Boeing suffered setbacks at Paris Air Show, but analysts debate outlook

There’s little doubt, industry analysts say, that Boeing got roughed up at the 49th annual Paris Air Show last week

The Chicago company had to watch as its chief rival, European-based Airbus, announced record orders for its A320neo, a new single-aisle airplane that’s attracting buyers who want to lower fuel costs and lower carbon-dioxide emissions.

“They took a few blows — I guess they got their hair muffed,” Richard Aboulafia, an analyst with Teal Group Corp., an aerospace and defense consulting group in Fairfax, Va., said Friday.

While Boeing generated plenty of chatter at the show, opinions differed as to whether its performance marked a temporary setback for a vibrant company or if it signaled reason to fret about its ability to compete in coming years.

The short-term future, at least, looks bright.

With an accelerating production pace at its Puget Sound aircraft assembly plants, Boeing has added nearly 3,000 workers to its Washington state payrolls in the last five months. The company is also fighting the National Labor Relations Board to open a new plant in South Carolina.

And the company will employ thousands more as it fulfills a $35-billion contract with the U.S. Air Force to build a new fleet of aerial tankers. The contract calls for producing 179 new tankers. But the deal eventually could be valued at more than $100 billion as the Air Force replaces its fleet of 600 or so Eisenhower-era tankers.

“I’m not worried about this at all — Boeing is in a big growth mode,” said Rep. Norm Dicks, D-Wash., known as “Mr. Boeing” on Capitol Hill.

In a note Thursday, AirInsight aviation consultant Addison Schonland wrote that Boeing actually had a pretty good week in France, with the Airbus orders just suggesting pent-up demand by customers who wanted something new and updated.

“It is not like we have seen Boeing 737 customers defect en masse,” Schonland said.

While Airbus took in more than 1,000 orders for its A320neo upgraded airliner, the company has yet to steal a single Boeing customer with it, Cowen & Co. analyst Cai von Rumohr wrote in a report. He said Boeing has the potential for an attractive all-new design to replace its single-aisle competitor, the Boeing 737, for entry into service in 2020.

But Aboulafia said “the main takeaway” from the French show is that Boeing must move quickly — “faster than they would like” — to develop a strategy for a new narrow-body product.

“They don’t have one, that’s the thing,” he said. “This industry is like steering a supertanker. Just because you’re in calm waters one day doesn’t mean you don’t have to worry about what’s coming soon.”

Boeing defended its performance, noting that the show featured the international debut of its newest commercial aircraft models — the 747-8 Intercontinental and 747-8 Freighter — and the appearance of its 787 Dreamliner. And the company said its new 747-8 Freighter flew to Le Bourget, the site of the air show, with all four engines powered by a fuel blend containing 15% camelina, marking the world’s first transatlantic crossing of a commercial jetliner with biofuels.

“The excitement and enthusiasm for the products and technologies Boeing showcased at the show have validated our belief in the strength of what is the world’s newest and most innovative family of commercial airplanes,” said Charlie Miller, Boeing’s vice president of international communications.

Airbus announced record commitments for 730 aircraft in a single day, on Thursday, the last day of the business portion of the show. It also marked a record for the number of orders taken by any commercial aircraft manufacturer at any air show. Airbus said the planes are valued at $72 billion at list prices.

For its part, Boeing announced orders for 142 aircraft valued at $22 billion, including an order from an undisclosed customer for 747-8 intercontinental jets worth $4.7 billion.

Airbus’ success with its re-engined aircraft will probably put increased pressure on Boeing to respond quickly, analysts said. Boeing is studying whether to replace its 737NG single-aisle plane, which competes with the A320, or, like Airbus, replace its engines. Boeing plans to announce a decision by the end of the year.

“They need to get going on that front,” Aboulafia said.

Hotakainen and McMillin write for McClatchy Newspapers