Day 1 At Paris Air Show: Boeing Bags 355 Commitments, Airbus Outlines Airbus A380 Plans

| About: The Boeing (BA)

Summary

Boeing launches Boeing 737 MAX 10.

Airbus outlines Airbus A380plus.

Jet makers accumulate 487 orders and commitments on first day valued $60.8B.

The bi-annual Paris International Airshow has started and traditionally the Paris Air Show, Farnborough International Airshow and Dubai Airshow are used as a stage to announce big orders. In this article, I will have a look at the order inflow on Day 1 of the Paris Air Show and notable news items. In the coming days I will be covering news and orders for Boeing (NYSE:BA), Airbus (OTCPK:EADSF), COMAC, Embraer (NYSE:ERJ) and Bombardier (OTCQX:BDRAF).

Source: here

Boeing

Last year, at the Farnborough Air Show, I named the article for the first day “Day 1 At FIA 2016: Asia Dominates, Boeing Stretches 737 MAX” as Boeing announced it would be stretching the Boeing 737 MAX 7. This year I could have kept the Boeing 737 MAX stretch in the title, since Boeing launched a new Boeing 737 MAX variant: The Boeing 737 MAX 10. The launch is likely the highlight of the day. With the Boeing 737 MAX 10, the world’s biggest jet maker has tried to come up with a competitive answer to the successful Airbus A321neo. The US jet maker claims it will be 5% more efficient compared to its nearest competitor, which would be the Airbus A321neo. The Boeing 737 MAX 10 has bagged 240 orders and commitments at launch, most of which will be unveiled in the coming days and weeks.

Somewhat surprising to me was Qatar Airways firming up an earlier order intention for 20 Boeing 737 MAX aircraft. Previously, the airline’s CEO stated it would not be operating the A320 and Boeing 737 MAX next to each other. With Qatar Airways planning on taking no A320neo, but A321neo airframes instead, there seems to be a place in the Qatar Airways fleet for the MAX. The deal includes options for an additional 40 Boeing 737 MAX jets.

Other Firm orders:

  • Lessor GECAS converted 20 of its existing orders for the Boeing 737 MAX to orders for the newly launched MAX 10.
  • TUI Group was the second airline to convert 18 of its outstanding MAX orders to orders for the MAX 10 and converted 10 existing options to options for the Boeing 737 MAX 10.
  • AerCap (AER) became Boeing’s biggest customer for the Boeing 787 ordering 30 aircraft of the -9 variant.
  • Norwegian (OTCPK:NWARF) ordered two Boeing 737 MAX 8 aircraft and reached a flight training agreement with Boeing.
  • Monarch Airlines ordered 15 Boeing 737 MAX 8 jets.

Today’s firm orders reached 105 for Boeing, 30 wide body jets and 75 narrow body jets. The deals carry a list price of $17B, but after discounts the deal can likely be valued closer to $8.1B.

Memoranda of Understanding signed:

  • BOC Aviation signed a MoU for 10 Boeing 737 MAX 10 aircraft.
  • Indian airline SpiceJet signed a MoU for 40 Boeing 737 MAX 10 - 20 will be newly ordered while another 20 will be converted from an earlier MAX order.
  • CDB Financial Leasing signed a MoU for 42 Boeing 737 MAX 8 airframes, 10 Boeing 737 MAX 10 (partly coming from conversion) and 8 Boeing 787-9s, making it the biggest commitment for Boeing on Day 1 of the Paris Air Show.
  • Tibet Financial Leasing signed a MoU for 20 Boeing 737 MAX aircraft, a mix of the 8 and the 10 variant.
  • ALAFCO signed a MoU for 20 Boeing 737 MAX 8 aircraft.
  • Lion Air signed a MoU for 50 Boeing 737 MAX 10 aircraft.

Today’s order intentions reached 250 (including options) for Boeing - eight wide body jets and 242 narrow body jets. The deals carry a list price of $31B, but after discounts the deal can likely be valued closer to $14.3B. This would bring the orders and commitments for Boeing on Day 1 to 355 aircraft with a catalog value of $48B and $22.4B after discounts. The first day of the air show usually has the most "bang" in it and in the subsequent days the order announcements rapidly decline. For Boeing, I am still expecting more announcements in the coming days. If we compare this year’s start to last year’s, we can conclude that Boeing had a much better start. Last year, the jet maker accumulated 70 orders and commitments on the first day, compared to 355 this year with the MAX 10 accounting for roughly 45% of the orders and commitments.

Airbus

Airbus had a more tranquil day announcing the Airbus A380plus, which features up to 80 more seats and features a winglet design as seen on the Boeing 737 MAX. The Airbus A380plus should push fuel consumption down by 4% and reduce seat specific fuel bun by as much as 13%.

Whereas Boeing had a stream of announcements on Day 1, Airbus had just two:

  • GECAS ordered 100 Airbus A320neo airframes.
  • Air Lease (AL) ordered 12 Airbus A321neo airframes.

Airbus had signed no MoUs on the first day of the Paris Air Show, bringing its order tally to 112 units valued $12.4B at list prices and $5.5B after discounts.

Last year, the jet maker accumulated 27 orders and commitments on the first day, compared to 112 this year.

In other news…

ATR and Bombardier were the only company, besides the two biggest jet makers, to have order news. ATR signed intention letters with two Chinese customers for 13 ATR 42-600 valued at $254.8 million at list prices.

PAL Express signed a firm order for seven Q400s valued $219.1 million.

Conclusion Day 1

Figure 1: Order overview Day 1 Paris Air Show 2017 (Source: www.AeroAnalysis.net)

Day 1 of the Paris Air Show was primarily a show day for Boeing where it accumulated 355 orders and commitments versus 112 for Airbus. The smaller jet makers added 20 orders and commitments bringing the order and commitments total for Day 1 to 487. After day 1 Boeing is in the lead, but Airbus likely has some big order announcements stacked as well.

Important to note is that while a soft order inflow was expected for the Paris Air Show, orders and commitments exceeded the figures of the 2015 Paris Air Show and the 2016 Farnborough Air Show.

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Disclosure: I am/we are long AER, BA.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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