The 2024 Farnborough Airshow could have been a celebration of the industry’s achievements and bright future.
Demand for air travel has never been as high, leading to record orders for new commercial aircraft. At the same time, many companies are working on technologies to enable the transition to a more sustainable future, bringing the sector closer to its target of net zero emissions by 2050. Also, advanced air mobility (AAM) is emerging as a new market with the first Western firm, Volocopter, nearing certification of its first model.
Instead, the biggest aerospace event of the year will be marked by uncertainty and concerns almost across the board. Boeing is only just beginning to recover from the fallout of the Jan. 5 Alaska Airlines flight 1282 accident. The company put out a statement July 15 saying that it “adapts [its] presence to prioritize factory safety and quality.” Therefore, the company will conduct only very few briefings at Farnborough and will not participate in the flying display. Neither the 737 MAX nor the 777X will be present, not even on the static display. The only Boeing commercial aircraft at the show will be a Qatar Airways 787-9. For Boeing, Farnborough clearly could not have come at a worse time, also because months after David Calhoun’s announced retirement at the end of the year it is still not clear who will lead the company into a hopefully better future.
Boeing’s single biggest piece of good news just ahead of the show was 777X Type Inspection Authorization (TIA) by the FAA, which is highly significant for the much-delayed program. That the aircraft is now in certification flight tests reduces the risk of further delays beyond the end of 2025. Launch customers Lufthansa and Emirates in particular are eagerly awaiting their first aircraft that are to replace Boeing 747-400s, Airbus A340s (at Lufthansa) and 777-300ERs (at Emirates). Lufthansa CEO Carsten Spohr said at a recent internal event that Boeing faces draconian financial penalties if first delivery slips into 2026.
Airbus could have benefited from its competitor’s troubles more than it has, but its recently revised (slower) ramp-up plan illustrates that it has underestimated the extent of the supply chain constraints. As CEO Guillaume Faury outlined in his recent Aviation Week interview, the company has multiplied its efforts to regain supply chain stability, with the takeover of parts of Spirit AeroSystems only the most prominent piece of action. The uncertainty about when Airbus can reach its production targets is already putting pressure on the timeline for its planned next generation narrowbody, which Faury had highlighted before the 2023 Paris Air Show as a key element to decarbonize aviation. Good news for Airbus, however, is the July 19 European Union Aviation Safety Agency (EASA) certification of the CFM Leap-1A version of the much-anticipated A321XLR, of which over 500 are on order (EASA certification of the Pratt & Whitney engine version XLR is set for later this year).
In AAM, securing financing through certification has emerged as the key worry for many of the European players. This year so far, many are muddling through with small capital increases that will buy them a few more months. But the good times of amply available venture capital are clearly over.
So what about commercial aircraft orders at the show? Airbus’ decision to slow down its output growth in the coming years reduces the number of available slots further. Even if airlines or lessors wanted to buy narrowbodies, for the short- to medium-term there are virtually no slots available. That will impact decision making.
For widebodies, the picture is slightly different, but could change soon, too. Demand for long-haul aircraft has returned faster than many expected, leading Airbus and Boeing to aim for higher production rates, too. Several large campaigns are ongoing and could lead to Farnborough order announcements. They could include a very large order by Qatar Airways and more commitments from Saudi Arabia where several airlines are looking to grow into widebody operations. Several Asian carriers such as Korean Air are also considering further deals.
If airlines don’t order widebodies now they will have to accept much longer delivery times, similar to what has been seen for narrowbodies. Unlike for narrowbodies, lessors are not really an alternative route given that they themselves have very limited widebody deliveries planned for the coming years.
Lessors have stayed noticeably absent from aircraft orders since airlines began to place big orders again in 2022. Avolon has been the one significant exception. The reasons are mixed. Some have exited the market leading to a concentration on five big players—AerCap, Air Lease Corporation, Avolon, BOC Aviation, and SMBC Aviation Capital. Those that remain often have large commitments in place that, they feel, are sufficient for the coming years. At current high pricing and long delivery times, margin risks are too high for most lessors to accept. And they can always get back into the market through sale-and-lease-back transactions quickly.
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