Thursday, June 13, 2024

Farnborough Airshow 2022: Boeing Makes It Big On Day 1!

By Vaibhav Agrawal

This week, as the aerospace industry swelters at its most significant event since COVID-19, Boeing (BA.N) will attempt to support its troubled 737 MAX 10 and 777X jetliners with orders officially worth over $15 billion from Delta Air Lines and Lufthansa.

After months of negotiations on its largest 737 with Delta, the American planemaker, battling to hold onto its duopoly with Europe’s Airbus (AIR.PA), will strike early at the Farnborough Airshow, which opens on Monday.

Reuters first revealed in March that Delta (DAL.N) was considering purchasing 100 MAX 10, and last week the airline was reportedly in discussions to order about 12 more Airbus A220s in a deal that will probably be revealed on Tuesday.

According to sources, Lufthansa of Germany (LHAG.DE) is likely to finalise a deal for about 10 large Boeing freighters, including seven of the recently introduced 777X cargo version.

Before the show, which is going on despite an emergency weather warning and a transportation disruption brought on by forecasts for record-breaking high temperatures, none of the parties commented.

Aerospace companies will try to demonstrate that civil demand is still strong despite the worst downturn in their history as Britain melts. The industry will gather in the shadow of the Ukrainian conflict, bringing attention to rising defence spending.

On Sunday, Boeing unveiled forecasts for largely stable civil aircraft.

Delegates stated that despite this, many agreements will be tentative or formal signings of business already underway, and almost all will be marketed as contributions to reduce emissions in support of a shared goal of net zero emissions by 2050.

The recent purchase of 56 Airbus A320neos by EasyJet (EZJ.L) is expected to receive shareholder approval, putting the airline on Farnborough’s radar. Seven A350 freighters have been ordered by Etihad, with no word yet on whether they will be unveiled at the show.

According to a source close to the negotiations, Poland’s LOT is reviewing the proposals from its current suppliers, Boeing and Embraer, and Airbus and engine companies but will not make a decision at the show. This refutes a rumour that the airline has already chosen Airbus.

After reaching its peak in 2016, demand for jets remained strong until the pandemic crippled air travel. Now that travel is picking up, passengers have long lines, and some jets are again in demand.

However, aside from Delta’s anticipated MAX order, the large orders that dominated previous events are becoming less frequent as airlines strengthen balance sheets damaged by COVID-19 travel restrictions.

Before the event, Airbus and Boeing representatives flew to India in search of a potential $50 billion blockbuster from Tata Group, the owner of Air India. It is looking at 200–300 narrowbodies and 30–70 widebodies from different suppliers, but for the time being, sources said, hopes of a sizzling order to match this week’s temperature are on hold.

Therefore, the MAX 10 and 777X, which Boeing intends to fly in a scaled-down Farnborough display, will garner the most attention.

Major Turbulence

Both aircraft are causing Boeing a lot of trouble as it struggles with regulatory issues following a two-year safety crisis brought on by crashes of a smaller MAX.

Unless Congress waives it, Boeing has until December to secure approval for the 737 MAX 10, the most prominent member of its single-aisle family, or meet new cockpit alerting requirements.

According to Chief Executive Dave Calhoun, the 737 MAX 10 could be scrapped. This could impact the entire industry, including Boeing’s rival Airbus, which does not want to be drawn into a premature race to develop new aircraft.

Stan Deal, the head of Boeing’s commercial division, told reporters on Sunday that it is “not a high probability path” to cancel the MAX 10, which analysts claim is necessary to compete with the Airbus A321neo’s strong sales.

Following a string of production and regulatory issues, Boeing is almost ready to ship its first 787 in a year, according to Deal.

This week, leaders in the aerospace industry will face pressure to address issues with supply chains and a rise in inflation that cast doubt on both input costs and consumer demand.

Despite concerns from some suppliers, the current market leader Airbus is continuing with plans to increase production of the single-aisle A320neo to 75 jets per month by 2025 from its current 50.


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