Filed under: Deals, Industry, Competitive strategy, Boeing Co (BA)
Most of the momentum for aircraft sales has appeared to be with Boeing (NYSE: BA). Its 787 Dreamliner has been selling well despite a delay in launching the plane. Its new stretch 747 has also done well, as have some of the newer versions of its old planes.
Rival Airbus picked up a key piece of business when aircraft leasing company AWAS (Ireland) Ltd.decided to purchase 100 of its jets. According to The Wall Street Journal the “jetliners are valued at $6.9 billion.” The paper adds, “AWAS Chief Executive Franklin Pray said he was surprised how eager Airbus and Boeing had been for AWAS’s business, given the strong demand.”
That may get to the heart of the matter. With huge production facilities going at full capacity, it is hard to say what Boeing and Airbus are actually charging for their planes. Each is fighting for market share because the demand for huge aircraft isn’t going to stay white hot forever. And, cutthroat competition often means discounting.
When Boeing releases its earnings for the fourth quarter, it will be interesting to see whether its gross margins will stay high. The market is obviously concerned. Boeing trades at a 52-week low.
New airplanes are still selling, but at what price?
Douglas A. McIntyre is an editor at 247wallst.com.
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