Boeing’s leadership, including Commercial CEO Kevin McAllister and CFO Greg Smith, will hold a “business update” from 9:30 to 10:30 am to discuss the Max, 777X and likely the NMA. Late last month, Boeing CTO Greg Hyslop suggested Paris “will be the location of Boeing’s next announcement regarding NMA,” according to CompositesWorld Editor Jeff Sloan. Whatever that is, Airbus is counter-programming. At 10:15am on the other side of the show, before the Boeing event even ends, the A321XLR will likely be launched by Airbus. TAC reported last week the aircraft’s launch was set for the show.
How much of the market — on the smaller side of the mid-market segment — will be spoken for with the XLR off and running? We might find out if American Airlines holds the same influence in 2019 that it did back in 2011. According to Reuters, Muilenburg said the XLR would only “scratch an edge” of the NMA market.
But is it the edge of something real? More than 1,000 staff inside Boeing working on NMA say it is, but others inside Boeing say the company still can’t find a design that would make its business case close. It’s at the same time really real and really not, they say. Other customers are being wined and dined with specifications, but some influential buyers say they can’t quite tell what the airplane is yet or if the engine makers have a realistic shot being ready in 2025. Engine makers seem to shrug for the time being, aware that NMA lives on a back burner somewhere behind Max and 777X. “Whenever they come back and say ‘now we want it,’ we’ll continue the discussion, we’ll be ready,” said CFM International President Gaël Méheust.
In a message to an NMA staffer late Sunday, your correspondent wrote “We’re all wondering what Monday brings on the NMA front.” The staffer replied: “So are we.” Adding: “The next few weeks (maybe days) will be critical for the Max and the NMA.”
Mitsubishi and Bombardier continue talking
There won’t be a Mitsubishi/Bombardier deal for CRJ this week at the show. The two sides continue to hash out details around the potential transaction, but the consensus is that neither side needs to be rushed by an air show deadline.
“Whatever the outcome of our strategic review of the CRJ, we aim to move forward in the carefully thoughtful fashion that our stakeholders have a right to expect,” wrote Mike Nadolski, Bombardier’s Vice President of Communications. Hefty residual value guarantees for parked CRJ200s (that come with the CRJ program) are the thorniest issue, representing potentially at least hundreds of millions of dollars in exposure for Bombardier, according to its most recent financial filings.
The guarantees date back decades when Bombardier was building a huge backlog for the CRJ200, which is largely unwanted in U.S. fleets now, due to the preference for larger 76-seaters. More relevant to the show, the CRJ is (as far as one can tell) absent in virtually any form from Le Bourget. A CRJ900 was set to be at the show Sunday, but it’s no longer expected. Bombardier is leaning heavily on its new business jet flagship, the Global 7500. That is its future. Mitsubishi’s freshly re-launched M90 (formerly MRJ90) and M100 (the revamped MRJ70) will feature heavily at the show, as the company repositions itself to win a spot in U.S. regional fleets. More on this strategy as the week unfolds.
Of Strategy, Tactics & Tone
If Farnborough 2018 was about strategy and alliances, the 2019 Paris Air Show is about how those strategies manifest in tactics and new products a year later. The last 24 months have been about the reformation of battle lines and alliance partners. Europe and Canada, U.S. and Brazil, China and Russia. The map is clear. Now, we begin to see what these strategies will produce. Decisions are being made and some are being shelved.
The stage is set here at Le Bourget, where the industry finds itself at a moment of great consequence that will test the resilience of the chosen strategies. A rising trade war between the two largest economies, uncertain air traffic trends, regulatory friction, potential conflict between the U.S. and Iran and a general public increasingly aware of carbon creation.
There won’t be an A380 at the show for the first time since 2004 (it was still being built). No CRJ here either. No 737 Max for the obvious reason. But there are new faces, like an Amazon Prime Air branded converted 737-800. A newly re-branded Mitsubishi SpaceJet. And electric propulsion (and the aircraft they power – Alice, Vahana, etc.) are getting a larger presence here.
The 737 Max has put a more serious pall over the show. Boeing CEO Dennis Muilenburg held a roundtable with international media Sunday afternoon, vowing a shift in tone. “We come to this Air Show focused on safety,” according to The Seattle Times. “I’d say we come to this Air Show with a tone of humility and learning.” There is a somber seriousness in the air. “No smiling,“ said one top OEM executive. But it’s not tone that drives the direction, it’s action. That, here in Paris, will decide the future.
TAC is on-site at the Paris Air Show. If you’re there, look for us and tell us what you’re seeing and hearing – Jon.
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