Paris Air Show - Check the Pulse

June 15 to 21, the audacity of hope took centre stage at the Paris Air Show with industry players and pundits celebrating the event’s centenary year at the Le Bourget Exhibition Centre. French Prime Minister Francois Fillon, accompanied by Defence Minister Herve Morin, officially launched the exhibition, held this year under a cloud of dismal financial prospects and pelting rain. There was no denying the sombre mood and niggling sense of gloom, but organisers of the biggest aerospace event in the global calendar appeared unfazed, deftly parrying queries about the conspicuous absence of some big names, lacklustre orders and fears of a low turnout. A week later, when the curtains came down after the spectacular celebrations culminated in dramatic historical fly-pasts, the sigh of relief was palpable.

We’re Bouncing off the Bottom

Among the major players, Airbus and Boeing may have endured their worst ever Paris Air Show for a generation so far as sales were concerned, but both were unanimous in their belief that the light at the end of the tunnel was in sight. “It feels like we’re bouncing off the bottom,” said Scott Carson, Boeing’s Chief Executive Officer (CEO), Commercial Airplanes. “It feels to us like the middle of next year is when we will see growth return to the industry.” Airbus CEO Tom Enders agreed. “We think orders will pick up again next year.” Both airframers have effectively written off 2009 with Carson saying the industry faces “a different year” to the boom times during each of the 12 months that preceded it, while Enders points out it is “obvious” that orders will come down dramatically from the 900 it booked in 2008.

At the beginning of 2009, Airbus executives engaged in some light-hearted crystal-gazing to forecast around 300 orders for the year. However, with just 32 firm orders secured to the end of May, it concedes it has much ground to make up and Chief Operating Officer, Customers John Leahy appears to now be regretting that prediction. “I’m getting new glasses,” he concedes.

However, it was Airbus who took the lion’s share of the airliner orders at a show which, although a pale reflection of the sales fest of two years ago, nevertheless saw some significant deals. The industry’s final tally of just over 200 airliners, worth $13.5 billion (Rs 64,695 crore)at list prices, was a figure many sceptics would have seen as wildly unrealistic given the state of the market at the start of 2009. Airbus sold 110 aircraft worth around $10 billion (Rs 47,868 crore)—a far cry from the 425 orders worth $62 billion (Rs 2,97,230 crore), plus another 303 commitments, it had racked up two years ago.

Undaunted, the duo stressed on their big backlogs, and the fact that demand for new deliveries has so far remained strong. Enders pointed out that Airbus’s order backlog of 3,500 aircraft gives it seven years of production at an annual rate of 500 deliveries. “This is why we are fairly relaxed about the order intake this year.” Boeing’s backlog is at a similar level, which Carson values at $265 billion (Rs 12,70,595 crore). “The value of the backlog built over the last three to four years is going to be realised this year in delivery of that backlog, not the generation of it,” he said.

The determination displayed by both Boeing and Airbus to keep production rates constant was a talking point among the 2,000 exhibiting companies. Airbus delivered a record 483 aircraft last year and although it has arrested its ramp-up, is on course to deliver a similar number this year. “The whole supply chain depends on us,” says Enders. “When we talk about high production rates we should not forget that the best support we can give our suppliers is to have a relatively high, stable, delivery stream.”

Dreamliner Delays

Boeing was tight-lipped about progress on the 787—not surprising, given the programme delay announced just a few days after the show ended. That all was not well spilled out in the open with Qatar Airways Chief Executive Officer Akbar Al Baker stirring up a storm at Le Bourget when he hammered out a warning to Boeing executives about the impact that further delays could have on their business. Al Baker blasted Boeing during a briefing over his airline’s order of 24 Airbus A320s, including the conversion of four existing options, saying the company was taking too long to resolve unspecific “issues”, warning that it would “walk away” from its 60-strong 787 contract if the problems are not quickly ironed out. “We have some serious issues with Boeing and if they do not play ball with us they will be in for a very, very serious surprise,” says Al Baker.

The airline’s 30 firm 787-8 orders (plus 30 options) were originally due for delivery from mid-2010. However, the production crisis has pushed back all customers’ deliveries by at least two years, which would indicate that Qatar’s first aircraft is not due to arrive until around 2013. While he is unspecific about the nature of the issues, Al Baker claims Boeing is not dealing with them “in a professional manner and Qatar Airways is very impatient with them”. He adds that the airline has the right to “walk away” from the deal if “the delay is unreasonable”.

Qatar Airways also hit the headlines with the launch of an on-demand charter division, Qatar Executive, which will operate two Bombardier Challenger 605s and a single 300. The service will be aimed at government officials, businessmen, bankers and politicians.

Regional Jets

Key among the regional announcements was more than $1 billion (Rs 4,785 crore) of sales for Sukhoi’s Superjet 100, including 30 to Hungarian carrier Malev. The Russian narrowbody made its European show debut and gave an impressive display each day of the event.

PowerJet’s SaM146 turbofans roared past the crowds having clocked up more than 100 hours in flight, including time on the Ilyushin Il-76 and a total of 3,800 hours of operation. Eight engines are being used for testing which is due to lead to EASA certification in November and Russian approval soon afterwards.

The Engine Makers

At the top of the supply chain are the engine makers and they were creating the most positive waves at the show. Air show attendees flocked to the General Electric exhibit for the official unveiling of the GEnx engine. The anticipation was widespread—and the response overwhelmingly enthusiastic—as GE took the wraps off a massive, gleaming model of the GEnx engines that will power Boeing 787 and 747-8. The global impact of the new engine became apparent with a deal announced at the show that will see Abu Dhabi Aircraft Technologies (ADAT) become the world’s first maintenance, repair and overhaul (MRO) provider for the new engines.

The move is part of a plan by ADAT parent and state-owned investment house Mubadala to establish Abu Dhabi as a global MRO hub. This in turn fits into a wider strategy to attract high-tech investment and build a domestic aerospace sector in the United Arab Emirates (UAE). On the eve of the show, Mubadala subsidiary Abu Dhabi Airports announced plans to establish an aerospace cluster at the airport in Abu Dhabi’s second city Al Ain, anchored by a factory designing and manufacturing composite components for Airbus and other manufacturers. Several European companies have signed up to open premises at the site. But the relationship and involvement with GE propelled the industry move to a different level. Mubadala signed a strategic partnership with the US engine-maker last year, which included co-operation on commercial finance, training and clean energy research and development.