Paris Air Show: There just aren’t too many planes in the world

The Paris Air Show returns this week after a long Covid hiatus. The typically biennial confab brings together executives from the aerospace and defense ecosystem and typically offers a slew of aircraft and engine deals and industry forecasts. Analysts were bracing for particularly strong order bonuses this year as airlines struggle to meet a resurgence in travel demand and lock down delivery slots that Boeing Co. And both Airbus SEs are becoming increasingly rare. But the flow of announcements was more like a stream than a flood. The capstone was IndiGo’s order for 500 narrow-body jets from Airbus. As the largest single order for aircraft on record, that’s a big deal, but it’s also the only big, truly new deal to come out of the air show. Others were smaller or recycled. “In an environment of rapidly rising demand, we were also surprised by the lack of orders,” analysts at Bank of America Corp., led by Ron Epstein, wrote in a June 20 report.

The relative lack of fresh blockbuster announcements at the air show is partly an issue of timing: Air India announced an order for 470 Airbus and Boeing jets in February, which was followed up in Paris this week with options for 70 more Boeing planes. Went. Saudi Arabia signed a March deal for 78 Boeing Dreamliners to be split between the two carriers, while Ryanair Holdings Plc agreed in May to buy 300 of Boeing’s 737 MAX jets. At least at Le Bourget the commentary ran free and easy airport, home of the Paris Air Show. Executives have alternately complained about stubborn supply chain bottlenecks, which are delaying deliveries and limiting manufacturers’ ability to ramp up production to meet all this demand, and order backlogs at Boeing and Airbus. A warning is being given about the risk of increasing the final capacity after filling. Which is now well spread by the end of this decade. Some longtime executives worry that airlines are over-ordering in an effort to get in line.

“There is a lack of capacity. There are no airplanes available,” Akbar Al Baker, chief executive of Qatar Airways, told Bloomberg television. “We also have other players flooding the market with large numbers of airplanes, and I just hope That’s what they’re doing right,” he said. Steve Udvar-Hazy, co-founder of Air Lease Corp., told Bloomberg News that the industry “suffers from a herd mentality that is not justified by economics or realityBoth the officials said that they do not feel the need to place fresh large orders for the aircraft right now, but mainly because they already have huge backlog. Air Lease has around 400 jets on order and Two 787 Dreamliners have been added to the air show. When Qatar Airways’ existing fleet needs replacement, “we will order more airplanes,” Al Baker said. That time is “not too far away.” He and Udvar-Haji Both also said that the strong demand the industry is enjoying is sustainable for the foreseeable future. In other words, they don’t think their companies are going to get caught in the aircraft bubble, but others are too. Can

Not all orders are created equal in the aerospace industry. Bank of America’s Epstein expressed some reservations about Indian carriers’ blockbuster bookings. “Given gaps within Indian infrastructure, availability of funding and concerns over India’s commitment to the Cape Town Convention, we remain cautious about these commitments,” they wrote in a report this week. Established an international registry for aircraft as a means to help companies claim their rights over aircraft. But aircraft orders are not written in stone nor signed in blood, something that has become abundantly clear during the pandemic and Boeing’s myriad production, regulatory and political issues in recent years. “Many of those gets will be postponed, or airlines will pull out of some aircraft or swap them with other buyers,” Udvar-Hazy told Bloomberg Television. “Look at it as a dynamic order book. It’s not a stable order book with Airbus and Boeing.”

At the last Paris Air Show in 2019, analysts began speculating that a long-running boom in air travel demand could be respite and Boeing and Airbus’ massive order books left airlines with more aircraft than they actually needed. Can be It turned out to be the right question to ask, although no one could have predicted the global pandemic it would cause. If the Paris Air Show were to happen in 2021, it would be only a few months after the Covid vaccine was introduced worldwide. The myriad restrictions on international travel meant that many airlines had more seats than passengers in their larger jets, even as domestic demand surged. Now, airlines are having to cut back on their growth plans and demand has failed to recover as they cannot find enough aircraft and fully functioning jet engines. It’s possible that aerospace executives, like economists, aren’t very good at forecasting what the world will look like five years from now, or even a year from now. A lot can happen between now and 2030 to 2035 – when IndiGo’s 500 Airbus jets are due to be delivered.

Boeing, for its part, predicts that the world will need to deliver 42,595 airplanes between now and 2042, more than the current fleet, even taking into account the reduction in flight demand due to climate concerns and productivity improvements. is almost double. About half of those orders are expected to be placed to replace older, less efficient jets.

Read also: After Indigo, Air India buys 470 planes from Airbus, Boeing at Paris Air Show

The more pressing issue for the aerospace industry is whether it can build aircraft on order for this decade. “Deliveries of all our aircraft are delayed,” said Al Baker of Qatar Airways. Particularly in the US, the industry has significantly reduced its ranks during the pandemic and has since struggled to rebuild its labor force. While companies are in a hiring spree, new employees lack the experience of their predecessors, and the knowledge gap is leading to quality issues up and down the supply chain. serious among smaller suppliers, who lack the capital to compete for talent with manufacturers. In the food chain and other industries. Nearly three-quarters of respondents to a Bank of America survey on the aerospace supply chain don’t believe that industry issues will be resolved before 2025, and 40 percent said it is unclear where production levels will eventually stabilize for 2023. The survey was conducted with the Aviation Week Network, and results will be reported on June 1. More than half of respondents were downstream suppliers with annual revenues of less than $25 million.

Read also: Paris Air Show returns with a bang; Mint Ground Report | Watch

Mike Kaufman, vice president of supply chain for General Electric Co.’s aerospace division, said, “When you thread almost everything, it almost always ends up with labor: attracting it, maintaining it, getting it on time.” ability to train.” said at the company’s investor day presentation at the Paris Air Show this week. “We are still being hampered by quality deviations – not the safety of the flight, but things that get stuck inside as soon as we start the descent down the ramp which causes us to stop or in some cases go backwards. There are still physical barriers.” GE has a 200-person team focused on supplier recovery and readiness. The rate at which aerospace suppliers to Honeywell International Inc. reneged on delivery commitments fell to about 15 percent in the first quarter, falling from a peak of 20 percent to 25 percent in 2022. But the normal is less than 10 percent, so there’s still a way to go. A supplier of jet engines to Raytheon Technologies Corp. used the wrong materials to make a batch of parts, forcing it to halt production and delay some shipments. The error will cause Raytheon to lose about $500 million in free cash flow in the current quarter, Brooke Sutherland reports, though it expects to make up that amount for the remainder of the year.

“Everyone is very excited. Both the manufacturers are looking for huge orders. But you can always get orders. When will you supply them? That’s the big question,” Al Baker said.

This story has been published from a wire agency feed without any modification to the text. Only the headline has been changed.

UPDATE: June 22, 2023, 12:51 PM IST