Podcast: Farnborough Fizzle

Joe Anselmo:

Welcome to Aviation's Week's Check 6 Podcast, and you'll have to pardon the noise, but we are at the Farnborough Airshow. I'm Joe Anselmo, Aviation Week's editorial director, and we're here today to talk about the commercial side of the industry at the air show. Joining me are Aviation Week editors, Guy Norris, Jens Flottau and Christine Boynton, and we have a special guest with us, the numbers guy, Aviation Week analyst, Daniel Williams. So Daniel Williams, let's start off by talking about the numbers at the Air Show so far. I mean orders. Pretty lame, no?

Daniel Williams:

Pretty lame is a great statement. In terms of aircraft orders, when I say orders, I'm using air quotes, I know you can't see me. There's been 202 announcements, which on our live tracker we track at, the reality is, it's about 109 real orders, i.e. they weren't on the orderbook before, they're not an MOU, and so on and so forth. So just over 100 orders is pretty lame. The engine orders actually have done really well, though. We've seen some surprise announcements. Surprise for me, considering I was on our MRO podcast the other week, suggesting that BA probably should buy Trents for their remaining 787s because they have Trents and the fact they've gone GEnx is a shock and a bold statement in equal measure.

So Airbus are technically the winners in terms of orders with 64, Boeing 32, ATR 4, and De Havilland Aircraft of Canada with the DHC 6400 have got 9. Now, the winner out of all of those is De Havilland Canada. They've got nearly two years worth of production that they've had ordered there. Airbus at 64, that doesn't even wipe what should be a normal month. Widebodies, they come in at 57. Jens and Joe and I were on a pre-Farnborough podcast. And we're like, "Is it going to be the year of the wide body?" And well, kind of is if 57 is the year of the wide body, but that is better than last year's Paris, where the June 2023 orderbook had just five.

So if I'm looking for silver linings, that's it. 39 narrow bodies and 13 turboprops. There was no big surprises. Virgin was the unkept secret. The JAL order was, QSI already announced as an MOU earlier in the year. Same for VietJet, and the Qatar was already on the orderbook. So yeah, lame is harsh, but probably fair.

Jens Flottau:

Yeah. And I agree with the categorization of it being lame. But in fairness, there is a timing issue here, right? There's a lot of big campaigns that we know of that just haven't been finalized. The 100 A330neos from China haven't yet come in. I understand there are some issues to be resolved, but they will very, very likely be resolved. Qatar Airways is looking at a big, big order for more than 100 wide bodies. They're just not there yet, and frankly, they have time to have so many aircraft on order, that they need to decide this now. So yeah, it's partly timing, but I think it'll come. And a completely different segment of the market, Embraer, they're talking about campaigns for about 300 E2s plus E1s. So if only part of that becomes reality in the next few months, then regardless of us being bored here in Farnborough, it will have been a pretty good summer.

Guy Norris:

What's the chances of seeing more widebodies ordered per air show though as we go into more of this? Because remember in the good old days, it used to be how many hundreds of A320neos and MAXs, and before that, generations before, it was always hundreds and hundreds of single aisles.

Daniel Williams:

Well, yeah, last year's Paris was over a thousand were popped on order. But again, that was going back to Jens. That was a timing thing. That was the India orders all coming in all simultaneously. So timing time is everything. We predict wide bodies would be good this year. It's been better, but we've been a little bit let down if we're honest.

Guy Norris:

But I think the other point is that a lot of people have done their orders, haven't they? They they've got them in, they're in the production backlog. So you're going to see this for a few years, I think, a low level of single aisles versus these sorts of upwelling really of widebody orders.

Jens Flottau:

Yeah, but that's again, timing. And if you look at the lessors for example, they're not ordering right now because whatever their order now will be delivered in eight, nine years and they are certain what they're going to pay, but they have no certainty on what they're going to get for the aircraft because who knows what the lease rates will be in nine years. So why do this now? You can always do sale and leasebacks. So the lessors are out for the moment. Some still do order, but largely they're not. And for the airlines it's the same thing eight, nine years. It's a long planning horizon.

Joe Anselmo:

Christine Boynton, this show is not just about orders. There's a lot of other things going on. Why don't you tell us what you think some of the highlights are?

Christine Boynton:

Sure. Well, it's interesting. We're talking about this being slow because this morning on the shuttle bus from the train station to the air show, I sat next to someone from a tier one supplier and we were talking about how the show was going. And I expected similar sentiments maybe from him. He was thrilled with how it's going. He's been able to get more meetings than he expected previously. And so if that holds true with other suppliers, then I think from that angle, the air show can be seen as a success, because a recurring theme that we've been hearing is the need for more communication and collaboration between manufacturers and suppliers in order to improve things within the supply chain. So Boeing and Airbus on a panel the other day, they were talking about moves they've made, creating forums, creating task force, but there's a little bit more to be done. So from that perspective, maybe the air show can be seen as a success.

