Airbus Hits a Company Record As Demand Soars

The airline industry has seen a boom in the past few years, and long-established trends are finally changing in ways that lead to profitability. In this clip, Industry Focus: Energy host Sarah Priestley and Motley Fool contributor Adam Levine-Weinberg take a dive into Airbus' delivery numbers for 2017. Find out which models clocked the most deliveries, how Airbus compared to Boeing (NYSE: BA) last year in terms of delivery numbers and long-term strategy, and more.

A full transcript follows the video.

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This video was recorded on Feb. 8, 2018.

Adam Levine-Weinberg: Turning to Airbus, they also hit a company record in terms of deliveries with that 718 commercial jets delivered in 2017. That was up from 688 a year earlier. Airbus is still trailing Boeing by about 6%. However, Airbus did gain some ground last year. And that's partially because Airbus actually has a larger backlog of aircraft on order than Boeing. It's using that backlog to support production increases. For Airbus, the tilt between its narrow bodies, the A320 family, and then its larger wide body planes was even greater disparity than at Boeing. You had 78% of deliveries being the A320 family. That totaled 558. Then, Airbus also delivered 67 A330s. That's its older model of wide-body jet. 78 A350s. And then, like the Boeing 747, Airbus' jumbo jet model, which is the A380, is doing quite poorly. There were only 15 deliveries on that during 2017, which was down substantially from the prior year.

Sarah Priestley: Which is strange, because when they first released this aircraft, there was so much hype around it. I know it was heralded as the next great aircraft, but it just hasn't delivered.

Levine-Weinberg: It actually just sort of happened that at the same time, Boeing and Airbus laid out different visions for how air travel would change. Airbus went with this massive plane that would be able to put more and more passengers through the biggest hubs, and Boeing said, "No, what people really want to do is be able to fly nonstop." So, Boeing created the 787, which is a much smaller plane that's more fuel efficient. For example, I think Qantas has said that they can fly two 787s between Australia and the U.K. for less than the cost of flying one A380. So, they can offer two different departure time options. Or, you can offer more nonstop routes than you could previously. That's really been siphoning some of the demand away from the A380, because when people have the option of now flying nonstop, they don't have to go through the big hub, so that means you don't need to put the larger airplane in there. So the real problem for the A380 right now is that there aren't that many airports that desperately need that amount of size. London's Heathrow Airport is one of the few exceptions, where it's really that crowded, and you need the bigger airplane. Dubai has some of the same constraints. But most airports just aren't quite that crowded yet. So, you're seeing a lot more demand for the smaller planes.

Adam Levine-Weinberg has no position in any of the stocks mentioned. Sarah Priestley has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.