Market for aircraft deals ‘definitely slowing’
Print Edition
THE boom in commercial plane orders of recent years appears to be giving way to a more sustainable pace of demand at the 2015 Paris Air Show, with jetmakers increasingly focused on lifting production to meet their record backlog of sales.
US planemaker Boeing and European rival Airbus continued to unveil a steady stream of deals yesterday, day two of the aerospace industry’s main annual gathering.
Boeing announced the biggest firm order of the event so far, with Dutch aircraft leasing company AerCap buying 100 737 MAX 8 jets in a deal worth US$10.7 billion at list prices.
Industry sources also said Korean Air Lines would split a US$6 billion order for 60 jets between Airbus and Boeing.
However, the number and size of the deals to date is below that of many recent trade shows, when cheap borrowing costs and strong growth in passenger numbers encouraged airlines to splash out on new, more fuel-efficient planes.
“The market is definitely slowing,” said Sash Tusa, aerospace and defence analyst at Agency Partners. “There are fewer orders this week than there have been at any air show in recent years. Manufacturers are going to have to fight much harder for what’s available.”
Some moderation in demand had been widely anticipated. Industry sources said on the eve of the show that, barring any last-minute surprises, Airbus and Boeing might struggle to announce 500 orders between them, compared with 697 at the Farnborough event last year with which Paris takes turns.
There seems little prospect of a sharp deterioration in demand, however. Airbus raised its 20-year forecast for jet sales on Monday, citing the rapid expansion of airlines in Asia and the Middle East and echoing a similarly upbeat outlook from Boeing last week.
But the biggest challenge facing planemakers now is to lift output to meet the record US$1.8 billion of orders they have booked for the coming decade.
Boeing is already planning to increase output of its popular 737 narrow-body jet to 52 a month in 2018 from 42 currently.
Its commercial airplanes chief, Ray Conner, said yesterday that Boeing would be cautious about taking any decision to raise output toward 60 a month.
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