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Morningstar | Boeing and Airbus Rally Through Slow Start at 2019 Paris Air Show

Activity at this year’s Paris Air Show was muted compared with prior years, but it was not short on surprises. The A320neo collected the most aircraft orders of any program, securing 232, and helped Airbus close the week with 166 more orders than Boeing. Expectations headed into this year’s show were restrained thanks to Boeing’s ongoing MAX challenges and Airbus’ soft order activity early in the year. Boeing stunned by securing a 200-order commitment from airline conglomerate IAG for its embattled single aisle MAX aircraft. The market welcomed Boeing’s announcement, sending shares 5% higher. While IAG’s move didn’t compel other airlines to order new 737s, it offered a vote of confidence for the beleaguered program and suggested Boeing was on track to revert to presuspension production schedules. Before this week, only Ryanair expressed public interest in acquiring future deliveries and Boeing had mostly earned cancellations since initial groundings. We think this order happened because of significant price concessions and Boeing’s improving service offering.

Airbus ended the week with a solid order total for each of its aircraft programs. Boeing landed IAG to Airbus’ chagrin, but Airbus bested Boeing in narrow body orders and nearly matched it in wide body commitments. Airbus also notched a key win with American Airlines’ A321neo XLR order. The A220 drew a diverse crop of orders (85 in total) while the newly launched A321neo XLR leapt out to an early order lead in the mid-size aircraft market. We think Boeing’s next generation mid-size aircraft will prove competitive if it can pull off single-aisle unit economics and with a quarter more seats than Airbus’ XLR.

MAX groundings put a hold on Boeing’s plan to launch the next generation mid-size aircraft in Paris this year. We are increasingly doubtful Boeing will make its 2025 launch target since Boeing will come to the market with a clean sheet design and encounter more stringent certification processes.

Our forecast remains predicated on Boeing’s MAX aircraft entering service six months after initial April suspensions. Boeing appears on track to conduct FAA certification flights before the end of the month. After completing certification flights, Boeing will submit its final MCAS update package for FAA review. Assuming the FAA’s final review takes about a month, Boeing’s MCAS update should earn airworthiness approval and installation within our mid-September timeframe. Our current forecast assumes the MAX suspension is lifted in December at the latest. We believe an absence of cancellations this week and recent flight schedule updates from North American carriers suggest Boeing is on pace to have the grounding lifted in our six-month timeframe.