Farnborough Airshow: Orders Slow, But OEMs Remain Positive
The annual order competition between Boeing and Airbus was no less interesting this year at the Farnborough Airshow, held from July 9th to July 13th. Boeing roared back into action this year, receiving 396 new orders and commitments, while Airbus took home only 115. These results were a reversal from last year’s Paris Airshow when Airbus significantly outsold Boeing.
Coming off of a powerhouse year at the Paris Airshow in 2011, Farnborough saw a much slower order flow and a generally more subdued atmosphere, attributable mainly to global macroeconomic concerns and uncertain defense budgets. Despite these factors, from an OEM perspective, airshow results reinforced the OEM upcycle and a very positive outlook for the commercial aerospace market, especially with demand for more fuel efficient aircraft and focus on emerging markets.
To address this demand for fuel efficient aircraft, the OEMs announced new products – Airbus’ enhanced A330 and Boeing’s 737 MAX-9 – which increase range by 7% and 18%, respectively, while having equal or higher payload than previous models. In the end, Boeing dominated the airshow with 308 787 MAX orders and commitments, while Airbus failed to maintain its momentum from last year’s record-breaking achievements.
Major order highlights:
- United Airlines announced an order for 150 Boeing 757 planes worth $14.7 billion, including 100 737 MAX-9 (delivery starting in 2018)
- Airbus gained Hong Kong’s Cathay Pacific as a new customer with an order for 10 A350-1000
- Approximately 55% of orders and commitments came from aircraft leasing companies, including large orders from GE Capital Aviation Services, Air Lease Corporation, Aviation Lease and Finance Company from Kuwait, and China Aircraft Leasing
While orders slowed this year, Boeing and Airbus has placed a greater focus on production rates and deliveries. A major question on the market’s mind is whether the OEMs will be able to reach their announced production rates. With backlog levels at seven years’ production, it will be critical to produce and deliver aircraft on time to customers, avoiding deferrals and cancellations. Additionally, the industry remains hesitant over whether the slight decline in global airline traffic growth since earlier this year (4.5% year-over-year growth in May compared to 6.1% in April according to IATA data) and the uncertain economic environment worldwide will impact aftermarket sales. At the Airshow, many suppliers like Triumph Group, had not seen any noticeable change in aftermarket trends, while other suppliers noted that they have seen softer demand in the last two months, although not enough to change annual plans.