Jens Flottau:

Sorry, but we were with Airbus on Sunday. They did a pre-show reception. And one of the big statements there by Christian Scherer was that, "We don't want suppliers to second-guess our forecasts." In other words, he thinks they are second-guessing their forecasts. So they're producing less than Airbus wants, and that's obviously a big deal because if only one supplier does that, then the whole system is in trouble. You can't put out an aircraft without a landing gear. Speaking of landing gears, that's a new issue that's just come up. We've had cabins, we've had engines, toilets, seats, whatever. Now it's landing gears because of a strike in Canada. So there's just stuff that comes up all the time. And I remember last year at Paris, people said, "Yeah, it's bad, but it'll get better." And a year later, we're here and people still say, "It's really bad." And yeah, it's not really getting better either.

Joe Anselmo:

They absolutely, the suppliers don't trust the OEMs. I moderated a panel at McKinsey and Company yesterday where we had Ihssane Mounir, the head of supply chain at Boeing, and he said, "Yeah, we got to do better," because at one point they told the suppliers they'd be doing 38 narrow bodies a month. They're nowhere near that, obviously.

Daniel Williams:

It is true. One of the biggest questions we, the data team, currently have is about production rates. I've been asked a lot about it at the show, and it is true. The suppliers are struggling with what they're saying. Airbus, Boeing, Embraer all put out commercial forecasts for the next 20 years. You look at them and you can clearly tell that they're an Airbus, Boeing, and Embraer forecast. They're all favored depending on what markets they do well in. And these are the things that happened. That's why there's possibility that Boeing produced very low double-digit numbers in the month of June. So when you're right, you go back to, "Hey, we should be at rate 32," and yes, they should be at rate 32, but with the continued oversight and everything else, they're not at rate 32 and it probably will be a while. And going back to the issue with the supply chain and the next problems, it's always perpetually two years away. "When's this going to be fixed?" "Oh, in about two years." Like in Paris, "Oh, in about two years." We're now here in Farnborough '24. "In about two years." It's the perpetual two years.

Joe Anselmo:

And Dan, Jens and I were interviewing an industry official executive this afternoon, and he was saying, some of these orders, it takes so long now to get an airplane when you order one that maybe some airlines are just placing orders just so they have a spot in the queue, and then at the same time, the lessors are ordering spare engines. I mean, you're counting all that.

Daniel Williams:

Yeah, look, the engines are where companies are making money right now. Lessors are not buying aircraft, they're buying engines. There's been one lesser order for the whole of the show. Macquarie ordered 20 MAX 8s. That's it. Again, goes back to what Jens was saying. "Lessors don't buy wide bodies. They'll happily take a sale and leaseback as and when because the market will have calmed down. They will invest in narrow bodies." And that's a shot in the arm for Boeing, an order for that, but it's still not brilliant.

Joe Anselmo:

Guy Norris, what else is going on at the show?

Guy Norris:

Well, I'm glad you asked me that, Joe. Let's face it. There are other things, but heavy metal and to be discussed. I know, Jens, you're shaking your head, but yeah, we've seen, for example, eVTOLs have really made a strong statement here at the show. There's been more, I have to say, mock-ups mostly here than ever before. But you do get the feeling that, have we said this before, at the next Farnborough, they really will be flying eVTOLs.

Joe Anselmo:

Yes, we have said that before.

Guy Norris:

Oh we did say that two years ago. But anyway, I think really you do feel that the market is poised for some sort of reality there on that and the emergence of those models, everybody's talking about the next phase, not just certification, but production. And there's even discussions about operators and deals being set with arrangements of new vertiports and that sort of thing. So I've really picked up on that as an active part of the market. And the other thing that I should say in terms of propulsion, you mentioned engines, is the huge amount of discussion over hybrid electric and alternative propulsion systems. Hydrogen is again being talked about. When was the last time... I was trying to think back. Who'd have thought at any Farnborough or Paris for that matter, that hydrogen propulsion would even be discussed even be a thing. But Rolls-Royce announced it was setting up a start of a new hydrogen test facility with NASA at Stennis and their partner, easyJet. And you've got Airbus of course, doing a lot of discussion about its hydrogen test work coming up. So yeah, tons of things going on there.

Jens Flottau:

I want to point out something that's got, I promise, nothing to do with orders. Embraer, the first time a commercial aircraft manufacturer is introducing automatic takeoffs. When they told us about it, I thought that was huge. That was really interesting. What they're doing is on short fields like London City, they don't want the pilot to do the takeoff manually because they say it's more precise if it's automated, if the system does it, you can rotate faster to the geometrical limits of the aircraft. And that gives the aircraft a lot more range. They say up to 500 nautical miles, 350 nautical miles out of London. And if you look at the circles around London City that basically covers all of Europe now, you're deep into Turkey and imagine if you can do this. It's quite an achievement, I thought.

