The Farnborough Air Show is over. Here are our thoughts:
For all the pre-show buzz about expected orders, with names and quantities identified, this show was a bust.
Airbus was said to be shooting for 250-300 orders; it finished with 115 (including orders, commitments, MOUs and so on). Just two of the talked-about orders would have brought Airbus close to the 250 mark. An A380 was also anticipated. But no-go.
Boeing also failed to meet pre-show expectations that revolved around converting about 75% of the then-remaining 550 737 MAX commitments to firm orders. In the end, only Air Lease Corp did so, for 75, while GECAS and Avolon were revealed as being among those Unidentified customers who “committed” to the MAX. We fully anticipate these, and the other MAX commitments, to convert but expectations were…expectations and in this, Boeing fell short. But the company was still the undisputed star of the show. Kuwait’s ALAFCO, a lessor, became a new MAX customer and so did United Airlines. United gave not only the MAX program in general a boost but the -9 MAX in particular a major shot in the arm with an order for 100. The airline also ordered 50 737-900ERs, a boost for this slow-selling airplane as well. Virgin Australian became another new MAX customer, albeit in the week preceding the show but this is a bit of a technicality.
Bombardier announced two new commitments for the CSeries, one from an Unidentified customer and one from Air Baltic. We view the Air Baltic order as significant, for this is the first time the CSeries competed against the A319neo and the 737-7 MAX. Previous competitions were vs the A319ceo, the A319neo and perhaps the 737–700. BBD continues to make slow progress with the CSeries, with orders and options in the 10-20 range. This pace is similar to Embraer, Airbus and Boeing at this stage of the game (i.e., 18 months before EIS, six months before first flight) for the E-Jet, 737-700 and A319.
The news that BBD is talking with AirAsia about a 160-seat CS300 (28 inch pitch with new slim line seats) was a surprise. We’ll wait with great interest whether the airline’s CEO, Tony Fernandes will be enticed away from his exclusivity with Airbus for the A320/320neo. If Airbus’ John Leahy was motivated to “kill” the CSeries before, these talks are sure to start a war–and Leahy takes no prisoners.
Embraer, a star at the Paris Air Show, only announced a handful of orders.
ATR had a reasonable show with its turbo-prop. Bombardier brought up the rear with an order for six Q400s.
Pratt & Whitney bested CFM International in those A320 deals where they compete. CFM, of course, recorded far more orders since it is the exclusive supplier on the 737NG and MAX.
Mitubishi surprised everyone with an MOU for 100 MRJs from SkyWest Airlines of the USA. But commentary that this is a “blow” to Bombardier is over-stating.
Why so few orders?
Because the global economy still pretty much sucks. The backlogs are up to seven years out. Customers don’t want to pay escalation costs this far out. No need to hurry.
A few years ago Boeing roundly criticized Airbus for announcing MOUs, LOIs and “commitments” while Boeing confined its announcements to firm orders. This changed at the Paris Air Show when Boeing announced commitments for 20 747-8Is from an unidentified customer. (It was the Hong Kong Airline Group.) Since then, all the airframe OEMs are busting their backs to throw every number they can out at an air show.
We roundly criticize this practice, whether it comes from Airbus, Boeing, Bombardier, Embraer or anyone else. An order isn’t an order until it is. The Hong Kong 748 “commitment” is still pending, and this was one of those anticipated to be firmed up at Farnborough. Instead, it became one of those no-gos. The same goes for other “commitments” from other OEMs. That’s why we have been so harsh on the practice. A commitment isn’t really worth the paper it’s written on. A commitment isn’t booked as an order on the tally sheet. This PR charade should be dropped. Of course, it won’t be.
The absence of product news (other than some detail of the 737 MAX and formalizing the A330-300 HGW), the failure to meet even low expectations in terms of orders and the crappy weather combined to make for a dull show from a news standpoint.
It was nice to see Boeing return to the aerial displays with the Qatar 787. Boeing certainly has a point: aerial displays haven’t sold an airplane (probably since Tex Johnston did the barrel role with the Dash 80). But it’s always been cool to see the A380, A340-600 or even the Lockheed Constellation do some aerobatics. We hope Boeing continues the practice.
Jeff Smisek, CEO United
- 100 737 Max 9
- 50 737-900ERs, replaces 757s flown domestically.
Jim McNerney, CEO The Boeing Co.
- Thanks to UA for putting trust in us.
- Boeing and United go back a long, long way. Once part of the same company.
- Boeing has delivered more than 1,400 airplanes to United and Continental.
- With today’s order, the 737 program has now surpassed 10,000 orders.
Ray Conner, President Boeing Commercial Airplanes
- The 737 MAX like the 787 will provide customers best solution in air transport.
- Will provide greater value in fuel efficiency. MAX, like the NG, is perfect match for United.
- $14bn value, NG delivery begins in 2013. (Where did Boeing come up with delivery positions next year?–Editor.)
- -900ERs replace 757s domestically, 9 MAX will replace other, less fuel efficient aircraft including A320s. We have 152 Airbus airplanes today.
- First 787 due in late September. McNerney has personally guaranteed this.
- We had extensive discussions with Airbus and Boeing. Spent almost the past year in discussions with engine and airframe manufacturers.
- We’ll finance aircraft as we get closer to delivery.
- Deciding factors we negotiated what we believe to be the best airplane with the best engines at the best price.
The Farnborough Air Show for the trade is over. Here are today’s final orders.
Airbus: Avolon signs MOU for 15 A320neos. Middle East Airlines 5+5 A320s/A321s. Russia’s UTAir 20 A321s. Synergy Aerospace firms up order for nine Airbus A330 Family aircraft. Ends show with 115 orders, MOUs, commitments.
Boeing: United’s announcement for the 737-9 MAX (100) and 737-900ER (50) originated in Chicago and was broadcast to the FAS. With this order, Boeing now has +1,200 orders and commitments for the MAX from 18 customers. Firm orders for 737 MAX now hit 649.
Bombardier: Chorus Aviation of Canada exercises options for six Q400s. AirAsia’s CEO Tony Fernandez confirms he’s talking about 100, 160-seat CS300s.