Boeing and Airbus:
The Financials Mar/Apr 2025

Having appeared to be on a road to recovery in 2023, Boeing reported a massive net loss in 2024, $(11.8)bn, a -17.7% net margin, while Airbus was again profitable, $4.1bn or a 5.9% margin on revenues. Over the past ten years (2014-24) Boeing has accumulated a net loss of $24.1bn while Airbus has achieved a total net profit of $27.5bn.

The stockmarkets’ verdict on the two OEMs is indicated by the graph. Up to the end of 2020, including the period when the MAX crisis emerged and the whole market plummeted when the implications of the pandemic became clear, the share prices of the two OEMs more or less tracked each other. Then they diverged, with Airbus strongly outperforming Boeing. Still, the equity market value of Boeing is now about $140bn while Airbus is capitalised at the equivalent of $125bn; back in 2017 Boeing was valued at $175bn almost two and half times Airbus’s $73bn.

Boeing brought in a new CEO, Kelly Ortberg, in August, replacing the beleaguered Dave Calhoun. Ortberg had previously headed Rockwell Collins. He may have decided to push as much bad news a possible into 2024, and indeed there was a lot of bad news. On top of the ongoing MAX and 778 production problems, which cut deliveries to just 348 units from 528 in 2023 and caused total revenue to decline to $66.5bn from $77.8bn in 2023, the company highlighted these factors:

• The IAM strike impacted production and reduced revenue by $15.2bn in the fourth quarter.

• One-off charges of $1.7bn were recorded for defence programmes and $1.1bn for the 777X and 767 programmes. ​

• Unspecified costs associated with workforce cuts.

Boeing had one vital success in 2024 — the equity raise of $23.8bn which has gone a long way to repairing the company’s balance sheet, and should have provided a platform for financial recovery, until tariffs created such uncertainty. Understandably, Boeing no longer provides financial guidance. Its key target had been to reach $100bn in revenues by 2026, which would have returned it to the record sum reached back in 2018. It still officially has the $100bn target but no commitment to a specific year.

Boeing’s strategy is to continue to “go slow” reviewing all its processes and supply chains for safety quality — in the process changing the culture of the company, according to Ortberg. The FAA continues to scrutinise, and maintains its cap on 737 MAX production of 38 units a month (the 2022 plan was for 52) per month. Boeing expects to be able to ramp up from the low 30s currently to 38 a month by the end of the year. 787 production is expected to go up to at least seven a month by the end of 2025, compared an average of five in 2024.

At least in the short term the effect of tariffs is manageable, according to management, the biggest problem being finding new customers for the 50 aircraft that China is refusing. Various cost pressures are emerging on imported components, either directly or via US suppliers, but Boeing thinks that these can be passed on.

Airbus’s 2024 revenues rose by 6% to the equivalent of $73.7bn,on the back on an increase in commercial deliveries to 766 units from 735 in 2023. Airbus too has suffered supply chain and production problems, especially regarding the GTF engines fitted to A320 NEOs, though in this case it is P&W that is bearing the direct costs.

Airbus is giving financial guidance. Its target is 820 commercial aircraft deliveries in 2025, and it expects adjusted EBIT of $7.5bn compared to $5.7bn in 2024. But Airbus in its first quarter presentation added that has yet not made any adjustments to its financial forecasts to account for tariffs because it was too early to quantify the impacts.

Its medium term planned output for the A320 Family is roughly twice that of the MAX programme — 75 units a month by 2027. Airbus’s plan for the A350s is 12 units a month by 2028 and for the A220s, 14 units a month by 2026.

How did Boeing, America’s premier manufacturer, get itself into this financial state? Our thesis is that policies instigated by CEOs, James McNerney and Dennis Muilenburg, undermined the corporation. They succumbed to the obsession with quarterly results and share price momentum, resulting in unsustainable amounts of cash being returned to shareholders. This phenomenon was prevalent in many industrial sectors in the 2010s, and to a certain extent was also followed by Airbus, but the impact on Boeing was especially harsh, with too little capital being allocated for investment in new products or to ensure production quality or simply to bolster reserves.

