PARIS – The 2017 Paris Air Show (PAS) is in the books for global aircraft manufacturing giants Boeing and Airbus, and transaction volume at the show exceeded even that of the most optimistic pre-show prognostications.
Airbus and Boeing together announced 937 new orders and commitments (including memoranda of understanding [MoU] but excluding purchase options) for aircraft during the show, more than tripling their year-to-date sales figures through the end of May (205 for Boeing, 73 for Airbus).
In all, the two manufacturers announced more than $100 billion in business at current list prices, though airlines often get heavy discounts off of said list prices for most orders.
Boeing led by the 737 MAX 10
At PAS 2017, unlike most summer air shows over the past decade, Boeing not only held its own head-to-head against its Toulouse-based rival, but actually left Airbus in the dust. At PAS 2017, Boeing announced 591 new orders and commitments including 232 firm orders, as well as 208 conversions from existing 737 MAX orders to the newly launched 737 MAX 10.
The MAX 10, launched on Monday as Boeing’s first competitive response to Airbus’ A321neo, ended the show with 335 orders and commitments from 15 customers, exceeding Boeing’s claim of 240 from 10 customers made on Monday morning.
Airbus Chief Operating Officer – Customers John Leahy was not sold on the 737 MAX 10’s performance in Paris saying “Boeing announcd 326 737 MAX 10 orders, of these, 158 are commitments (including 54 conversion) leaving 168 firm orders of which 125 are conversions. The total net firm orders was 43.”
The 787 Dreamliner also had a strong show, winning 45 new orders and commitments and more than doubling year-to-date sales and pushing Boeing already past 2016’s net orders figure for the Dreamliner.
Boeing’s full breakdown of new orders and business from the show is outlined below.
- Tassilli Airlines – 3x 737-800
- Mauritania Airlines – 1x 737 MAX 8 (previous UFO)
- Ruili Airlines – 20x 737 MAX (MoU)
- Unidentified Customer – 125x 737 MAX 8 (MoU)
- Xiamen Airlines -10x 737 MAX 10 (MoU
- Air Lease Corporation – 5x 737 MAX 7, 7x 737 MAX 8 (MoU)
- El Al – 2x 787-8, 1x 787-9
- Ethiopian Airlines – 2x 777F, 10x 737 MAX 8
- Japan Investment Advisor – 10x 737 MAX 8
- CALC – 15x 737 MAX 10, 35x 737 MAX
- Azerbaijan Airlines – 4x 787-8 (MoU)
- Ryanair – 10x 737 MAX 8 (MAX 200)
- Blue Air – 6x 737 MAX
- Avolon – 75x 737 MAX 8 (MoU)
- Okay Airways – 8x 737 MAX 10, 7x 737 MAX 8
- ACG – 20x 737 MAX 10
- Lion Air – 50x 737 MAX 10 (MoU)
- Monarch Airlines – 15x 737 MAX 8 (previous UFO)
- United Airlines – 4x 777-300ER
- Norwegian Air Shuttle – 2x 737 MAX 8
- ALAFCO – 20x 737 MAX 8 (MoU)
- AerCap – 30x 787-9
- SpiceJet – 20x 737 MAX 10 (MoU)
- Tibet Financial Leasing – 20x 737 MAX (MoU)
- CDB Aviation – 42 737 MAX 8, 4x 737 MAX 10, 8x 787-9
- 737NG – 3 (3)
- 737 MAX – 410 (135)
- 737 MAX 10 – 127 (47)
- 777 Classic – 6 (6)
- 787 – 45 (41)
- TOTAL – 591 (232)
- AerCap – 15x 737 MAX 8 to 737 MAX 10
- Copa Airlines – 15x 737 MAX to 737 MAX 10
- Malaysia Airlines – 10x 737 MAX 8 to 737 MAX 10
- Donghai Airlines – 10x 737 MAX 8 to 737 MAX 10
- United Airlines – 39x 737 MAX 9 & 61x 737 MAX to 737 MAX 10
- SpiceJet – 20x 737 MAX 8 to 737 MAX 10
- TUI Group – 18x 737 MAX to 737 MAX 10
- GECAS – 20x 737 MAX 8 to 737 MAX 10
- 737 MAX 10 – 208
Airbus has a quiet show; A321neo business is slow
Airbus’ history is usually to dominate Boeing at these types of events, so the extremely quiet airshow by Airbus was a surprise to industry observers.
Even departing salesman, John Leahy’s typical last-day magic in winning orders for 85 A320neo family jets, 14 A320ceo family jets, and 8 A330neos wasn’t enough to put Airbus over the hump.
In all Airbus won 346 orders and commitments and 158 firm orders. The A321neo sold just 47 copies in all (about a third as much as the MAX 10), and total widebody sales were for 20 frames.
When asked if Airbus needed to once again extend the A320. Leahy responded, “When you have 80% of the market you don’t need to change your product, we listen to our customers. We look very carefully at the 737 MAX 10, we thought the launch customer base was going to be stronger. The story on the 787 and 350 is the same story. We studied the 787 carefully and we developed a better aircraft.”
Airbus also launched its A380 upgrade at PAS 2017, dubbed the A380plus. But despite the fanfare, Airbus made no tangible headway on further sales for its very large aircraft (VLA). Leahy said the A80plus featured “aerodynamics improvements, 11 abreast and more revenue space, with 13% posible cost reduction if all mods are applied.”
