Paris Air Show a Sign of the Times for Airline Industry

This week’s Paris Air Show, typically an extravagant showcase where market leaders Boeing Co. and Airbus SAS trumpet their new orders and new planes, was unusually muted.
Paris Air Show a Sign of the Times for Airline Industry
Visitors look at the Airbus A380 on June 18, 2009 at the 48th International Paris Air Show at Le Bourget airport. (Pierre Verdy/AFP/Getty Images)
6/19/2009
Updated:
10/1/2015
<a><img src="https://www.theepochtimes.com/assets/uploads/2015/09/airshow88554648.jpg" alt="Visitors look at the Airbus A380 on June 18, 2009 at the 48th International Paris Air Show at Le Bourget airport. (Pierre Verdy/AFP/Getty Images)" title="Visitors look at the Airbus A380 on June 18, 2009 at the 48th International Paris Air Show at Le Bourget airport. (Pierre Verdy/AFP/Getty Images)" width="320" class="size-medium wp-image-1827832"/></a>
Visitors look at the Airbus A380 on June 18, 2009 at the 48th International Paris Air Show at Le Bourget airport. (Pierre Verdy/AFP/Getty Images)

This week’s Paris Air Show, typically an extravagant showcase where market leaders Boeing Co. and Airbus SAS trumpet their new orders and new planes, was unusually muted.

The recent recession and the plight of the airline industry has sapped the typical fervor from Boeing and its bitter rival Airbus, a division of European Aeronautic Defense and Space Company. This year, the companies are investing more resources not in announcing new future orders, but maintaining current ones.

The economic boom in recent years has given the aerospace manufacturers a backlog of order deliveries for up to the next ten years worth billions of dollars. But as airlines try to shed personnel and cut back on routes, many are attempting to cancel or postpone their airplane deliveries.

To Airbus, “The priority is not to get new orders but to maintain those we have and turn them into deliveries,” CEO Tom Enders said last week in a Bloomberg interview.

Indeed, facing a downturn in travel, credit market illiquidity, and recent safety concerns, it doesn’t make much sense for airlines to go on a shopping spree.

Boeing, based in Chicago, announced zero order commitments for the first five months of 2009. It had 73 purchase agreements during the same period, but also faced 66 order cancellations.

Airbus has fared better, though not by much. After Qatar Airways announced on Monday a new order of 24 Airbus A320 jets, Airbus now has net orders of 35 jets after cancellations. The deal is valued at up to $1.9 billion.

Airlines in the Middle East and Asia were the only few to open their pocketbooks this year, as the recession took a severe toll on North American and European air travel. Malaysia’s Air Asia ordered ten Airbus A350 jets this week.

As airlines cancel orders, Boeing and Airbus attempted to postpone their deliveries instead, banking on an economic recovery and travel boom in future years. In addition, the companies have tried to expedite the deliveries for other airlines who wish to take the aircrafts in the earlier delivery slots.

Given the cost and effort of assembling an aircraft the aerospace manufacturers rely on planned production and delivery timetables. Production and plant personnel could be severely impacted by any sudden changes in orders and deliveries.

Boeing Reaffirms Outlook

Boeing released its annual Current Market Outlook for 2009 on Monday, reaffirming many of its forecasts for the industry in upcoming years.

In 2000, the company predicted that demand for commercial aircraft through 2019 would be split 4 percent large, 25 percent twin aisle, and 71 percent single aisle jets. According to Boeing, so far actual demand has been 2 percent large, 23 percent twin aisle, and 75 percent single aisle, signaling a movement toward smaller jets.

The outlook is disappointing for sales of Boeing’s 747 jumbo jet as well as Airbus’s new A380 “superjumbo” jet, which some analysts have labeled as a disappointing in its timing of arrival, especially when airlines are moving toward smaller, less costly jets in today’s environment.

Boeing’s forecast suggests that the market may be more bullish for manufacturers of smaller planes, such as Canada’s Bombardier and Brazil’s Embraer, both manufacturers of smaller commercial and private aircrafts.

But Boeing is still optimistic in the future of the industry. Since 1978, air travel has increased at 5.3 annually.