Planemakers alter sales pitch to boost profit

PARIS (Reuters) – Airbus and Boeing leave this week's Paris Airshow with plans for ambitious growth in aviation services, as flattening demand for new jets and pressure to raise profit margins encourages planemakers to deepen their exposure to airline operations.

The two largest planemakers set out their stalls at the world's biggest air show in a series of announcements that could set them in competition with some of their suppliers and even some of the airlines that have ordered jets in recent years.

The overlap reflects the complexity of the aviation market as it matures, leaving a large fleet of aircraft to service or upgrade and tens of thousands of people to train – all services that could in turn become tools to help sell even more jets.

"Many customers are now looking for fixed cost per flight hour with assured outcomes on part availability. It is the (airline) CFO's dream to get costs out and management risks under a third party," Stan Deal, head of Boeing's newly created global services division, told Reuters.

"The future state we want to get to is that we can support every element of a day of operations on the airplane."

For years, air shows were all about "moving the metal," winning as many orders as possible.

Orders are still buzzing, but highermargin services have taken a prime time slot for the first time with a volley of announcements from each company.

"Would you imagine having your Mercedes car without the associated services? It makes no sense," said Laurent Martinez, head of 'Services by Airbus.’

"We are definitely the best placed to serve our aircraft because we know the aircraft nose to tail," he told Reuters.

Boeing's newest division starts up on July 1 with a mandate to roughly triple Boeing's commercial and defense services to $50 billion in 10-15 years. The existing commercial unit will also keep its own services sales team to support the effort.

Airbus said the worldwide aftermarket services business for jetliners will double to $3.2 trillion over the next 20 years.