Boeing beats Airbus in air-show orders
Boeing secured twice as much in order value at the Paris Air Show as rival Airbus as demand for the Max 10, the biggest version of its 737 workhorse, pushed the U.S. plane maker to its first win at the aviation industry’s annual showcase in five years.
Boeing won orders and expressions of interest for about 370 planes worth as much as $52 billion in the three days through Wednesday, compared with Airbus’s tally of 229 airliners valued about $25 billion. Airbus dismissed the setback, saying it’s focusing on meeting delivery targets to make up for production snags rather than seeking new purchasers.
The haul of about $77 billion in deals easily surpassed the $50 billion signed at last year’s show in Farnborough, England, which was the lowest figure since 2010. Asian purchasers were particularly active as they girded for an accelerating travel boom. That’s in contrast to the relatively restrained buying from crowded markets in the U.S. and Europe. The bulk of agreements came from leasing companies, which have more leeway to delay deliveries.
“It seems lessors feel stronger about the need for more aircraft” than airlines do, George Ferguson, an analyst at Bloomberg Intelligence, said in a report. “Lessor orders could be of lower quality than airlines as they’re removed from current financial fundamentals, and could be a sign of intense competition.”
The biggest buyer at the Paris expo was GE Capital Aviation Services, which ordered 100 Airbus planes valued at $10.8 billion and converted 20 Boeing production slots from earlier purchases to the planned 737 Max 10. The model, rolled out to combat Airbus’s hot-selling A321neo, secured 336 commitments, including customers shifting to it from the 737’s other Max versions.
Even with the boost from the Max 10, order flow isn’t expected to surpass deliveries this year, Boeing Chief Executive Officer Dennis Muilenburg said. That’s because demand jumped in past years as high fuel prices encouraged airlines to scramble for more efficient planes.
One of the largest airline customers at the Paris show was India’s SpiceJet Ltd., with a deal for 40 Boeing planes, including 20 conversions, reflecting industry interest from Asia. The carrier was joined in orders at Boeing by Chinese operator Okay Airways Co. Ltd., Japan Investment Adviser Co. and BOC Aviation Ltd. The leasing arm of China Development Bank signed agreements to buy airliners from both Airbus and Boeing.
Avolon, the world’s third-largest lessor, ordered $8.4 billion of Boeing models at the Paris event. The unit of Beijing-based Bohai Capital Holding Co. decided to lock in deliveries of as many as 125 of upgraded narrow-body jets from the U.S. company because the slots are “very valuable real estate,” Avolon Chief Executive Officer Domhnal Slattery said.
The Max series is oversold through 2020, and capacity is finite for the model favored by budget carriers, Slattery said in an interview. He projects the middle class in Asia will swell by more than 1 billion individuals in the coming years.
“We have never seen a demographic shift like that ever in the world, in terms of the scale but also the purchasing power,” Slattery said. “These people are going to get on planes” and “there’s no going back.”
The Max 10 will be 5 feet longer than the $119.2 million Max 9, currently the biggest member of the re-engined 737 aircraft family, which was launched in 2011.
It will be the first new model from Chicagobased Boeing since the twin-aisle 777X series, now dubbed the 777-8 and 777-9, was unveiled at the Dubai Air Show in 2013.
With numerous conversions among the Max 10 orders, “that wouldn’t qualify as a launch as far as we’re concerned,” said Airbus sales chief John Leahy, who was presiding over his last Paris air show and earlier quipped that the plane’s biggest competitor is the sister Max 9. “Let’s talk about the actual incremental orders they’ve got, and I think our numbers are looking pretty good.”
In today’s Amazon world of push-the-button-andget-it-now, fast-food giant McDonald’s is asking customers to cool their heels for a single extra minute. That’s what it will take to cook its fresh-beef quarter-pounder designed to woo back millions of customers that had left the Golden Arches for other fast-casual dining options.
Some McDonald’s customers may refuse to wait, according to a report by Reuters, highlighting the trade-off in today’s consumer society where mobile disruptive technology is pressuring providers of everything from groceries to Uber to news reports to meet “I want it yesterday” customer demands without sacrificing quality.
“There’s no question that in today’s society, customers want what they want, when they want it,” said Sam Oches, editorial director at QSR, a trade publication for the quick service restaurant industry. “That has especially trickled down into food, where if a customer can’t get what they want and when they want it at one restaurant, they have another option where they can.”
McDonald’s stock raced toward an all-time high Monday. Wall Street reacted to the news that the burger giant was upgrading its technology, including kiosks, to meet on-demand orders. The company’s chief executive, Steve Easterbrook, took over two years ago with a goal of reviving sales through fresher, higher-quality offerings and round-theclock availability of its popular breakfast menu.
The quarter-pound sandwiches, which have anchored McDonald’s menu for decades, are being upgraded in test markets as part of the fast-food giant’s attempt to raise its quality in the highly competitive burger sector.