Airbus throws in the towel at Paris Air Show
paris — Boeing Co beat rival Airbus SE in orders at the Paris Air Show this week as a new, stretched version of the US planemaker’s 737 workhorse sparked a flurry of intense deal-making at the aviation industry’s biggest gathering this year.
Boeing won orders and expressions of interest for 600 planes worth as much as $79 billion, according to figures compiled by Bloomberg based on company announcements as of midday Thursday. While Airbus pulled out a series of late agreements, it fell short with a tally of 326 airliners valued at just under $40 billion, sales chief John Leahy said at a press conference at the show, adding that the two companies were about equal in terms of firm orders, which exclude more tentative agreements to buy.
“Are we conceding that Boeing sold a few more airplanes than we did? Yes,” said Leahy, who reaffirmed his plan to retire later this year. “Every dog gets his day.”
The dealmaking amounted to more than double the $50 billion posted at last year’s show in Farnborough, England, which alternates with the Paris expo as the industry’s marquis event. The unexpected surge marked the highest purchase tally in at least eight years. Asian lessors and airlines were particularly active as they girded for an accelerating travel boom. The order binge, driven by demand for singleaisle planes, quieted concerns that demand is fading.
“Maybe people came to the show with muted expectations, but the order activity is positive on the backdrop of relatively strong airtraffic growth,” said Kelly Ortberg, chief executive officer of aerospace supplier Rockwell Collins Inc. “New narrow-body introductions are exciting. I think we’ll all leave going, ‘The show was a little better than expected’.”
Pledges to buy the new singleaisle Max 10, which Boeing began marketing in Paris to combat Airbus’s hot-selling A321neo, amounted to 351 airliners. Net new commitments for the model amounted to 137 planes, with customers shifting another 214 from earlier agreements for other Max versions, and thereby eating into those backlogs.
The biggest disclosed buyer at the Paris expo was General Electric Co.’s 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 Max 10, the biggest variant of the 737. Boeing said on Thursday that it signed a sales agreement with an “unidentified major airline” for 125 Max 8s valued at $14 billion.
The boost from the Max 10 should help Boeing’s order flow come close to matching deliveries this year, Chief Executive Officer Dennis Muilenburg said. The measure, known as book-to-bill, fell below one during 2015 and 2016 as sales slumped for the Chicagobased manufacturer amid falling oil prices, which sapped demand for new aircraft.
Demand for planes jumped earlier in the decade as high fuel prices spurred airlines to stockpile orders of more efficient planes like Boeing’s upgraded 737 Max lineup and Airbus’s A320neo. That order flurry caused Airbus’s backlog to more than double, surging past 6,800 airliners after its deals in Paris. One of the largest named airline customers at the Paris show was India’s SpiceJet Ltd, which struck a deal with Boeing for 40 of the newest Max model despite being wooed by Airbus, co-founder Ajay Singh said in an interview. The carrier was joined in orders at Boeing by Chinese operator Okay Airways Co Ltd, Indonesia’s Lion Mentari Airlines PT, 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 and is mulling potential wide-body jet orders to serve Asia’s capacity-constrained markets, CEO Peter Chang said in an interview.
Avolon, the world’s third-largest lessor, ordered $8.4 billion of Boeing models. The unit of Beijingbased Bohai Capital Holding Co decided to lock in deliveries of as many as 125 of the upgraded narrow-body jets starting in 2021 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 sees the aerospace market tilting to Asia as the middle class swells by more than 1 billion people over the next decade.
“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 1.68 metres longer than the $119.2 million Max 9, currently the biggest member of the re-engined 737 aircraft
Maybe people came to the show with muted expectations, but the order activity is positive on the backdrop of relatively strong air-traffic growth
Kelly Ortberg, CEO of Rockwell Collins
family, which was launched in 2011. It will be the first new model from Boeing since the twin-aisle 777X series, now dubbed the 7778 and 777-9, was unveiled at the Dubai Air Show in 2013.
Still, the order flurry — logged during sweltering conditions in Paris — included large numbers of conversions from previous orders and commitments that may not ever materialise.
“Lessors also increase the risk that the market will have more supply for a particular aircraft due to speculative buying,” George Ferguson, an analyst with Bloomberg Intelligence, said in a report, adding that Boeing and Airbus were on par with 144 firm orders each, but Boeing’s value higher due to more widebodies.
With numerous conversions among the Max 10 orders, “that wouldn’t qualify as a launch as far as we’re concerned,” said Airbus sales head Leahy, who had earlier quipped that the Boeing plane’s biggest competitor is its sister Max 9. “Let’s talk about the actual incremental orders they’ve got, and I think our numbers are looking pretty good.”