Wednesday, October 5, 2022
Oct. 5, 2022

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‘Morale booster’: Boeing wraps up successful Farnborough Air Show

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FARNBOROUGH, England — Boeing wrapped up a successful Farnborough Air Show Thursday with one more finalized 737 MAX jet order, from Qatar Airways, and a last-minute commitment from airfreight carrier Cargolux to buy the 777X widebody freighter.

It’s been a week of good news for Boeing, a rare respite from a litany of setbacks and problems stretching back three years — and perhaps at last a turn in fortune.

After two fatal crashes of the MAX, the grounding of that jet, the staggering financial downturn caused by the pandemic and the discovery of defects that have stopped almost all deliveries of the 787 for 21 months, Boeing sales chief Ihssane Mounir was carefully humble as he welcomed this week’s successes.

“We’ve been going through a lot as an industry. We’ve been going through a lot as a company,” he said.

“I don’t think any of us will say that there is a point in time where we’ve turned the corner,” he said. “Trust has to be earned all the time. One airplane at a time, one delivery at a time, one engagement at a time.”

Yet he said everyone who works at Boeing — whether factory workers, engineers, corporate employees or executives — knows that every multimillion-dollar sale identifies an airline or airplane lessor that believes in Boeing and its future.

“Every order is an affirmation that they trust us,” Mounir said. “So yes, it is a morale booster.”

“It’s been a very gratifying week,” he said. “It has been quite a journey.”

He said the jet orders signal that aviation is emerging from the unprecedented pandemic slump.

“The recovery is well underway,” Mounir said. “We’ve seen it primarily in the insular domestic markets. Now it’s starting to foothold internationally as well.”

And he confirmed expectations in the industry that suggest more good news for Boeing is coming soon:

“We are excited that we’re coming close to resumption of the 787 deliveries,” he said.

The buzz at the air show in England is that Federal Aviation Administration approval to resume deliveries could come as soon as next month.

Airbus almost a no-show at the air show

Boeing announced new firm orders for 167 MAXs and five widebody 787 Dreamliners at Farnborough.

Based on pricing data from aircraft valuation firm Avitas, those orders are worth approximately $9.6 billion after standard industry discounts.

Boeing’s sales success shone brighter because rival Airbus almost failed to show up in terms of booking new orders.

Airbus did announce an order for 12 small single-aisle 220s from Delta and finalized a commitment from British low-cost carrier EasyJet for 56 A320s.

Then Thursday, with its sales chief and CEO already gone, Airbus announced without fanfare an order from the main group of airlines in Latin America, LATAM, for 17 long-range single-aisle A321s.

In an interview late Wednesday just before he left the air show, sales chief Christian Scherer was unruffled.

In previous shows, Airbus typically would go all out to win the sales race against Boeing — and more often than not would succeed. Scherer’s predecessor John Leahy, now retired, never let an opportunity to beat Boeing pass him by, nor the chance to crow about it.

“I’m not John Leahy,” said Scherer, a far less brash but steely salesman.

Quietly, he pointed out that he’d beaten Boeing on sales through the first half of the year and landed a huge order from China just before the air show.

“We’re well past 500 orders, not even counting the 300 we announced earlier this month, and the year is halfway through,” Scherer said.

“Don’t worry about our sales ability,” he said. “We’re doing really well, thank you very much.”

Big deals and reaffirmations

By far the most important Boeing order was from Delta Air Lines on the opening day for 100 MAX 10s.

That largest model of the MAX is not certified and cannot be certified as is unless Congress acts to allow Boeing extra time without needing to upgrade its crew alerting system.

The uncertainty around the issue has created tension between the company and Congress, with CEO Dave Calhoun even suggesting that Boeing might cancel the jet if it doesn’t get the necessary approval.

At Farnborough, Delta came out publicly in Boeing’s corner, stressing how important it is to the airline to keep commonality between the MAX 10 and other 737s — a huge boost for Boeing’s position from a major U.S. carrier with lobbying power in Congress.

The final day Qatar order for 25 single-aisle 737 MAX 10s was firming up a deal announced in January, a Boeing win that emerged out of Qatar’s bitter legal dispute with Airbus.

The European jetmaker canceled orders for 50 single-aisle A321neos after Qatar raised what the manufacturer says are dubious safety concerns over peeling paint and erosion on its widebody A350 jets.

The MAX 10 is Boeing’s competing offering for the A321neo.

With the Airbus/Qatar dispute pending in a British court, Qatar CEO Akbar Al Baker, after signing the MAX deal in the Boeing media chalet, chose to exit without taking questions.

Aside from those firm orders, Boeing also announced restructuring or “re-commitments” of previous large orders, including by Norwegian for 50 MAXs and by VietJet for 200 MAXs.

The VietJet announcement, for example, related to 100 planes first ordered six years ago at Farnborough 2016 and then upped to 200 planes three years ago at the 2019 Paris Air Show.

Yet Mounir explained that the “reaffirmation” by VietJet this week was meaningful.

Because of the almost two-year grounding of the MAX after the fatal crashes in Indonesia and Ethiopia, and the consequent delay in delivering any planes to VietJet, the carrier had the right to cancel its order.

“They had an opportunity to walk away if they wanted to,” Mounir said. “The reaffirmation of the 200 MAXs was at the end of a process at which they had to decide: Do they stay with us or they don’t stay with us.”

“Those reaffirmations are basically a confirmation of trust that we had to earn back,” he said.

Mounir noted that “The air show week is just one week of 52. And we’re working toward closing the business every day.”

Still, for him and for Boeing, a very good week.

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