MAY 24TH, 2016

Boeing and Airbus are slugging it out in their fight for market share, which now includes another player

New York, May 24, 2016 — Bombardier’s landmark win of a large order from Delta Air Lines for its new C Series jets provides further evidence of the escalating and still evolving competitive intensity in the multi-decade Boeing/Airbus rivalry, according to Moody’s Investors Service.

The market for large commercial airplanes (100-plus seats) has long been dominated by The Boeing Company (A2 stable) and Airbus Group SE (A2 stable). While the two incumbent airframers are expected to retain the lion’s share of the market, in a new report, Moody’s said that encroaching competition over the course of the next decade will begin to chip away at their long-standing duopoly.

“It’s going to take a good bit more time to fully develop, but the beginning of the end of the long-running Boeing/Airbus duopoly is finally upon us,” noted Moody’s Senior Vice President Russell Solomon.

In its newly released report, “The Gloves Come Off as Being and Airbus Fight More Than Just Each Other for Share,” Moody’s said the recent order from Delta Air Lines, Inc. (Baa3 stable) for 75 CS100 jets bolsters the legitimacy of Bombardier’s new narrowbody program and ratchets up the competitive market dynamic. The deal was driven by several factors including a steep pricing discount and earlier availability of the jets, according to the rating agency.

While the widebody market remains somewhat pressured, with ensuing heightened competition, the much larger market for narrowbodies has been growing faster and is slated to accelerate further over the next several years. Recent market transactions have highlighted a growing incidence of ever more aggressive price discounting, though, according to the rating agency. Moody’s believes the recent Bombardier/Delta deal will add fuel to the fire, even though it doesn’t compete directly with Boeing or Airbus’ mainstream product — not yet, anyway. Moody’s underscored that Airbus has continued to close the gap with Boeing in their competition for market share, with the company winning more new orders and poised to increase deliveries of its newly re-engined A320neo more than a full year ahead of Boeing’s competing 737 MAX.

“Boeing’s mid-sized 737 sales are keeping reasonably good pace, and the family as a whole is still the most widely sold aircraft of all time, but they have several competitors closing in,” commented Solomon. “Airbus’ larger A320s are outselling Boeing by a wide margin, and with Bombardier and Embraer moving up with more competitive offerings in the lower end of the market, this could pose more problems for Boeing.”

With airline customers increasingly holding all the leverage these days, as new orders continue to slow and oil prices remain relatively low, both Airbus and Boeing will continue to place emphasis on high market penetration and first-mover advantages as they trade jabs and protect against encroaching competitors, leveraging their low manufacturing costs and substantial production scale.

The report, “The Gloves Come Off as Being and Airbus Fight More Than Just Each Other for Share,” is available to Moody’s subscribers at