The most important date for aero plane manufacturers and suppliers is the Farnborough Air Show that took place this year between the 20-24 July. This is where the latest plane models are revealed and where the likes of Boeing, Airbus and Bombardier try and sell their planes to the airline companies. This is where deals are made that either make or break their year.
As far back as 2019 Emirates Airlines placed an order for the much anticipated Boeing 777X ordering 270 at $440 million each. Due to unforeseen design delays and modifications the first batch of 10 is finally ready for delivery 7 years later. Emirates has told Boeing they are not interested as so many modifications were required the aircraft is not fit for purpose besides maybe supplying Heinz the metal to manufacture baked bean cans. Etihad Airways with 15 and 10 other 777X orders have also been cancelled. Not a great show for Boeing when your aim is to obtain orders and not lose orders.
This is the biggest problem with Boeing having so many back orders they cannot fulfil and why the orderbook they have is no guarantee airlines will purchase these planes when they are ready for delivery in 8 or 10 years time. Airbus has been asked to lengthen the A350 aircraft which would then compete directly with the Boeing 777N which will replace the 777X. The 777N goes into testing next year and airlines are guessing when and if this one will be ready. Let us just say the expectations are low and market confidence in Boeing could not be any lower.
This is a heavy blow representing about $120 billion of lost sales that they will not get back with Emirates looking at Airbus instead for future orders. The other Boeing order in doubt is the Chines order that was negotiated by Trump and Xi Jinping involving another $20 billion order.
The problem is this order does not include maintenance and parts which the Chines demand a 30 year assurance. The Chinese have faced sanctions in the past with various US airline parts companies like Honeywell and General Electric who supply engines. The sanctions revolved around protecting critical aviation technology that Comac the Chinese airline manufacturer would like to get their hands on. China dies not want to rely on the US for the next 30 years and this order was more about developing their own aircraft obtaining this critical engine information.
When you consider China accounts for more than 10% of Boeings backlog and Boeing have not supplied one plane to the Chinese in nearly 10 years the Boeing orderbook is not that healthy. Who knows the orderbook may be only for investor confidence because it looks like many more cancellations are expected with Airbus gaining those lost orders.
I mentioned in last weeks post that Airbus was dominating the market with a 60-40 market share advantage and this could be much higher. The Boeing order book does look as though this has been fluffed up and the 16000 or 12 year backlog may actually not be that healthy. Reading between the lines the DEI hiring that boing installed has not ended up well handing Airbus more orders than expected as airlines drop Boeing. The question is can Boeing recover in the next 5 or 10 years as this is not looking very good.
