PARIS AIR SHOW SET FOR CHALLENGING YEAR AS INDUSTRY DEALS WITH WAR, CRISIS, AND SAFETY CONCERNS
International disputes, trade barriers, and a somber atmosphere anticipated to shroud the Paris Air Show
As the 2023 Paris Air Show kicks off, more than 2,400 companies from 48 countries will come together to display aircraft and aerospace technology. While the commercial rivalry between Airbus and Boeing typically takes center stage, this year's event is anything but standard.
A COMPLEX LANDSCAPE
The ongoing war in Ukraine and worries of a broader Middle East conflict, following Israel's recent strikes on Iran, have cast a shadow over the industry. The recent Air India-operated Boeing 787 Dreamliner crash in Ahmedabad, resulting in at least 265 fatalities, has further rocked the aerospace world. Not only does this tragedy represent the first catastrophic crash of a 787, but it also comes amid Boeing's ongoing efforts to reconcile past safety and production issues.
Boeing CEO, Kelly Ortberg, will not be attending the show, focusing instead on the ongoing investigation into the accident.
Both manufacturers have been grappling with delivery delays due to lingering supply chain disruptions. Airbus has been particularly impacted by fuel-efficient engine shortages for its A320 jets and even a scarcity of aircraft restrooms for its wide-body models.
LOOMING THREATS AND OPPORTUNITIES
At the 2018 Paris Air Show, multiple challenges surfaced for both Boeing and Airbus. These issues centered on safety scrutiny, delivery delays, and geopolitical tensions, to name a few.
- Airbus Challenges: With ambitious delivery targets, Airbus aimed to increase its output from 766 aircraft in 2024 to 820 aircraft in 2025. Dominating market demand, Airbus faced pressure to meet these lofty goals amid ongoing supply chain hurdles, including component shortages.
- Boeing Challenges: The grounding of the 737 MAX and ongoing safety issues posed a significant challenge for Boeing. The manufacturer also grappled with delivery pressures and faced competitive pressure from Airbus' rampant delivery pace.
- Impact of the Air India Crash and Recent Events: The tragic Air India crash highlights the importance of operational safety and reliability, potentially impacting airline decisions on new orders and fleet renewal.
- Industry-Wide Challenges: The industry is coping with growth amid structural challenges, including shifting market dynamics, tariffs, and tariff wars, and softening demand in some sectors.
In summary, the 2023 Paris Air Show promises to be a complicated event, with ongoing tension and safety concerns adding to the usual commercial rivalry between Boeing and Airbus. The manufacturers will undoubtedly need to navigate challenges such as supply chain bottlenecks, safety concerns, and geopolitical uncertainty to secure orders and meet their delivery commitments.
The complex landscape of the aerospace industry, characterized by geopolitical tensions, war, and safety concerns, may influence ongoing discussions regarding future finance and investment deals during the 2023 Paris Air Show. The recent Boeing 787 Dreamliner crash and subsequent industry-wide scrutiny could potentially reshape financing arrangements and production plans for both Boeing and Airbus.
