News Backgrounder
Le Bourget was Asia-Pacific order bonanza
Le Bourget’s Paris Air Show was dominated by Asia-Pacific airline commitments for Boeing airliners, with many of the billion dollar plus deals signed off by the well-funded lessors of the region.
July 1st 2017
It has been some time coming. Five years in fact. But Boeing finally outpaced rival Airbus in sales at the biennial Paris Air Show last month. Read More » And Boeing’s victory was by a very healthy margin thanks to its latest single aisle airliner, the B737 MAX 10.
The U.S. manufacturer scored twice as many orders and expressions of interest than Airbus at the show when it added 571 aircraft, valued at an estimated $74.8 billion, to its order book.
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Airbus received commitments for 229 jets, worth $25 billion, and appeared unfazed by its rival’s performance. It said it was focused on meeting delivery targets pushed back by production snags rather than seeking new buyers.
Analysts who predicted a slow show were off target. By the end of the four trade days, the two big manufacturers had accumulated new business valued $83 billion, which easily outpaced the $50 billion in sales at last year’s Farnborough Air Show.
The winning card in Boeing’s hand was China. Its fast growing leasing companies led the procession to the signing table. The China Development Bank Financial Leasing Company agreed to spend $7.4 billion on 52 B737 MAXs and eight B787s.
Beijing-based Bohai Capital Holding locked in 125 of the same aircraft for delivery from 2021. Tibet Financial Leasing, a newcomer to the industry, ordered 10 B737 MAX 8s and 10 B737 MAX 10s for $2.3 billion. Chinese-controlled lessor, Avolon, sealed an $8.4 billion deal for 75 MAX planes and BOC Aviation, owned by the Bank of China, ordered 10 B737 MAX 10s worth $1.2 billion.
Lessors were not the only Asian buyers queuing for Boeing’s latest offering. Other MAX buyers were India’s SpiceJet (20 MAX 10s), Lion Air (50 MAX 10s), Okay Airways (10 MAX 10s, 7 MAX 8 and five 787-9s), Donghai Airlines (10 MAX 10s), Malaysia Airlines (10 MAX 10s) and Xiamen Airlines (10 MAX 10s).
A new Vietnamese airline, Bamboo Airlines, told Boeing it wanted to buy 15 planes ahead of its launch in 2018.
Avolon chief executive, Domhnal Slattery, summed up the MAX rush when he said the lessor wanted to lock in orders for the type because slots are “very valuable real estate”. The MAX 10 is oversold to 2020 and capacity is finite for an airliner favoured by low-cost carriers.
Airbus, in shrugging off the Le Bourget order differential with Boeing, said the show provided strong evidence that the commercial aircraft market remained healthy. But it was not about to let Boeing off the hook.
It pointed out a large number of the MAX 10 orders were existing orders for earlier MAX models that had been converted to the new type. Vertical Research Partners analyst, Robert Stallard, estimated that of the 336 MAX 10 announcements, 201 were conversions, so “only a net 135 should be considered new with 43 of those firm and 92 non-firm”, he said.
Airbus Commercial Aircraft chief operating officer customers, John Leahy, declared “that would not qualify as a launch as far as we’re concerned. Let’s talk about the actual incremental orders they’ve got and I think our numbers are looking pretty good.”
“Let’s talk about our commercial success this week at Paris that extends our already diversified order backlog to a new industry record of over 6,800 aircraft.”
Airbus is focusing on speeding up deliveries after delays on the A320neo series, the result of issues with its Pratt & Whitney engines, and the wide body A350, chief operating officer, Fabrice Bregier, told investors. Airbus planned to deliver 30 more planes to customers this year compared with 2016, which meant the company must accelerate work in the second half of the year, he said.
The MAX 10 is Boeing’s first new model since the B777X series was unveiled at the Dubai Air Show in 2013. It is 1.68 metres longer than the $119.2 million MAX 9. It is the biggest member of the re-engined B737 family, which was launched in 2011. Boeing is confident the MAX 10 will put the brakes on the A321neo, which has won considerable sales since it was unveiled three years ago.
“We think the timing is just right,” Boeing chief executive, Dennis Muilenberg, said. “The MAX 8 and MAX 9 continue to be at the heart of the market. The MAX 10 is going to add to a portfolio that boasts a production backlog of seven years.” It will seat as many as 230 passengers, roughly matching its European rival while burning 5% less fuel (than the A321neo) because of lighter construction, Boeing said.
Le Bourget also was big business for the industry’s engine manufacturers. Joint venture engine maker, CFM International, received record orders for 1,658 LEAP and CFM56 engines as well as long-term service agreements. Combined, its MRO and engine sales are valued at $27.3 billion.
Again, Asia led the way with multi-billion engine orders from China Eastern Airlines, Spring Airlines, China Southern Airlines and several Asia-Pacific lessors.
