Duopoly competition though June 2025

Yesterday, we updated our models to reflect the June numbers from Airbus and Boeing. It was quite a month! Both firms pumped up their volumes of deliveries. Airbus reached 63, and Boeing reached 60. Great news for the supply chain, you'd think. Before we offer our views, here are assessments from the leading analysts we follow. RBC: Both Boeing (BA) and Airbus (AIR-FR) reported their June, and thus 2Q25, aircraft orders and deliveries. Despite delivering three less aircraft than Airbus, we believe investor focus will be on Boeing's strength in deliveries. On a YoY basis, Boeing delivered 16 more aircraft compared to June 2024 whereas Airbus fell short by 4 aircraft. We believe the deliveries report continues the narratives coming out of the Paris Airshow - supply chain issues (largely engine and interior delays) continue to weigh on Airbus's production with suppliers appearing more optimistic about Boeing's production rates. We believe Boeing's 280 deliveries in 1H25 could provide better optimism for investors about 2H25 build rates. However, we think investors are likely to feel less confident about Airbus's 2025 guide of ~820 deliveries with only 306 deliveries in 1H25. BofA: (on Airbus) For 2Q25 we see revenues of €15.67bn & Adj EBIT of €1.41bn. Airbus delivered 170 planes in 2Q25 (-11 YoY), although A320 deliveries at -19 YoY in 2Q which will impact profitability in Commercial. Supply chain improvement into 2H, gliders and the potential tariffs exemption on Aerospace will be a key focus of the 2Q print. We leave delivery assumptions unchanged at 810, but we update our FX and our A350 profitability model, increasing our A350-1000 mix of future deliveries. Our 2025-28 op profit ests decrease 1%-5% mainly on FX. We roll forwards valuation to 2028 (in line with methodology across the sector). PO decreases to €229 & ADR $67.07 (prev €237/$65.40). We reiterate Buy on Airbus which is also on the BofA 3Q Best Ideas list. Vertical: Boeing ships 60 planes in June – Boeing released its June order and delivery stats yesterday, and as widely expected it was a strong month for deliveries as shipments to China resumed. Boeing delivered 60 aircraft, which included 42 737 MAX narrowbodies and 9 787s. This included 8 planes for Chinese customers (5 737s, 2 777Fs and 787). This takes Boeing’s first half deliveries to 280 aircraft, 206 of which were 737 MAX. On the order front, Boeing booked 116 gross new orders, and on a net basis it now stands at 625 YTD. (Source: B Airbus delivers 63 planes in June – Airbus also announced its June stats yesterday, and it handed over 63 new aircraft. 55 of these were narrowbody A320, A321 and A220s, while the remaining eight were widebody A330s and A350s. This means Airbus ended the first half with 306 deliveries, down ~6% YoY. Its net order intake YTD stands at 402 aircraft. Here's our view, primarily driven by our data model. Airbus Airbus appears to be struggling to meet its delivery rate target. They target 820 deliveries, but with six months to go, that translates to an average of 88 deliveries per month. We don't see how they can do it. By the way, this is a consensus view in the supply chain as well. We expect a revision down in 3Q25. Orders are doing as expected. Airbus is a stable source and attracts business as a consequence. The latest LOT order for A220s was politically driven, but so what? It's business. The forthcoming competition for AirAsia will be as challenging as all other competitions. Airbus has the advantage. Airbus drove up A220 deliveries to the highest on record last month. It also has the monopoly in the over 200-seat single-aisle segment, the hottest market to be in. That's the good news. The bad news is that when you're on top, the only other option is to lose the lead. Airbus must work closely with its supply chain, as a revitalized Boeing is vying for the top position. Boeing There is no doubt that Boeing is making a comeback. Several people we have spoken with insist we are getting ahead of ourselves on this. Based on the data, we are comfortable with our view. The chart at the top of this post illustrates the basis for our growing confidence. The market has come back to Boeing. China is retaking deliveries, cutting off the discounts to Akasa and Air India Express. That means better pricing for Boeing. The virtuous cycle is in process. Is Boeing out of the doldrums? No, not out, but most definitely exiting the doldrums. Boeing last out-sold Airbus in 2020. Here we are in 2025, and Boeing has a higher level of orders YTD. This is the marketing talking, and it's buying Boeing. Summary The supply chain is stymying Airbus's plans. Airbus has deployed personnel to suppliers' operations where assistance is needed. A good move, but we are not seeing the fixes. That said, the A220 saw an excellent June. Can they maintain the A220 rate at this high level? Like everyone, we are watching closely, as that backlog is not strong. Boeing, starting at a lower base than Airbus, seems to be stabilizing its production and deliveries. This was the primary goal for the new leadership, and the results are evident. MAX production has now met the FAA-imposed rate twice. The FAA will be watching closely to ease that limit to 42, we believe. Boeing faces the same supply chain challenges as Airbus, for example, with cabin fixtures on the 787. As the duopoly continues to push production and deliveries, the supply chain is likely to become more comfortable with investing in capacity. This is the rising tide everyone needs and wants.

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