Title of the Article Boeing orders jump but trail Airbus for 4th

straight year as China lags.

Source of the Article https://www.reuters.com/business/aerospac

e-defense/boeing-airplane-deliveries-orders
-jump-2022-2023-01-10/

Date of the article January 11, 2023 8:36 AM GMT-3

Word count 592

Date the commentary was written 07/08/2023

Section of the syllabus Microeconomics

Key concept being used Change

Boeing orders jump but trail Airbus for 4th straight year as China lags.

WASHINGTON, Jan 10 (Reuters) - Boeing Co (BA.N) reported a sharp jump in airplane

orders and deliveries in 2022 but trailed Airbus (AIR.PA) for the fourth straight year as its
European rival trounced the U.S. manufacturer more than tenfold in the Chinese market.

Boeing delivered 480 airplanes and won 774 net new orders after allowing for cancellations
in 2022, while Airbus delivered 661 jets and won 1,078 jet orders during 2022, or a net total
of 820 after allowing for cancellations.

In 2022, Boeing delivered eight airplanes to China while Airbus delivered more than 100. In
July China's "Big Three" state airlines agreed to buy 292 300 Airbus jet, while Boeing said in
September it would begin to remarket some of the more than 100 737 MAX jets earmarked
for Chinese airlines. 2017 that Airbus and chief 3 minute read · January 11, 2023 8:36 AM
GMT-3 · Last Updated 3 months ago Boeing orders jump but trail Airbus for 4th straight year
as China lags Aerospace & Defense.

13/4/23, 10:43 Boeing orders jump but trail Airbus for 4th straight year as China lags |
Reuters.

U.S. Commerce Secretary Gina Raimondo complained in 2021 that the Chinese government
was preventing its domestic airlines from buying “tens of billions of dollars” worth of Boeing
airplanes. Boeing Chief Executive Dave Calhoun said in October the planemaker hopes it
will eventually be able to deliver more jets in China but "it is really hard for me to find signals
that things are going to change in China and move in our direction."

In total last month, Boeing delivered 69 airplanes, including 53 737 MAX planes and 15
widebody airplanes and booked 203 new orders net of cancellations.

Boeing in 2021 delivered 340 planes and reported 479 net new orders. Boeing shares
closed down 0.9%.

A Boeing 737 Max aircraft during a display at the Farnborough International Airshow, in
Farnborough, Britain, July 20, 2022. REUTERS/Peter Cziborra

13/4/23, 10:43 Boeing orders jump but trail Airbus for 4th straight year as China lags |
Reuters

Boeing said its official backlog as of Dec. 31 rose to 4,578 airplanes including 3,628 737
MAX airplanes. About 80% of its deliveries in 2022 were for 737s. Boeing had gross orders
of 935 for 2022 before cancellations and accounting adjustments.

Boeing's 2022 deliveries included 31 787 Dreamliners, including 10 handed over in

December.

In August, the U.S. Federal Aviation Administration (FAA) approved the first 787 for delivery
since 2021. Boeing halted deliveries in May 2021 after the FAA raised concerns about its
proposed inspection method.
Boeing Commercial Airplanes CEO Stan Deal said the company had worked hard to
stabilize 737 production and resume 787 deliveries.

Last month, President Joe Biden signed legislation lifting a Dec. 27 deadline imposing a new
safety standard for modern cockpit alerts for the MAX 7 and MAX 10 - two new versions of
the U.S. planemaker's best-selling 737 MAX.

The MAX was grounded for 20 months after two fatal crashes in 2018 and 2019 killed 346
people.

Without action by Congress, the two new MAX variants would need modern cockpit alerting
systems to be certified by the FAA. Boeing has warned that this could jeopardize the futures
of the airplanes. Boeing has more than 1,000 orders for the two MAX variants.

Last month, United Airlines (UAL.O) said it was ordering 100 787s and 100 737 MAXs.
Boeing said Tuesday that 10 MAX and 10 787 orders were previously listed as unidentified
orders.
Commentary

This article explores the latest figures and market dynamics, shedding light on the
factors contributing to Boeing's lag in China. As the battle for market dominance continues,
the implications of this ongoing trend for the aerospace and defense sector come into focus,
prompting strategic considerations for both manufacturers.

The market demand for aircraft is a key concept observed in this scenario. Factors
like eased travel restrictions, increased air cargo transportation, and fleet modernization
efforts contribute to the surge in demand.

