Aviation executives descend upon Paris this week for the first air show in the city in four years. The industry’s biggest conclave is expected to yield a bounty of jetliner orders for Boeing Co. and Airbus SE, with India’s IndiGo, Mexico’s Grupo Viva and Saudi carrier Flynas among the airlines looking to bulk up on aircraft.
The industry is struggling to manage a surge of growth after travelers stormed back to the skies in force after the Covid-19 pandemic. Chief among the challenges are persistent supply chain kinks that have slowed output.
GTF Optimism (9:01 am)
Pratt & Whitney “has a great story to tell about where we are, where we’re going and what we need to do” with the GTF engine that’s seen durability issues on Airbus A320 and A220 aircraft, Greg Hayes, chief executive officer of parent Raytheon Technologies Corp., said at an investor day presentation in Paris. No new narrow-body introductions until the mid-2030s means the GTF will be produced for much longer than originally anticipated, “which means a much longer afterlife” for in-service aircraft, he said.
Raytheon on Sunday reaffirmed its financial outlook for this year, expanding its commitment to return $33 billion to $35 billion to shareholders through 2025 in the form of dividends and stock buybacks, after the merger with United Technologies.
Read more: Airlines Are Rankled About Pratt & Whitney’s Jet Engine Problems (1)
Narrow-Body Talks
Airbus is in talks to land a large narrow-body deal from Mexico’s Grupo Viva Aerobus, Bloomberg News reported Sunday, citing people familiar with the matter. Negotiations could wrap up at the show this week, they said, giving the fast-growing budget carrier the means to expand its footprint in Latin America.
Separately, IndiGo is set for a landmark order as it expands its fleet to accommodate surging demand in India. Bloomberg News reported that the company may order 500 aircraft as soon as today.
Saudi Plans
Saudi startup Riyadh Air is shopping for narrow-body aircraft and is “actively engaged” in talks, with the two major planemakers vying for the sale, said CEO Tony Douglas, confirming a Bloomberg News report from late May. The airline has brought over an airliner to Paris to show off its new livery, an unusual hue of dark lavender that the carrier says will set it apart at airports.
Keeping Up With Demand
Aerospace manufacturers were whipsawed by the Covid-19 pandemic, shedding staff as aircraft demand evaporated, then racing to hire workers back to meet a post-pandemic stampede of orders. As Airbus and Boeing strain to lift production, their top executives gave updates on the state of their effort to overcome stress on their elaborate manufacturing networks.
Companies at the bottom of the supply chain are proving to be the weakest links in the effort to ramp up output, Airbus CEO Guillaume Faury told reporters on Friday. “It’s really the ramp-up that’s at stake,” with suppliers in tiers 4 through 6 — who provide parts used in larger aircraft assemblies — struggling to access capital and sufficient staff.
Airbus is deploying its own staff to the factories of smaller suppliers but that’s not a long-term solution, Faury said. He’s most concerned about the US, where “we continue to see more critical situations when it comes to both labor and balance sheets.”
Boeing Steps It Up
Boeing Co. is preparing to accelerate production of its cash-cow 737 jets to 38 units a month “sooner rather than later,” the planemaker’s commercial chief, Stan Deal, told reporters on Sunday. The move will boost revenue at the US planemaker after a supplier defect slowed output of the the single-aisle jetliner.
Boeing is also getting its arms around a supplier issue with the 787 Dreamliner, another major source of cash. It’s shipped the first of its wide-body jetliners that had its horizontal stabilizer bar inspected and repaired, Deal said.
At the same event, defense chief Ted Colbert expects the unit to post a second-quarter margin in line with the negative 3.2% operating loss reported in the first quarter.
Author: Siddharth Philip, Julie Johnsson, Kate Duffy and Albertina Torsoli