength on the commercial side as it is more than going to offset the weakness we expect to see on the defense side," Herbert added.

AIRBUS SEEN BEATING ITS DELIVERY GOAL

Meanwhile, industry sources said Airbus delivered more than 530 jets in 2011. Airbus had predicted 2011 deliveries of 520-530 aircraft, up 4 percent from the previous year, as urbanization and demand from emerging markets cushion both leading aircraft manufacturers from a feeble Western economy.

Airbus, a unit of EADS, declined to comment on its 2011 performance ahead of a company presentation on January 17.

Airbus overtook Boeing in 2003 in a global passenger jet market valued at $4 trillion over the next 20 years.

Their rivalry led to what became the world's largest trade dispute over mutual accusations of subsidies, with World Trade Organization cases expected to reach a climax in 2012.

Steady deliveries are seen as the lifeblood for both industrial titans next year as doubts gather over the economy and the ability of airlines to pay for their aircraft.

Barring global recession or a disorderly break-up of the euro that could trigger widespread economic contagion, the industry insists for now that financing for the $80 billion to $100 billion needed annually to pay for deliveries is secure.

Airbus also won a bigger share of orders than its U.S. rival in 2010 after promising to revamp its best-selling A320 150-seat jetliner with new fuel-saving engines.

The two companies are preparing for a major battle over a $16 billion order from United Continental Holdings Inc's United Airlines in the first quarter expected to cover approximately 180 aircraft, including possibly 130 of the latest generation of revamped 150-seaters.

Industry attention in 2012 will focus on how well both companies perform in building the next generation of carbon-composite wide-body passenger jets, the 787 Dreamliner which entered service last year and the mid-sized Airbus A350.

Shares of Boeing, a Dow component, closed down 1.1 percent at $73.53 on the New York Stock Exchange.

(Additional reporting by Kyle Peterson; Editing by Christian Plumb, Gerald E. McCormick and Bernard Orr)

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