When asked if the overall order party was over for the industry, Leahy responded “This is a slower year for orders as we have previously reported. There is an order cycle that is in a lower point, and the only negative thing I see is that we’ve thought they (Boeing) was going to have a larger oder for the MAX 10.”
Airbus’ full breakdown of new orders and business from the show is outlined below.
- Tibet Financial Leasing – 20x A321neo (MoU)
- Iran Airtour – 45x A320neo (MoU)
- AirAsia – 14x A320ceo
- Zagros Airlines – 20x A320neo, 8x A330neo (MoU)
- Wizz Air – 10x A321ceo
- Hi Fly – 2x A330-200
- Delta – 10x A321ceo
- Ethiopian – 10x A350-900
- Viva Air – 35x A320neo, 15x A320ceo (MoU)
- CDB Aviation – 30x A320neo, 15x A321neo (MoU)
- GECAS – 100x A320neo
- Air Lease – 12x A321neo
- A320ceo Family – 49 (34)
- A320neo Family – 230 (100)
- A321neo 47 (12)
- A330ceo 2 (2)
- A330neo 8 (0)
- A350 – 10 (10)
- TOTAL – 346 (158)
The 737 MAX 10 is for real
Our view on the 737 MAX 10 before Boeing’s launch had been quite lukewarm. In fact, we poured cold water on the prospects of this new MAX variant in numerous analyses published over the past year and a half. But Boeing’s MAX 10 performance at the Air Show silenced all critics, including us.
Pretty much every box was ticked regarding performance. It won multiple new growth orders from Asian ultra low-cost carriers, validating the hypothesis that the MAX 10 could compete in Asian markets where its range was not a factor. It also won substantial orders from Chinese customers, another key market for the type.
Three major, global full-service airlines (United, Copa, and Malaysia) all validated the plane via conversions, and even lessors, who pooh-poohed the notion of the MAX 10 earlier this spring flocked to the MAX 10 in droves (5 in all).
Some critics will point to the number of conversions contained in the 335 figure and the potential cannibalization of the 737 MAX 9. But airlines paying extra money to convert to a larger variant is hardly a sign of weakness, and moreover, it proves that the MAX 10 can keep MAX customers away from the A321neo.
Even if the MAX 10 doesn’t win oodles of business, by keeping MAX 10 customers in-house in the middle of market (MOM) segment, it will have served its strategic purpose.
Boeing will likely beat Airbus in the yearlong orders battle
PAS 2017 extends Boeing’s full-year net order count to 437 aircraft, against 240 for Airbus. If all MoU are converted in this calendar year, Boeing’s edge will expand to 796 against 428.
With not much business expected at November’s Dubai Air Show, PAS 2017 thus positions Boeing to win the annual net orders battle for the first time since 2012 (When it outsold Airbus 1203 to 833).
We don’t expect overall volumes to exceed that of 2016 substantially, though there are potential catalysts like Delta Air Lines’ first next generation narrowbody order and orders from China’s big three carriers of Air China, China Southern, and China Eastern.
Widebody market weakness is a real phenomenon
The brisk narrowbody business transacted at the show stood in sharp contrast to the almost dead market for widebody jets. Other than the Iranian order for 8 A330neos and an Ethiopian top-up, Airbus wasn’t able to get any traction on either of its smaller widebody jets.
In the A350’s case, Airbus’ problem is simply that the airplane is functionally sold out, though a cynic might point out that didn’t prevent the 787 from generating substantial sales. But the A350 will be fine for Airbus in the long run.
Our one caveat is that yet another 777-300ER order from United isn’t a spectacular sign for the prospects of its A350-1000 order. We understand that Boeing is working hard there to get United some more 777-300ERs and flip them to the 777X.
It might be time to start worrying about the A330neo however, as order momentum remains languid. Since launching with a bang back at the 2014 Farnborough Air Show, the A330neo is in a rut. It ended the show with just one MoU for 8 A330neos from Iranian carrier Zagros Airlines. It now has just 210 firm orders a year before EIS.
Fabrice Brégier, Airbus Commercial President, said “Clearly there is a market of the 777 / A330 replacement, and that will drive the market in the coming years.”
In a world of high fuel prices, the A330neo might have been a standout seller. But now without the fuel burn savings to power sales and the 787 recapturing some availability, there isn’t much impetus to buy the A330neo if you are buying a mid-sized widebody anyway.
On Boeing’s side, the 787 momentum is welcome but as we’ve covered before the lack of 777X order momentum isn’t a great sign. Deferrals if not cancellations are coming from the Middle East customers, and Boeing needs to diversify that order book within the calendar year.
Responding to sluggish wide body sales, Ihssane Mounir vice president, Global Sales & Marketing for Boeing Commercial Airplanes said “This week, we’ve seen a solid market for the 787. It’s something we will continue seeing, and there will be more in the coming days. More 777 and 777X orders to come. The 777X milestones are doing well and some customers are asking us to expedite the EIS.”
The 777 production bridge in 2018 is also at risk unless Boeing can find another 20-25 new order this year, and at this point, the prices might truly reach fire sale levels. The Chinese carriers are where we expect Boeing to find a solution if they can pull it off.