Paris aviation deals signal recovery in face of supply challenges

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A flurry of dealmaking at the Paris air show has confirmed that the aviation industry is back in business after the Covid pandemic — and that the world’s two dominant plane makers still face a challenge navigating a supply chain that retains the scars of the crisis. 

Airbus and Boeing had together announced orders for more than 1,200 aircraft by the end of the third day of the event, according to analysis by consultancy IBA.

The European group snagged 846 of the total including the largest single commercial jet deal in civil aviation history, Indian low-cost carrier IndiGo’s order for 500 aircraft.

Most of the orders — 1,070 — were for single-aisle planes such as the Airbus A320 and Boeing 737 Max, which fly the short to medium-haul routes that have led the travel industry’s recovery. Order backlogs for the two plane makers now stretch out almost a decade. 

The buying spree has prompted some concerns that airlines are over-ordering to ensure they get scarce delivery slots that are now close to the end of this decade.

But Christian Scherer, head of commercial at Airbus, said there was “nothing terribly unusual” and that the orders announced were evidence that “business is back as usual”. 

“It is good, stable,” he told the Financial Times, adding that the IndiGo order was a “natural continuation of an order flow, a growth and replacement of fleets into the future”. The planes for the Indian carrier will be delivered between 2030 and 2035. 

Stan Deal, head of Boeing’s commercial aircraft division, said he expected to see a “pretty robust recovery in the market” and a “steady state long-term”. 

Airbus and Boeing have forecast the need for more than 40,000 new jets over the next 20 years, with roughly half of them for growth and the remainder for replacement as airlines seek to buy more fuel-efficient aircraft to reduce their carbon emissions.

Executives believe growth will continue to be strongest in Asia, with a wave of demand for new aircraft notably from India and China. 

Yet the industry continues to struggle with a shortage of skilled workers and critical materials, which is impeding planned ramp-ups in production.

Akbar Al Baker, chief executive of Qatar Airways, singled out manpower as a key challenge. 

“Covid brought a lot of lay-offs of good people who now don’t want to come back to the same profession . . . both Boeing and Airbus and the rest of the industry are hugely short of the expert capabilities that were existing before the pandemic,” he said in Paris.

Airbus said this week it had filled more than half of the 13,000 positions it expects to create this year. Boeing said in January it expected to hire about 10,000 new workers in 2023. 

Executives from both companies said they expected demand to remain significantly ahead of supply for some time. 

“It is a ramp-up game . . . It is all about delivery,” Guillaume Faury, Airbus chief executive, told investors in Paris on Wednesday. 

Airbus reiterated its target to deliver 720 aircraft by the end of this year and reconfirmed previous ramp-up plans for both its single-aisle and widebody aircraft. 

Scherer said the company would focus on achieving its targets and ensuring a stable supply situation, before considering any further ramp-ups, notably in the wide-body segment of the market where demand from airlines is now also coming back.

Rob Watson, who recently took over as president of civil aerospace at Rolls-Royce, said his focus was on “execution and delivery”. The company’s large engines power Airbus’s A350 aircraft and it will be focusing on ramping up deliveries to meet its existing order book.

The supply chain, he added, is “definitely tight”. It is in the “right shape to survive Covid but not necessarily in the best shape to deliver a growth curve. So we pay close attention to our suppliers,” he said. 

Boeing has faced its own problems boosting its output, including supplier issues that have impeded production. 

Deal said the company would focus on delivering on its targets for both wide-body and narrow-body aircraft. 

“We want to see the supply chain recover. We want to see the demand continue to be robust and then we’ll make further rate decisions,” he said.