Paris Air Show 2017: Low on orders, high on hype

Major planemakers are getting ready for a week-long marathon of unveiling and deals. Although Paris promises to be as spectacular as ever in terms of showcasing the world what the genius of engineering is capable of, no one familiar with the market is expecting the big OEMs to break records.

Not raining deals

The book-to-bill rates for both titans of the industry – Boeing and Airbus – dropped below 1.0 last year and a miracle would need to happen in order for either of the giants to bounce back this year.

Passenger traffic growth around the world has been steep and steady, at 7.4% across all regions in FY 2017, according to a report by the International Air Transport Association (IATA), with growth in premium passenger traffic having exceeded its economy counterpart in many key markets in the past year.

Nevertheless, the demand for new aircraft is not consistent with the brisk pace of airline traffic growth. This might not be as worrisome as some depict it, as a lower book-to-bill rate does not pose a high risk in the nearest future, with Airbus and Boeing’s impressive-as-ever order backlogs and unprecedentedly low cancellation rates at 3%.

“The 7-9% increase that we expect in large commercial airplane deliveries over the next 12-18 months is supported by the significant combined order backlog of Airbus and Boeing’s large commercial aircraft, which was close to record levels at the end of 2016,” Moody’s Investor Services explain a report published in May.

According to the estimates that have been circulating in the media for the last month, Boeing and Airbus are likely to record some 200 orders each, similar to last year’s Farnborough Air Show.

More than just OEMs

Another important trend that should not be ignored is the ambition of both Airbus and Boeing to tap into new revenue streams or unlock opportunities in markets they had previously been passive.

According to Anand Parameswaran, Senior VP for Aerospace and Defense at Cyient, „Paris will see a rise in deals conducted on service models like Power-by-Hour contracts – likely to make up 60-70% of the deals. While such engine leasing models are not a new concept, they have proliferated widely throughout the industry in recent years.”

OEMs are tapping into the possibilities offered by digital technologies that not only help significantly decrease development times but also expanding their aftermarket services portfolios, following the path of engine manufacturers.

The leaning towards disruptive technology is clearly understood from Airbus CEO Tim Enders’ speech given at the Airbus Media Days event held prior to this year’s Paris Air Show.

“The defense area was traditionally the technology driver. No more,” Enders explained. “Today the civil aircraft field is where the innovations are made. The defense field then adopts them.”

The new MAX

Coming back to the likely orders to be announced in the coming week, a sizeable chunk of them are probably going to the debutant Boeing 737 MAX 10.

The latest addition to the 737 MAX family would seat around 230 passengers in a single-cabin layout common among LCCs or 189 passengers in two-class capacity. At a length of 43.8 meters (only a modest 1.68 m or two rows longer than the MAX 9), the new variant does not require a thorough re-design, the only major change being the trailinig-link landing gear modification. This means that the model can be fitted with same wing and CFM LEAP 1B engines as the MAX 9.

It should be noted though that a significant part of the MAX 10 orders will be simply replacing previous orders

In an interview given on June 14, Ryanair’s CMO Kenny Jacobs, told journalists that Europe’s largest airline by the number of passengers flown is considering an order for Boeing’s latest addition to the family. However, according to Bloomberg, the chances of such an order being announced at Paris are rather slim. Indonesian budget carrier Lion Air is also named as one of possible launch customers of the model.

Stealth jets make a comeback

The Paris Air Show is going to be symbolic for the defense sector, as it will be the first time in 20 years that a US-operated stealth jet is going to circle above the crowd at Le Bourget. Lockheed Martin is bringing two F-35s, one for flight demonstration, and one for static display. The last planned appearance of an American stealth fighter (the F-22) in 2009 was canceled.

The planes have landed in Paris on June 13 and footage of them in flight is already available.

In addition, Lockheed has a debut planned for Paris week – the LM-100J commercial freighter. According to the company, the LM-100J represents the 17th different mission capability for the C-130J Super Hercules platform and is an updated version of the L-100 cargo aircraft, which Lockheed Martin produced from 1964-1992. The LM-100J made its first flight on May 25, 2017.

Debutant ball

What this year’s Paris might lack in orders, it will certainly compensate in the number of new aircraft that will be shown to the public. In addition to the already mentioned demonstrations by Boeing and Lockheed, probably the most anticipated are the flying display of Embraer’s largest second-generation E195-E2, the international debut of the Saudi-Ukrainian An-132D turboprop, Airbus A321neo’s flying display and the appearance of the Mitsubishi Regional Jet.

And – serving as a cherry on the top – the Air Show is likely to feature the presentation of Boeing’s New Midsize Airplane, a concept meant to bridge the gap between the 787-8 and the 787-1000, seating 220-270 passengers. Boeing has the ambition to make this twin-aisle jet fly at single-aisle operating costs, which can only be achieved by major advances in propulsion and construction.

So far, the company has been reluctant to reveal the details being part of their “secret sauce”, as Mike Delaney, Boeing Commercial Airplane VP of Airplane Development, put it. We can only hope that some of this “sauce” is going to be spilled at Le Bourget.

The International Paris Air Show is organized by the SIAE, a subsidiary of GIFAS, the French Aerospace Industries Association.

The 52nd  show will take place at the Le Bourget Parc des Expositions from 19 to 25 June 2017, and once again will bring together all the players in this global industry around the latest technological innovations. The first four days of the Show will be reserved for trade visitors, followed by three days open to the general public.

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