Active Stocks
Thu Mar 28 2024 15:59:16
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Companies / SpiceJet buys 40 planes as Boeing tops Airbus in Paris Air Show haul
BackBack

SpiceJet buys 40 planes as Boeing tops Airbus in Paris Air Show haul

Boeing secured twice as much in order value at the Paris Air Show as rival Airbus, marking the US planemaker's first victory in five years at the annual showcase

An aerial view of the 52nd Paris Air Show at Le Bourget Airport on Wednesday. Photo: ReutersPremium
An aerial view of the 52nd Paris Air Show at Le Bourget Airport on Wednesday. Photo: Reuters

Paris: Boeing Co. secured twice as much in order value at the Paris Air Show as rival Airbus SE, marking the US planemaker’s first victory in five years at the aviation industry’s annual showcase.

Boeing won orders and expressions of interest for about 420 planes worth as much as $58 billion based on a Bloomberg count through midday Wednesday, getting a boost from demand for the Max 10, the biggest version of its 737 workhorse. Airbus, which posted a tally of 229 airliners valued at about $25 billion, dismissed the setback and said it was focusing on meeting delivery targets to make up for production snags rather than seeking new purchasers.

The haul of about $83 billion in deals easily surpassed the $50 billion signed at last year’s show in Farnborough, England, which was the lowest figure since 2010. Asian lessors and airlines were particularly active as they girded for an accelerating travel boom. The order binge reflected customer support for a new Boeing 737 model, and quieted concerns that demand is fading for new jetliners.

“Maybe people came to the show with muted expectations, but the order activity is positive on the backdrop of relatively strong air-traffic growth," said Kelly Ortberg, chief executive officer of aerospace supplier Rockwell Collins Inc. “New narrow-body introductions are exciting. I think we’ll all leave going, ‘The show was a little better than expected."’

The biggest buyer at the Paris expo was General Electric Co.’s GE Capital Aviation Services, which ordered 100 Airbus planes valued at $10.8 billion and converted 20 Boeing production slots from earlier purchases to the planned 737 Max 10. That model, rolled out to combat Airbus’s hot-selling A321neo, secured 336 commitments, including customers shifting to it from the 737’s other Max versions.

The boost from the Max 10 should help Boeing’s order flow come close to matching deliveries this year, Boeing chief executive officer Dennis Muilenburg said. The measure, known as book-to-bill, fell below one during 2015 and 2016 as sales slumped for the Chicago-based manufacturer amid falling oil prices.

Demand had jumped earlier in the decade as high fuel prices spurred airlines to stockpile orders of more efficient planes like Boeing’s upgraded 737 Max and Airbus’s A320neo. That order flurry caused Airbus’s backlog to more than double, surpassing 6,700 airliners.

Speeding deliveries

Airbus is now focusing on speeding up deliveries following delays on the A320neo series and wide-body A350, chief operating officer Fabrice Bregier told investors at a conference Wednesday. The Toulouse, France-based manufacturer still plans to hand over about 30 more planes to customers this year than in 2016, which means the company will need to accelerate work in the second half, he said.

One of the largest airline customers at the Paris show was India’s SpiceJet Ltd., which struck a deal with Boeing for 40 of the newest Max model, after being wooed by Airbus, co-founder Ajay Singh, said in an interview. The carrier was joined in orders at Boeing by Chinese operator Okay Airways Co. Ltd., Indonesia’s Lion Mentari Airlines PT, Japan Investment Adviser Co. and BOC Aviation Ltd.

The leasing arm of China Development Bank signed agreements to buy airliners from both Airbus and Boeing, and is mulling potential wide-body jet orders to serve Asia’s capacity-constrained markets, CEO Peter Chang said in an interview.

Avolon, the world’s third-largest lessor, ordered $8.4 billion of Boeing models. The unit of Beijing-based Bohai Capital Holding Co. decided to lock in deliveries of as many as 125 of the upgraded narrow-body jets starting in 2021 because the slots are “very valuable real estate," Avolon chief executive officer Domhnal Slattery said.

The Max series is oversold through 2020, and capacity is finite for the model favoured by budget carriers, Slattery said in an interview. He sees the aerospace market tilting to Asia as the middle class swells by more than 1 billion people over the next decade.

Population jump

“We have never seen a demographic shift like that ever in the world, in terms of the scale but also the purchasing power," Slattery said. “These people are going to get on planes" and “there’s no going back."

The Max 10 will be 5 1/2 feet (1.68metres) longer than the $119.2 million Max 9, currently the biggest member of the re-engined 737 aircraft family, which was launched in 2011. It will be the first new model from Boeing since the twin-aisle 777X series, now dubbed the 777-8 and 777-9, was unveiled at the Dubai Air Show in 2013.

Still, the order flurry—logged during sweltering conditions in Paris—included large numbers of conversions from previous orders and commitments that may not ever materialize. “Of the 336 Max 10 announcements, we estimate 201 are conversions, so a net 135 should be considered new with 43 of those firm and 92 non-firm," Robert Stallard, an aerospace analyst with Vertical Research Partners, said in a report.

With numerous conversions among the Max 10 orders, “that wouldn’t qualify as a launch as far as we’re concerned," said Airbus sales chief John Leahy, who was presiding over his last Paris Air Show and earlier quipped that the Boeing plane’s biggest competitor is the sister Max 9. “Let’s talk about the actual incremental orders they’ve got, and I think our numbers are looking pretty good." Bloomberg

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 22 Jun 2017, 02:10 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App

Chat with MintGenie