Joe Anselmo:

And Guy, we can't end this podcast without you talking about one of your favorite companies that you cover. What did you hear about, Boom?

Guy Norris:

Of course. Yeah. Boom did make a bang at the show. I said that I'd say that. Just to remind listeners, Boom Supersonic is developing a Mach 1.7 supersonic airliner, which will be essentially 21st century successor to Concorde. But they know that the only way it's ever going to be achieved is with the development of an acceptable Chapter 14 propulsion system and something that's going to really make this entire project feasible. So without an engine, obviously nobody goes anywhere. But on the other hand, this is something that they knew they had to convince the market about. And that's what they did at the Farnborough show here. They did, for the first time, discuss in detail really some solid progress and plans for the propulsion system, including the establishment of a production site for the new engine, which is called the Symphony with StandardAero, their partner in Texas and StandardAero, they've reminded us, not only is an MRO company, it also manufactures or assembles GE fighter engines at its site and they've got test cells for that.

So there is a sort of beginnings of an infrastructure there. They also revealed the flight deck, which for the first time on a western-built commercial airline that we know, we've asked around all the experts here that it's got active side-sticks, which means that what they're saying is they're combining the best of Airbus and Boeing in that respect. Boeing does have feedback, but through the control columns, Airbus has side-sticks, but they're passive, so no feedback. So anyway, I really thought the Boom announcement was one of the highlights of the show, quite frankly.

Jens Flottau:

And we do want to dedicate this part of the program to Steve Trimble, of course.

Joe Anselmo:

Well, Steve Trimble's not here. Our listeners can't see this, but I saw the numbers guy shaking his head while Guy was talking. How come you're shaking your head?

Daniel Williams:

Boom is ambitious, let's say. Everybody who's previously worked with them, Rolls worked with them for three years, they walked away leaving them without an engine provider. We are in a world moving to a hopefully more greener, and I know Boom, say it's all a hundred percent SAF. We're not producing anywhere near enough SAF to do anything right now. So I think that how much of the need for a supersonic airliner is incredibly niche, let's say. They couldn't make it work with the business jet, the Aerion. That had a chance because those people who can afford that business jet would've paid for that and Aerion couldn't make that work. So I'm incredibly skeptical, and I've put it on a podcast now, over Boom, and so much so we don't put it in our current commercial forecast.

Guy Norris:

Strange enough, neither does Boeing.

Daniel Williams:

No, no, not many people. I think Boom do. But I think that's about it. So I wish them well because I'm a child who was brought up in the UK when the Concorde was flying. It was a wonderful thing. Do we need another Concorde? Probably not because who needs to do New York to London in two hours less than what you can do it in now, but a much more efficient way in a much more sustainable way, and at probably a slightly less cost?

Guy Norris:

Well, I've got to say, Boom showed some numbers where they said they'd had a survey, which 97% of the people polled had voted in favor of a much shorter flight and faster flight times. And they thought that the remaining 3% had accidentally pressed the wrong button. But they're saying that this is, and I've said this before and I'm open, I could be skeptical about this too. I just think we're hearing at an air show that's exciting that somebody's making a bold move, somebody's having a go at developing a brand new supersonic airline and what's not to like.

Daniel Williams:

Yeah, the winner in terms of order is the Twin Otter that was designed 60 or 70 years ago and is the ultimate winner 'cause they've got two years worth of production.

Guy Norris:

Well, 130 orders potentially so far for Boom. That's in the order book. Anyway. I will-

Joe Anselmo:

Okay, guys, we will schedule a future Check 6 on Boom, I promise you. But we're almost out of time. But Christine, anything we missed from this week at Farnborough?

Christine Boynton:

Yeah, maybe a smaller nugget, but I heard airlines talk about AI and data a little bit. And one thing in particular stood out to me, British Airways is in the middle of their seven billion pound transformation plan. And they were recently looking at their analytics. They have all this data, things are becoming increasingly connected, but they're starting to use it in a better way. And one thing that they began to realize was if an engine on their A320neo fleet begins to start up later than normal, it's an indicator that a starter valve is going to fail. So now if a neo engine starts up at six minutes rather than three, they replace that starter valve before they end up with an AOG, and that's actually reduced their aircraft downtime on that fleet by about 4%. I think that's fascinating. So I'm really excited to see what else comes out of this plan and their better use of the data, because honestly, there's just so much opportunity.

Joe Anselmo:

Well, on that note, we're going to have to wrap up. But to our listeners, we're actually going to have another Check 6 coming up being recorded tomorrow by Robert Wall and our defense team to talk about defense highlights in the UK this week. But for now, that's it for this Check 6. A special thanks to our podcast editor, Guy Ferneyhough. To our listeners, thank you for your time. Have a great week.