The financial tables and the graphs on these pages trace the longer term financial fortunes of the two OEMs and provide some interesting insights into their current positions.

Boeing had historically been a more profitable company than Airbus, with a net result totalling $34.5bn during 2014-18, more than three times that of its European rival. Since suffering the various shocks, ranging from the MAX crises to COVID to the 2024 strike, Boeing has produced major losses, $(35.9)bn during 2019-24 compared to a resilient cumulative profit of $14.0 at Airbus.

Historically, Boeing’s Commercial division has been firmly supported by the Defense and Global Services divisions, But, for the past two years, Defense has been loss-making, which the company blames on fixed-price government development programmes. Airbus is predominantly a civil aircraft manufacturer, but its Defence and Helicopter divisions have contributed marginally to overall profits for the past two years

A major difference between the two OEMs used to be Boeing’s greatly superior ability to generate cash. Operating Cashflow — ie, profits plus depreciation and amortisation, adjustments for deposits and PDPs (these are paid to the manufacturer usually in three or four tranches, based on the list price not the negotiated discounted price, before the airline takes delivery of the aircraft which is when the manufacturer records the revenue), changes in inventories, creditor/debtor balance, etc — was huge at Boeing: $57.2bn during 2014-18, in contrast to just $19.2bn at Airbus. Then everything went wrong — for the period 2019-2024 Boeing’s operating outflow totalled $(35.9)bn, while Airbus managed to generate positive cash of $24.8bn during this period.

Subtracting Capex — which includes new and replacement manufacturing equipment, R&D, investments in or divestment from other companies — from Operating Cashflow gets us to Free Cashflow, which again was historically much stronger at Boeing than Airbus. In 2014-2018 Boeing generated $42.7bn, dwarfing Airbus’s $3.9bn.

In startling contrast, during 2019-2024 Boeing’s Free Cashflow went negative to the tune of $(34.8)bn, despite a near halving in net Capex. Airbus was positive, $8.1bn, on this measure. (These calculations of Free Cashflow are taken directly from the published accounts; the OEMs may have different definitions.)

Coming into the crises of 2019/20, first the MAX grounding, then Covid-19, Boeing found itself with inadequate liquidity, which led to a huge surge in borrowing to cover liabilities and contingencies: during 2019-24 Boeing increased its net debt by a total of $38.2bn, Airbus by a much more modest $3.5bn. (The OEMs did not take industry-specific state loans, but they have benefited from implicit state support.)

By the end of 2023 Boeing’s balance sheet was distressed; its debt (long and short term) stood at $52.3bn as at the end of 2023, meaning that its balance sheet showed negative net equity of $(17.2bn). Moreover, debt was easily manageable in the era of ultra-low interest rates 1-2% pa, but Boeing is now paying around 5.4% pa, Airbus around 4.5% on its new debt. Both OEMs currently have investment grade ratings, but Fitch rates Boeing’s long-term debt at BBB-, two grades lower than Airbus’s at A-.

The equity raise of $23.8bn in the third quarter of last year has partly restored Boeing’s balance sheet. Long and short term debt still totalled $53.9bn at the end of 2024, but, importantly, its negative net equity has been reduced to $(3.9)bn. Long term debt totalled $27.2bn at Airbus at the end of 2024; it has positive net equity of $19.0bn.

Boeing has not paid dividends since 2020 and there is little prospect of any in the foreseeable future. Airbus, on the other hand, has restored shareholder payments, and has proposed a dividend of $3.5bn for this year.

It is worth recalling what happened to all that cash generated during the good times, 2014-18. During this period Boeing generated $42.7bn in Free Cashflow but then returned $52.8bn to shareholders in dividends and, especially, through share re-purchases — in other words it paid out more to shareholders than it was generating internally; it was in effect borrowing in order to fund its generosity to shareholders (and to senior management whose bonuses were related to the soaring share price). Airbus followed the same policy, albeit on a much smaller scale — generating a total of $3.9bn and paying out $6.8bn. Such a financial strategy was dubious during the good times. It proved to be calamitous when things went wrong.