An aside before getting into the heart of this post: the following was sent by a Wall Street analyst upon hearing the news that Boeing will lose $300m on the first 18 KC-46A tankers.
KC-46A over-runs. In the movie Casablanca, the Police captain proclaims; “This café is closed; I’m shocked, shocked to find out there is gambling here.” A waiter then hands him his Roulette winnings. We are equally shocked to read reports that BA likely underbid the KC-46 contract. BA’s poor performance on the 767 tanker program and aggressive KC-46A bid drove us to include a nearly $1bn EMD contract over-run in our estimates, which are unchanged. We maintain our Buy rating and $92 target.
Now for the rest of the story, as they say.
While there remains much uncertainty within Boeing and the industry over what Boeing will do about a new airplane–a 737 re-engine or an entirely New Small Airplane (NSA), and if an NSA, what will this look like–states interested in building the NSA also anxiously await Boeing’s decision.
Washington State is the location for building the 737 and having lost the 787 Line 2, it doesn’t want to lose the NSA. The governor has already appointed a task force under the name Project Pegasus to plan the campaign and strategy to be sure the NSA is built here. Other states probably are already planning their strategies, though none has announced anything that we’ve seen.
We sat down with Pat Shanahan, who heads up Boeing airplane programs, at the Paris Air Show for a short conversation.
One of the messages top executives have repeatedly said in recent months is that they will not do two new airplane programs, following the challenging and unhappy experiences on the 787 and 747-8 developments. We asked about this and more.
Those of us who are intimately familiar with commercial aviation will find this as no news. For those who don’t deal in this business every day, this will provide a better understanding of how deals are won in aviation.
This is the story of the GE Powerhouse and how family ties combine to enable GE Aviation and CFM International to win deals that might otherwise go to competing engines.
None of what we’re about to tell you is to suggest that the GE/CFM engines are inferior (though, obviously, some might dispute this), because they are superb engines. But a telling comment came from CFM’s Sandrine Lacorre, product marketing director, who said at a UBM Aviation conference, “What we can’t do technically, we will do commercially.”
Here are our closing views of the PAS:
Boeing did very well at the show. We know the headlines almost universally say Boeing had a bad show (which it didn’t) and was trounced by Airbus (which it was), but people easily overlook comparing Boeing’s performance vs. previous air shows.
Boeing announced more than 140 orders worth some $22bn–about equal to the 2009 Paris Air Show. By anyone’s standards, this ain’t shabby. Boeing often announces low numbers at air shows, claiming it doesn’t hold orders for the shows and Airbus does. We regard this as so much poppycock, because we know customers drive announcements and both Airbus and Boeing hold announcements for air shows at customer requests.
This is a story we provided KIRO TV in Seattle, for which we provided reports during the air show.
Airbus A320neo success far exceeds expectations
Special to KIRO TV
Airbus ended the primary portion of the Paris Air Show Thursday with 700 new, firm orders for the A320neo (New Engine Option) and a total of 1,029 firm orders and commitments year-to-date. There possibly could be a few more orders before the show officially ends Sunday, but the trade show portion ended Thursday.
The results surprised even Airbus super-salesman John Leahy, who said at the company’s closing press briefing that some deals came together unexpectedly during the show.