UK Airshow All About Boeing, Airbus Sales

The bi-annual Farnborough Airshow opens Monday near London and this year’s big story may be the dog that didn’t bark–The Boeing Co. (NYSE: BA) is apparently not ready to commit on a new aircraft, referred to variously as the new mid-market airplane (NMA) or the 797. More on that later.

What is expected is a showdown between the two new sales chiefs at Boeing and arch-rival Airbus. The long-time top salesmen for both companies retired recently and the new guys, Boeing’s Ihssan Mounir and Airbus’s Eric Schulz, will be looking to put their own stamps on their companies’ business.

New orders are how salesmen keep score and Boeing is expected to land an order for around 14 of its 777 freighters from package delivery service DHL. The company is also expected to get a new order for the 777-8 from Ethiopian Airlines and another from Emirates for 40 787-10s.

Airbus may have saved up some orders to announce at Farnborough in order to give the new sales chief something to crow about. Last week the company announced an order from JetBlue Airways Corp. (NASDAQ: JBLU) for 60 of its new A220-300 aircraft, formerly known as the Bombardier CS300, along with options on another 60. The first planes will be delivered in 2020, and at list prices the 60 firm orders are valued at $5.5 billion. Boeing’s putative partner, Embraer SA (NYSE: ERJ) was also in the running for this deal.

A startup airline, Moxie Airlines, may also place an order for 60 of the A220-300 with Air Lease Corp. (NYSE: ALC) taking the role of a flow-through lessor. This would be a huge win for Airbus, but the company is likely to have to settle for a higher-than-usual discount to get the order. It would probably be worth it.

A decision from Boeing regarding the NMA (797) is not expected until next year. The aircraft is aimed at a market for a twin-aisle plane with capacity for 220 to 270 passengers and a range of up to 5,000 nautical miles. The attractiveness of the plane to customers comes from its twin-aisle design (quicker loading, unloading for faster turnaround times) and lower operating costs primarily from reduced fuel burn.

Boeing forecasts a market of some 4,000 aircraft of this type and the company is trying to figure out how likely it is to recoup development costs of around $10 billion (probably more when and if the project gets the go-ahead) at a price that customers are willing to pay. Aviation Week and Merrill Lynch have surveyed potential customers for the NMA, and the results and other details are available here.

The first announcements from Farnborough are set to go off right after the World Cup championship game Sunday. Don’t touch that dial.

 

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