2019 Paris Air Show Preview

Airbus

The big talking point for the European manufacturer is whether it launches the A321 XLR during the Air Show. While no authority to offer was officially announced, Airbus has been working toward securing enough orders to justify a launch. If launched, the manufacturer will reveal its specifications, including range, MTOW and engine options.

Indigo is expected to announce a large A320neo family order. This might include the A321 XLR to launch long haul flights following Jet Airways’ demise. TAP’s leading shareholder, David Neeleman, said over the weekend he’s prepared to be an XLR launch customer.

Airbus ideally wants to line up a large Boeing 757 operator among launch customers. Luring United Airlines, the world’s second largest 757 operator, would be quite a coup.

Airbus announced a hike in the A220 MTOW at the Airbus Innovation Days two weeks ago. This might lead to a follow up order from an existing operator or a new customer.

In the aftermath of the Ethiopian Airlines 737MAX crash in March, a few airlines that ordered the Boeing aircraft announced they were evaluating a switch to the A320neo. It is unlikely there will be numerous, if any, announcements on this front. The A320neo family production line is fully sold for several years. The European manufacturer’s supply chain is also struggling to keep up with the increased production rates.

Boeing

The American manufacturer will be under intense scrutiny regarding any update on the expected 737 MAX return to service timeline. At this point, it seems unlikely that Boeing will commit to a specific timeline, especially since regulators around the world haven’t agreed yet on a coordinated response.

Boeing 737-8 MAX.

As surprising as this might seem, Boeing could announce a new 737 MAX order. Ryanair CEO recently declared that the airline was ready to order more aircraft. The Irish low-cost carrier is renowned for negotiating hard discounts from OEMs under circumstances where the latter have less leverage.

Ryanair’s CEO, Michael O’Leary, said he’s negotiated a large compensation from Boeing, preferring discounts to cash. This lends credence to the possibility Ryanair could announce an order at the show.

Boeing would like to announce several MAX orders as a way of showing confidence in the MAX and the MCAS software fix.

Boeing isn’t expected to make any major New Midmarket Aircraft announcement. An authority to offer for the Air Show was in the cards before the 737 MAX crashes. Now, ATO isn’t expected until toward the end of the year, after the MAX returns to service.

Regarding the Embraer tie up, the American manufacturer could provide an update on regulatory approvals and whether the target for a year end completion is still on track.

Bombardier

A new order for the CRJ seems unlikely. The Canadian manufacturer is still looking to sell the regional aircraft program. An announcement during the Air Show is possible. Bombardier might also announce the finalization of the Q400 program sale to Viking Air.

COMAC

The Chinese manufacturer is unlikely to announce any major new orders. It may provide updates on the C919 certification process, but COMAC’s participation in past air shows has been perfunctory at best.

The timeline for entry into service is still 2021 for now. COMAC may also provide updates on the firming of the CR929 specification, which is expected in the near future.

The manufacturer will have to dissipate fears of material program delays if the trade war with the USA escalates. COMAC relies on numerous US suppliers for the C919 program, including the CFM Leap 1C powerplant.

Embraer

At last week’s pre-Paris Air Show briefing, Embraer announced that it wouldn’t launch a new Turboprop program. It remains to be seen whether the Brazilian manufacturer will announce any new major E2 order. New sales are negatively affected by the fact the tie up with Boeing hasn’t been finalized yet.

The E175 E2 prospects, without a single firm order, are looking bleak in light of the fact it does not comply with Scope Clauses at US airlines.

IRKUT

The Russian manufacturer may provide an update on the MC21 certification process. It might have to delay the entry into service, rescheduled last week to 2021, given international sanctions on its parent company, Rostec.. The timeline already has been negatively affected by US sanctions on composite materials and other components toward Russia.

Mitsubishi

Mitsubishi MRJ. Source: Mitsubishi.

The Japanese manufacturer might steal the show’s attention. A major announcement, which involves a change of strategy for the MRJ program, is expected following an article from Nikkei Asian Review. This would involve changing the name to the SpaceJet and potentially assembling the aircraft in the USA. The aircraft would seat 76 passengers and be compliant with Scope Clauses at US airlines. The change of some manufacturing would mean more US suppliers to drive down costs and improve efficiencies.

It is no exaggeration to say that Mitsubishi is going all in to beat Embraer’s E-Jet and Bombardier’s CRJ in that segment. The Japanese manufacturer sees an opportunity because there is no new generation CRJ and the E175-E2 is out of the market for now. Mitsubishi might announce a US regional airline as launch customer for the SpaceJet. It would be the icing on the cake if such order is backed by a Big Three US legacy carrier.

Sukhoi

After the Aeroflot SSJ100 crash a few weeks ago, Sukhoi’s main objective will be to reassure that the aircraft design is sound and safe. The Russian manufacturer will also have to highlight progress on maintenance issues after numerous operational disruptions at Interjet and Cityjet. Convincing airlines that operational reliability issues are under control is critical if Sukhoi wants to secure new orders outside Russia.

Potential Orders

Now that we looked at the commercial aircraft OEM, we will discuss potential orders and the context surrounding the Paris Air Show.

Korean Air and Thai Airways could announce major widebody orders. Sale campaigns for the two Asian flag carriers have been ongoing for a while. After delays in the process due to changes in senior management, Air France might finally order narrowbody aircraft to replace an aging A320 family fleet.

Other than what was already mentioned, no other major order announcements are expected. Passenger growth is softening around the world and airlines massively ordered over the last few years. Air freight volumes year to date are down due to increased trade tensions. The ongoing Airbus–Boeing WTO trade dispute, with the threat of reciprocal tariffs on aircraft, might give airlines second thoughts before placing new orders. With the escalating trade tensions between China and the USA, will Chinese airlines announce Airbus orders and snub Boeing?

Another event might steal the attention during the Paris Air Show. The European Finance minister will meet in The Hague June 20-21 to discuss the introduction of a kerosene tax for intra-EU flights. Kerosene taxes aren’t anything new, but the magnitude of the tax potentially on the table (330 Euros per 1,000 liters) is unprecedented. It isn’t clear whether such tax will be agreed, but after the strong showing of ecological parties during the European elections, there are political pressures to act on the Old Continent.

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