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Airlines Battle Out Pandemic: Airbus (EADSY), Boing (BA) in Focus

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The year 2020 was quite appalling for two of the world’s major aircraft manufacturing giants, Boeing (BA - Free Report) and Airbus (EADSY - Free Report) . The pandemic-stricken year was a little too rough to deal with for both companies, as they witnessed a series of order cancellations, delivery delays, record low production rates and furloughs, since March 2020.

Pandemic’s Impact on Boeing and Airbus

The pandemic struck at the worst possible time for Boeing, as we know it was already facing intense scrutiny from regulators and customers worldwide due to the grounding of 737 MAX since March 2019. Its prolonged impacts coupled with air travel restrictions, courtesy of COVID-19, completely rattled Boeing’s revival plans for 737, resulting in adjustments in the production rates for all of its commercial aircraft programs, with a furloughed workforce.

Airbus, despite overtaking Boeing during the year, is also facing its gravest crisis to date. The aircraft giant has been forced to reduce its global workforce and resize its commercial aircraft activity in response to the COVID-19 situation.

A Sneak Peek Into the Dismal 2020 Numbers

Boeing ended 2020 with 4,223 jets in its backlog, declining 22% year over year. Evidently, due to the pandemic's impact and other existing issues with the 737 line of jets, the deliveries made throughout the year took a serious hit as well. In the whole of 2020, Boeing could only manage to deliver a total of 157 commercial aircraft compared with 380 aircraft delivered at the end of 2019. Interestingly, per a Flight Global report, Boeing’s net orders took a nasty tumble, as the company lost 1,026 orders during the year.

Meanwhile, Airbus was also a victim of the global turmoil, as its total jet deliveries in 2020 slumped 34.4% year over year to 566 units. Its backlog totaled 7,184 jets at the end of the year, falling 4% from the 2019 numbers. Net orders placed for jets in 2020 were also substantially down to 268 compared with net orders of 768 jets placed during the previous year.

Airbus Overtakes Boeing in the Race for Supremacy

Despite facing a handful of pandemic-related challenges, Airbus managed to seize the title of the world’s largest aircraft manufacturer, with its arch-rival Boeing registering a notable downfall. In particular, Boeing faced extreme scrutiny for its bestselling 737 MAX aircraft, almost throughout 2019 and 2020, as these jets were grounded by airliners across the world for a period of almost 20 months. Boeing's misfortune turned out to be largely beneficial for Airbus, as the latter ramped up production for its renowned A320 family of jets. Resultantly, in 2020, Airbus saw a higher market share globally for the very first time.

How Prospective Does 2021 Look?

After a disastrous 2020, 2021 is expected to be a lot better in terms of air travel, led by fewer restrictions on flying, re-opening of borders and the widespread availability of vaccines. This would enable airliners to fly more frequently and generate better revenues. In line with such projections, passenger numbers are expected to grow to 2.8 billion in 2021, a billion more than 2020, per an IATA report.

Therefore, we expect Airbus and Boeing, carrying a Zacks Rank #2 (Buy) and #4 (Sell), respectively, along with other commercial aircraft manufacturers, such as Textron (TXT - Free Report) and Embraer S.A. (ERJ - Free Report) , to post better delivery figures in 2021 and effectively revamp operations.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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