As the aviation industry recovers, airlines need to invest in new airplanes to meet
evolving market requirements, indicating a positive outlook for the aerospace industry.

In this context, market demand refers to the level of interest and orders for Boeing
and Airbus airplanes in the global market, with a particular focus on the Chinese market. The
article highlights that Airbus outperformed Boeing in terms of both airplane orders and
deliveries for the fourth consecutive year.

In 2022, Boeing delivered a total of 480 airplanes and secured 774 net new orders
(after accounting for cancellations). On the other hand, Airbus delivered 661 jets and
received 1,078 jet orders, resulting in a net total of 820 orders. Therefore, Airbus had higher
delivery figures and secured more orders compared to Boeing in 2022.

The market demand for Boeing and Airbus aircraft is influenced by various factors,
including airline fleet expansion plans, customer preferences, economic conditions,
regulatory approvals, and government policies. In this case, the article mentions that the
Chinese government has been limiting its domestic airlines from purchasing Boeing aircraft,
which impacted Boeing's market performance in China.
 Boeing's intense market competition with Airbus is highlighted in the article. Despite
trailing for the fourth year, Boeing's recent surge in orders and deliveries suggests a potential
shift in its favor.

Factors such as successful product launches and favorable market conditions

contribute to Boeing gaining an edge and striving to challenge Airbus's dominance. The
market dynamics and performance of both manufacturers will shape the global aviation
landscape.

The article specifically points out that Airbus had a significant advantage over Boeing
in the Chinese market. While Boeing only delivered eight airplanes to China, Airbus
delivered more than 100 planes.

Additionally, in July, China's state airlines agreed to purchase 292 Airbus jets, further
solidifying Airbus' dominance in the Chinese market. Boeing, in response, announced plans
to remarket some of the 737 MAX jets that were initially intended for Chinese airlines.

The article highlights other developments that impact market competition. Boeing's
backlog, which represents the number of orders yet to be delivered, increased to 4,578
airplanes, with the majority being 737 MAX aircraft. The resumption of 787 Dreamliner
deliveries after a temporary halt due to regulatory concerns is another factor affecting market
competition.

With this information we can resume that Airbus still has more control over the
market than Boeing because of its numerous deliveries but in the last year Boeing gained
more deliveries so this resulted in a decrease in Airbus planes demands and an increase in
Boeing planes demand. So this can result in an expansion of the supply curve and an
increase in the price of airplanes.

A fall in Airbus demand

 Increase in the demand of Boeing

Expansion in the curve of supply and increase in price

In the context described, government intervention refers to the involvement of the

Chinese government in influencing the purchasing decisions of domestic airlines and
impacting Boeing's market position.

The article mentions that U.S. Commerce Secretary Gina Raimondo complained in
2021 about the Chinese government preventing its domestic airlines from buying "tens of
billions of dollars" worth of Boeing airplanes. This intervention by the government can have
significant effects on the market dynamics and competitiveness of Boeing in China.

Government intervention can affect Boeing's market share, particularly in China,

where Airbus has been outperforming Boeing.

By restricting or influencing purchasing decisions, the Chinese government can give

Airbus a competitive advantage, leading to a higher market share for the European
manufacturer. This can impact Boeing's revenue, profitability, and overall competitiveness in
the global aerospace market.

This government intervention in the form of restrictions or barriers on trade has had
an impact on Boeing's orders and deliveries in China.

Boeing's CEO, Dave Calhoun, also expressed concerns about the lack of signals
indicating a change in China's stance towards Boeing and the potential for things to move in
their direction. This suggests that the company is facing challenges due to government
intervention, which is affecting its ability to sell more aircraft in China.

To conclude with, Boeing's lag in the Chinese market compared to Airbus,

highlighting factors such as eased travel restrictions, air cargo demand, and fleet
modernization driving aircraft demand. Airbus outperformed Boeing in both orders and
deliveries for the fourth consecutive year. Despite recent gains, Boeing faces intense
competition from Airbus, with Airbus dominating the Chinese market. The Chinese
government's intervention, including restrictions on Boeing purchases, impacts Boeing's
market position. Government actions have implications for Boeing's market share, revenue,
and overall competitiveness. Regulatory intervention, such as the lifting of safety standards
for Boeing's 737 MAX, further shapes Boeing's future prospects.