BOEING 777-200LR
Ed Turner  /  AP file
A Boeing 777-200LR Worldliner is shown landing at the Le Bourget Airport in France last year. While rival Airbus delivered more jets overall in 2005, Boeing had better year selling larger planes like the 777.
updated 1/17/2006 2:23:27 PM ET 2006-01-17T19:23:27

A December sales surge kept Airbus on top of the global passenger jet market in 2005, the company said Tuesday — bettering Boeing Co.’s orders and deliveries.

But Airbus conceded it had lost ground to Boeing in the market for larger, more profitable planes and with it, the race for highest order value. It also said it plans to review its A340 jet in the wake of disappointing sales.

Airbus announced 1,055 net orders for 2005, beating its U.S. rival’s 1,002, and delivered 378 airliners to Boeing’s 290. Excluding cancellations, the Airbus tally came to 1,111 orders, the largest number ever booked either side of the Atlantic.

The Airbus figures defied predictions that the European plane maker would lose the lead in orders it took from Boeing in 2001, two years before pulling ahead on deliveries. In the 11 months to Nov. 30, Airbus had reported 687 firm orders.

“We had a very busy December,” Airbus Chief Executive Gustav Humbert said at a briefing before Tuesday’s announcement.

The final figures include a late surge of order confirmations for single-aisle A320 models. China bought 150 of the jets during a visit to Paris last month by Prime Minister Wen Jiabao — upstaging a Boeing deal the previous month to sell 70 737s to China.

In longer-range, widebody planes, however, it is Airbus that has struggled to keep up. Boeing sold 455 such jets last year, representing 44 percent of its total orders, while Airbus took orders for 193 of its larger planes, or 17 percent of its total.

As a result, Boeing won the larger share of the overall market by order value in 2005, Humbert said. “As far as we see it, Boeing has 55 percent in value and we have 45 percent in value, although we are leading in the number of aircraft,” he said.

In 2004, Airbus won 54 percent of global new orders by value, according to the company’s own figures. The average catalog price for a single-aisle Airbus A320 or Boeing 737 is close to $60 million, less than a third of the average list price for the A340 or 777 — which also carry higher profit margins.

Humbert also signaled a review of the A340, a four-engine jet that flies 380 passengers up to 7,500 nautical miles in the largest of its three versions. The A340 attracted only 15 firm orders in 2005, while Boeing won 154 orders for its competing twin-engine 777s.

“We can and will do better in the long-range field,” Humbert said, without specifying what changes were under consideration. “If we think something has to be done then I will act very quickly, but nothing is on the table,” he said.

Airbus has sold the A340 as a safer bet for long-haul flights over remote areas like the North Pole, arguing that a four-engined plane is better able to cope with an engine failure and fly on to a safe landing elsewhere. But rising oil prices are making the economics of more efficient twin-engined planes difficult to ignore — and Boeing is rubbing its hands.

“When fuel prices are so high, there’s no way Airbus can price an inefficient airplane attractively for customers,” said Randy Tinseth, director of product and services marketing for Boeing’s commercial jet division.

Orders for Airbus’ long-range, fuel-efficient A350 — which enters service in 2010, two years after the competing Boeing 787 Dreamliner — also fell 28 short of the 200 target for the end of 2005. And Airbus is not expecting any slew of new A380 sales until the superjumbo’s entry into commercial service, scheduled for the end of 2006.

Airbus said Tuesday its revenue rose 8.8 percent to 22.3 billion euros ($27 billion) in 2005, an all-time high. Operating margin — earnings before interest and taxes, or EBIT, as a share of revenue — rose to above 10 percent from about 9.5 percent in 2004, Humbert said. That implies a 15 percent increase in EBIT to over 2.2 billion euros ($2.7 billion).

Full financial results are to be announced in March by European Aeronautic Defence and Space Co., which owns 80 percent of Airbus. Britain’s BAE Systems PLC owns the rest.

EADS shares closed unchanged at 31.45 euros ($38.15). BAE shares fell 0.3 percent in London to 417 pence ($7.38).

Boeing shares fell 21 cents to $69.27 in early afternoon trading on the New York Stock Exchange.

Although the Airbus order record beat a consensus forecast of 950, Kepler Equities analyst Pierre Boucheny said the jump in December may partly have reflected a rush to finalize deals that would otherwise have gone through in January.

“The more that they put into 2005, the less there will be in 2006, that’s the risk,” Boucheny said. But the operating margin guidance beat Boucheny’s own 9.8 percent forecast, he said. “Everything is a bit better.”

Last year’s 378 Airbus deliveries beat the company’s previous record of 325 in 2001, and its gross orders beat the previous all-time record of 1,095 — booked by Boeing and McDonnell Douglas in 1989, eight years before they merged. The glut of new business increased the Airbus order book to 2,177 aircraft, accounting for 55 percent of the global backlog by number.

Having sold the planes, Airbus now has to build them — a feat that will require production to be increased rapidly to unprecedented levels. Airbus plans to raise its monthly output of single-aisle jets to 30 this year and 32 early in 2007 from the current 28.5, and is rallying its 600 front-line suppliers to anticipate the surge.

Airbus will place a “special focus on supply chain management” in 2006, Humbert said. “It is, for sure, a constant battle — it’s not easy for the supply chain to ramp up like this.”

Airbus is predicting more than 400 deliveries in 2006. Humbert declined to give an order forecast but said it would be “difficult” to top 1,000 for a second straight year.

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