Aviation leaders started convening at a major summit near London on Monday as the industry struggles with supply chain disruptions, aircraft delays and stalled efforts to reduce emissions.
The July 22-26 Farnborough International Airshow, a gathering of top executives from airlines, aircraft makers and weapons manufacturers, has often been a festival of orders for passenger jets from Boeing and Airbus.
Many delegates said the show was not expected to produce a flurry of orders as Airbus struggles to reach output goals and Boeing adopts a low-key posture amid its safety crisis, which was triggered by a panel flying off a 737 Max jet in January.
Some deals will get over the line, delegates said. Virgin Atlantic is close to placing a top-up order for Airbus A330neos and Flynas, a Saudi low-cost carrier, is poised to order up to 30 of the same widebody aircraft, industry sources said.
Japan Airlines is expected to firm up recent tentative orders for jets, and Boeing is seeing leasing interest for its 737 Max, while Türkiye’s national flag carrier, Turkish Airlines, is in the midst of negotiations to buy Boeing jets, industry sources said.
The companies declined to comment.
Has recovery stalled?
Reuters reported earlier in July that Boeing was nearing a sale of some two dozen 777X jets to Korean Air in a roughly $4 billion-$6 billion deal that could be finalized at the show.
South Korea’s largest carrier has been in talks over a potential return to its traditional supplier of long-haul aircraft for months after placing a surprise order for 33 A350 jets from Airbus in March.
The 777X jets are worth some $198 million each after typical discounts, according to delivery prices from Cirium Ascend.
Industry bosses will also be looking for any further sign of weakness in air passenger demand following a handful of profit warnings from airlines.
Second-quarter airline earnings are set to be weaker on the back of spiralling costs and deteriorating pricing, with Ryanair missing forecasts on Monday. That in turn could lead to a slowdown in orders as airlines grapple to recover.
“The big question for the airlines here at Farnborough is what has happened to the halo effect of demand after the pandemic – has that recovery stalled?” said veteran aviation journalist Mark Pilling, who was due to host a panel of CEOs.
With dealmaking limited, the focus is likely to fall on how to remove supply chain blockages and speed up the delivery of planes to frustrated airlines.
Aviation was hit hard by the pandemic which saw air travel collapse only to bounce back sharply. That has left many firms scrambling to resolve labor and parts shortages.
The situation has been exacerbated by a spiraling crisis at Boeing, which has had to slow down the production of its best-selling 737 Max plane following the panel blowout.
Stephanie Pope, Boeing’s head of commercial aircraft, said at a media briefing on Sunday that 737 Max production was improving and the company was undergoing “transformational change” across safety and corporate culture.
Airbus Chief Executive Guillaume Faury also told journalists on Sunday that the planemaker was making progress ramping up production of its top passenger jets.
Political turbulence
Aerospace and defense companies, which rely heavily on government-funded programs, are closely assessing a turbulent political period in Western democracies, with a new Labour government in Britain, a fragmented parliament in France, and an election in the United States in November.
“We are indeed in a world that is changing all the time … very volatile, very unpredictable, and quite challenging for industries,” Faury told reporters on Sunday.
Faury’s comments turned out to be prescient. About an hour later, U.S. President Joe Biden announced he was ending his re-election bid and endorsed Vice President Kamala Harris to replace him.
This week’s air show will be peppered with sustainability panels and workshops as aerospace giants and airlines seek to emphasize their commitment to reducing carbon emissions, even as they plan to massively expand global air travel.
On the defense side, the focus will be on Ukraine, possible delays to America’s future F-22 fighter replacement, code-named “NGAD,” and a defense review by Britain’s new Labour government.
British Prime Minister Keir Starmer also attended the airshow on Monday, as defense executives looked for any signals about what impact Labour’s review could have on their programs.
Starmer said he wanted to put “on record” just how important the Global Combat Air Program (GCAP) was, dampening speculation that the fighter jet project with Japan and Italy could be axed following a defense review.
“It’s important for me to put on record just how important a program this is,” he said.
Britain, Japan and Italy signed an international treaty last year to set up the GCAP, merging the separate next-generation fighter efforts of the countries and aiming for a new aircraft to enter service by 2035.
But there has been speculation that Starmer’s Labour party, which won an election earlier this month, might not recommit to GCAP after it immediately launched a review of the armed forces, which will report back in the first half of 2025.
Starmer noted the review but said the GCAP program, also known as Tempest in Britain, was making “significant progress.”
“It is an important program and I know that people in the room will want to hear me say that,” he said.
“The defense secretary is holding a ministerial-level meeting, I think, next week in relation to this because of the significant benefits here in this country.”
Britain’s biggest defense company, BAE Systems, and engine maker, Rolls-Royce, are working on the project alongside Italy’s Leonardo and Japan’s Mitsubishi Heavy Industries.
The program could be opened up to others at a later stage, Italy’s defense minister said in January, with the likes of Saudi Arabia possible contenders to join the project.
