Airbus Overtakes Boeing In Market Cap For The First Time

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Airbus SE (EPA:AIR) has finally managed to overtake its fiercest rival and the industry’s most valuable company, Boeing Co (NYSE:BA). Despite Airbus’ stock dropping 1.91%, Boeing has dived 6%, causing its market capitalization to fall to $82 billion, compared to the European manufacturer’s $89 billion.

Airbus Overtakes Boeing

It has been a very hard year for the sector due to the macroeconomic perspectives and the war in Ukraine. Volatility has been maxed up and despite the fact that the European manufacturer manages to contain the bleeding by losing only 8.59% so far this year, Boeing’s situation is critical.

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The American manufacturer collapsed 31.87% in 2021 —the sharp drop in the U.S. explains this overtaking at a critical moment.

Boeing's sharp decline today comes after the company sees its position among its customers threatened, due to the delay of its 737 Max 10 model. The plane is the great hope to continue competing with Airbus but there will be a delay on regulatory grounds.

$16 billion are at stake and the model is the gateway to compete again in the medium-sized aircraft market —from which they have disappeared since the accidents with their 737 Max.

"They have a nightmare scenario where if they don't get Max 10 certification, they drop half the market, possibly forever," said Richard Aboulafia, managing director of AeroDynamic Advisory.

Key Differentiator

The distance between the two firms came to seem insurmountable, but the crises that have been going on since 2018 have been closing the distance, as reported by CNN Business.

Boeing's first disaster came with the accidents of its 737 Max model in Malaysia and Ethiopia —Both incidents claimed the lives of 346 people. This forced the production of this aircraft to be halted and led the company to reduce its profit margins due to compensation for victims, redesign, and fewer orders.

When Boeing was surfacing, Covid drastically affected the entire aviation sector due to the closure of tourism and the fall in flight demand. Having overcome the worst of the pandemic, the company now faces a serious threat of recession in the U.S. and an environment of strong inflation and rate hikes.

Airbus, on the other hand, and despite being affected by the same macroeconomic issues, it does not face an aggressive rate hike environment.

According to Bloomberg, Boeing has delivered 340 aircraft in 2021 compared to 611 by Airbus. A difference that, due to the regulatory problems that threaten the 737 Max 10, could be consolidated in the future.