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Paris Airshow to focus on production backlog
Published in The Saudi Gazette on 15 - 06 - 2015

PARIS — After years of big-ticket plane orders, next week's Paris Airshow will see rather fewer multi-billion-dollar deals and rather more nervous expressions as planemakers face the daunting task of producing $1.8 trillion of jets already sold.
The world's biggest aerospace gathering will still have its fair share of announcements, including a potential 100-plane leasing order for Boeing, as well as the showmanship that goes with any public contest with European archrival Airbus.
But with almost a decade's worth of production on their books, any new business is likely to be couched in tougher than ever warnings that factories must ‘execute' to win long term. And many analysts believe the order party is winding down.
“Given the fact that order books have swelled so large, it is unlikely that the headlines will be about large blocks of orders at this show and much more about the production process and viability of the supply chain,” said aerospace consultant Jerrold Lundquist, managing director of The Lundquist Group.
“Although the battle for market share in orders will always be there, the contest for delivery share is growing, as each player strives to ... ramp up their production output.”
Low interest rates and high oil prices created a stampede of orders for new planes and fuel-saving spin-offs of existing ones in recent years, leaving some 12,000 jetliners left to produce and lifting shares across the aerospace sector.
“We are getting to volumes where ... you need to build a single aisle aircraft every 6.5 hours. It is a drumbeat and intensity that is very demanding,” Airbus Chief Operating Officer Tom Williams told reporters ahead of the air show.
But French engine maker Safran injected a note of caution this week by saying its priority would be to meet its already record commitments, before thinking about further production increases being explored by some planemakers.
A profit warning ahead of the show from French seats maker Zodiac Aerospace highlighted concerns about tensions in the supply chain, though some suppliers fear jetmakers are raising production too quickly to fuel their own market battles.
“You have to balance market share with execution. A lot of suppliers are worried about making that big investment and watching it all fall down,” said aerospace analyst Richard Aboulafia, vice president at Virginia-based Teal Group.
Asked on the eve of the show whether solid production lines were more important than chasing new orders, Airbus CEO Fabrice Bregier told Reuters, “I hope we can do both.”
Boeing raised its forecast for jet demand on Thursday and Airbus is expected to follow suit when it outlines its latest market forecasts on Monday.
It goes into the show with a lead over Boeing in plane orders, with 247 so far this year versus Boeing's 175. (Graphic: http://link.reuters.com/kaz43w)
But barring last-minute deals, several industry sources said the two plane giants may struggle to announce 500 orders between them, compared with 697 at the Farnborough event last year. Some analysts have predicted higher orders, especially from Airbus.
Dutch lessor AerCap is close to a deal to buy 100 of Boeing's 737 MAX jets, two people familiar with the matter said. Both firms declined to comment. But unlike previous years, industry sources said there was less rush to complete orders in time for this year's show, a sign that the recent order wave appears to be maturing.
A keenly-awaited final order for 250 Airbus planes from India's IndiGo is not expected to be finalized at the event.
The show is also seen unlikely to bring Airbus immediate respite from slow sales of the A380 superjumbo, with all eyes instead on a possible relaunch at the Dubai Airshow in November.
Airbus Group Chief Executive Tom Enders was quoted on Friday as saying a decision on whether to upgrade the double-decker with new engines, using a formula that has worked for the company's smallest planes, would be taken by year-end.
In the skies, the show will mark the first head to head flying demonstration between Boeing's 787-9 and the A350-900, two new carbon-fibre jets winning sales in the wide-body market.
It will also be a victory lap for France's Rafale fighter which stunned the defence industry by winning a trio of export orders in recent months after years of frustrating losses.
It is an opportunity too for some recently developed aircraft to restore their image after a spate of problems.
French President Francois Hollande will open the show on Monday with a symbolic flypast of the Airbus A400M, weeks after a fatal crash during a pre-delivery test flight.
Canada's Bombardier will be bringing both its new CSeries plane and a new management team as it attempts to kick-start a project designed to challenge the duopoly of Airbus and Boeing, after missing its Farnborough debut last year.
Defence companies attending the show have been buoyed by heightened security concerns triggered by the rise of Islamic State, Russia's support for separatists in eastern Ukraine and China's assertive stance in the South China Sea.
US officials and industry executives also see demand from new customers such as India, Vietnam and others.
Some US companies like Northrop Grumman have switched to other air shows in the Middle East and Asia, but many others will be joining the 130,000 trade visitors to powwow with suppliers, potential buyers and the big weapons makers. — Reuters


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