Although I will not be attending the 53rd International Paris Air Show which opened at Le Bourget this morning be in no doubt that there will be plenty for the 2,462 companies that are exhibiting at the show together with the many thousands of trade visitors attending to mull over and discuss. One thing of certain is that unlike past air show events this one will not be dominated by commercial aircraft order announcements.
That said, there will be order announcements of course and I suspect that Airbus will likely dominate this particular show albeit that Boeing usually provides a surprise this, if it occurs, is most likely to be for 777, 777X or 787. For Airbus, leaving aside the huge popularity of the A320NEO family, I would be surprised if the week closed with some good news in respect of A350 and A330 orders.
Further orders for the A220 (the former Bombardier C series which Airbus acquired a 50.1% stake) might also occur and I guess that the subject and plans for Boeing Brazil, the name now chosen for the partnership deal between Boeing and Embraer, will come up for under discussion in the tents. Leaving what might or might not occur at the Paris Air Show this week in respect of anticipated order announcements, for the whole of 2019 I take the view that we will be lucky to hit the one thousand airplanes being ordered for the year – in other words, less than half the number of planes ordered last year.
The 2019 Paris Air Show opens in the aftermath of two tragic incidents involving Boeing 737 MAX planes in which 339 people lost their lives. Boeing CEO Dennis Muilenburg said over the past few hours that “we come to this air show with a tone of humility and learning” and no one can argue that such words offer the right tone for Boeing to take.
The failure of the MCAS system on both 737MAX planes combined with the failure of the pilots to understand that the system could well malfunction when a single instrument that feeds the information into it fails has appeared as the main reasoning behind both tragic incidents. Not surprisingly, the repercussions for Boeing and for both Ethiopian and Indonesian airline operators whose planes where involved in the two separate incidents has been manifold.
Clearly the resulting grounding of all 737 MAX planes will dominate discussion in the Boeing tent this week. And while Boeing has already confirmed a software solution the battle to restore confidence of operators and passenger alike is only now about to begin. I have no idea whether reports that the US Dept of Justice is carrying out a criminal investigation are true or not but with reports of various lawsuits being launched Boeing faces a difficult period ahead. Before moving on I have to say that it is very regrettable that one US Senator has chosen to suggest part of the blame for Ethiopian Airlines incident lies with the pilots. Such remarks are entirely without foundation and place an unnecessary slur on the airline.
For now, my reading of the situation continues to be one of insufficient training for 737 MAX pilots on the MCAS system and until and if proved otherwise I will stick to that. That is very different from failure on the part of pilots. The certainty in all this is that big lessons have been learned by aircraft manufacturer, regulator and airline operators – more than sufficient lessons to ensure that in regard of MCAS we will never see the like of such tragedies again. I suspect and indeed, hope that the 737 MAX will be flying again by the end of the third quarter of the year. That is when the battle for winning hearts and minds for Boeing really begins.
The 2019 Paris Air Show opens at a time of increased confusion as to whether we have seen the end of what has undoubtedly been a very long cycle of growth in the commercial aerospace industry. While the major commercial aircraft manufacturers continue to enjoy near record levels of order backlog and demand for well in excess of 40,000 new planes being required over the next twenty years it is noticeable that in recent months airline passenger traffic growth has, according to the International Air Transport Association, slipped well below the long term 5% average.
Of course, no-one is suggesting that passenger growth is about to go into reverse or that envisaged new growth markets such as Africa and other emerging markets will continue to see the aviation industry expanding. More than likely then is that emerging markets and what is commonly referred to these days as millennials’ preference for travel experiences would is likely to support continuing airline industry growth but perhaps not quite at the rate envisaged three or four years ago.
Such doubts come at a time when both Boeing and Airbus are increasing the number of aircraft that they build in order to meet rising demand for commercial airplanes as witnessed by their bulging order books. There are however clouds on the horizon that cannot be ignored. Airline profit margins are heading in the wrong direction as costs, particularly oil and staff wages increase at a time when competition for fares has probably never been greater.
Airbus is expected to unveil its A321XLR — a long-range version of its best-selling A320 single aisle jet family whilst at the same time even though the plan has I believe been placed on the back burner in the wake of the 737MAX crisis I suspect that Boeing will be asked more questions about when and if it intends to launch a mid-sized aircraft, one that if it was to go ahead would likely have an up to 270 seat capacity similar to 767 and former 757 family of aircraft.
Away from the commercial aircraft scene we can expect France and Germany to launch their vision of the proposed new military fighter jet that they have agreed to develop and build together. Separately I suspect that Airbus will be asked about hybrid-electric powered aircraft and whether the next generation of A320 will be powered in this way.
Other issues likely to dominate chalet talk will be the proposed merger between United Technologies Corp and Raytheon which was announced last week. Analysts will be looking for clues as to how GE and others will respond to this unexpected move whilst at the same time suggesting other possible avenues for aerospace/defence consolidation in Europe. My view is that a year from now the European aerospace and defence industry will look pretty similar to how it does now! That said, partnership and collaboration being the way forward, watch this space!
CHW (London – 17th June 2019)
Howard Wheeldon FRAeS
Wheeldon Strategic Advisory Ltd,
M: +44 7710 779785
Skype: chwheeldon
@AirSeaRescue