Airbus Solidifies Narrow-Body Dominance as Boeing Battles Supply Chain Headwinds

The global aerospace industry is undergoing a seismic shift. As demand for narrow-body aircraft surges, Airbus has positioned itself to capitalize on a post-pandemic recovery, while Boeing faces mounting headwinds from supply chain fragility, regulatory hurdles, and trade tensions. For investors, the divergence in fundamentals between the two giants offers a clear roadmap: favor Airbus (EADSY) for its robust backlog and strategic agility, while approaching Boeing (BA) with caution until operational stability is restored.

Airbus: Leveraging Scale and Backlog Strength

Airbus's A320neo family has emerged as the gold standard for single-aisle aircraft, dominating a market that accounts for roughly 80% of global passenger traffic. The company's backlog of 7,705 narrow-body jets (88.9% of its total backlog) provides a multiyear production runway, with current output targeting 50 aircraft/month—still below its 2027 goal of 75/month but steadily advancing. This backlog is a critical moat: it guarantees revenue visibility for over 10 years, insulating Airbus from short-term demand fluctuations.

Despite supply chain constraints—particularly delays in fuselage deliveries from Spirit AeroSystems—Airbus has maintained discipline. Its recent $439 million asset purchase from Spirit to offload unprofitable programs and a $200 million credit line extension underscore its ability to navigate supplier risks. Meanwhile, A321neo variants, which account for most new orders, offer unmatched fuel efficiency and capacity for long-haul routes, further cementing its leadership.

Boeing: Stuck in Neutral Amid Structural Challenges

Boeing's 737 MAX, once a cash cow, now faces a perfect storm. The company's production target of 38 MAXs/month by mid-2025 has been repeatedly delayed, with April's output lagging at 29/month. The root causes are twofold:
1. Supply Chain Gridlock: Spirit AeroSystems, a critical supplier for fuselage assemblies, is teetering financially. Its Q1 2025 revenue dropped 11%, and cash reserves fell to $220 million—a liquidity crisis that Boeing's proposed merger with Spirit aims to resolve. However, regulatory and shareholder hurdles delay this lifeline.
2. Trade War Costs: U.S. Section 232 tariffs on aluminum and steel, reinstated in March 得罪, have added $100 million in annual costs to Boeing. These tariffs, coupled with inventory backlogs (97 undelivered MAXs by April 2025), squeeze margins and complicate production scaling.

Wider-body programs like the 777X are also faltering, with FAA certification delays pushing Lufthansa's first deliveries to 2027. This exacerbates Boeing's reliance on the MAX, which now accounts for 75.6% of its backlog—a risky concentration in a volatile market.

Investment Implications: Airbus Ascendant, Boeing Troubled

The data underscores a stark divergence in investment prospects:

1. Airbus (EADSY):
2. Backlog Stability: A robust order book and a 10-year production horizon provide a defensive profile.
3. Supply Chain Mitigation: Strategic moves with Spirit and gradual ramp-up plans reduce near-term risks.

4. Valuation: At 14x forward P/E, EADSY trades at a discount to its 5-year average, offering upside as production scales.

5. Boeing (BA):

6. Structural Overhang: Supply chain bottlenecks and tariff costs threaten its ability to meet delivery targets.
7. Weak Demand Signals: April's slump in MAX orders (8 gross vs. 11 for Airbus) signals waning buyer confidence.
8. Valuation Risks: BA's 16x forward P/E assumes operational turnaround, a bet that may prove overly optimistic.

Cautions and Considerations

• Tariff Volatility: U.S.-EU trade tensions could escalate, further disadvantaging Boeing.
• Spirit's Survival: A Spirit-Boeing merger's success hinges on Airbus's cooperation—a non-trivial ask.
• Airbus's Ceiling: Its 2027 production target of 75/month may face pushback if supply chains cannot scale.

Final Analysis

Airbus's narrow-body dominance, paired with its disciplined execution, positions it as the clear winner in this industry reset. Investors should favor EADSY for its resilience and long-term growth. Boeing, meanwhile, remains a high-risk bet until its supply chain and regulatory challenges are resolved. In a sector where execution trumps ambition, Airbus is flying high while Boeing struggles to clear the tarmac.

Investment Grade: Airbus (EADSY): BUY | Boeing (BA): HOLD (until operational clarity emerges).