It's Airbus 13,000,000,000 - Boeing 0, On The First Day Of The Paris Air Show

From Zero Hedge

By Tyler Durden

As the jarring truth about Boeing's "cost-cutting above all" philosophy involving the company's deadly, ill-fated 737 MAX (or whatever the company's ill-fated plane may be called soon) receives an ever-wider public appreciation, the company is finding it increasingly difficult to do business as usual.

Take the Paris Air Show, traditionally the venue where the world's largest aircraft makers lock in deals worth tens of billions of dollars. Well, the first day of the 2019 edition of this boondoggle couldn't have gone any worse for Boeing, and alternatively it couldn't have been better for Airbus, which locked in $13 billion in orders for new jets.

Boeing's tally? $0.

Among those lining up to order Europe's iconic (if subsidized) airlines included Air Lease Corp., the giant US leasing company, which agreed to buy planes worth $11 billion before customary discounts, including the new A321XLR. Virgin Atlantic also bought eight A330 wide-bodies with options for six more.

And that's just the beginning: according to Airbus CEO Guillaume Faury, "there’s room to run up the score", as Bloomberg reports, and with good reason: while Boeing is scrambling to drag the name of its workhorse 737 Max out of the mud as it languishes on the tarmac - literally - after it was idled indefinitely in March after two deadly crashes, Airbus said it was seeing “very strong demand” for its rival A320 family of single-aisle jets.

“As far as we are concerned, you should expect a very positive Paris Air Show with a lot of orders,” Faury said in an interview with Bloomberg Television. Boeing... not so much.

Which is ironic, because just one year ago, the tables were turned. Back then, Airbus, having just gone through a jarring management transition - fallout from a multi-year bribery investigation - announced 431 orders valued at $62 billion at the alternating Farnborough air show in the U.K. That lagged Boeing’s commitments for 528 jetliners valued at $79 billion through the week last year.

Of course, most of the Boeing buyers are now considering whether to cancel their orders depending on what the fate of the MAX will be.

So it is now Airbus' moment in the sun: according to Bloomberg, "the Air Lease order in particular provided a vote of confidence in the A321XLR, a twin-engine jet that can travel 4,700 nautical miles, more than any other narrow-body on the market. The plane is positioned as a more fuel-efficient successor to Boeing’s discontinued 757, able to connect smaller cities that can’t support service by big wide-body jets."

The model is also meant to take the wind out of the sails of Boeing’s planned “new midmarket airplane,” or NMA. That jet, dubbed the 797 by analysts, is on hold while the Chicago-based company works through the Max crisis. Airbus’s decision to start sales of the XLR could help sway customers who had been looking at both options.

Airbus’s Air Lease deal also included the A220 plane that the Toulouse, France-based company acquired last year from Canada’s Bombardier Inc. and has been marketing harder, providing a further fillip.

Defiant, Boeing CEO Dennis Muilenburg, gave no ground on either the Max or the NMA, saying that the former will return to service before the end of 2019 and remain the backbone of the company’s short-haul strategy for years to come, in a Bloomberg Television interview. He may be overly optimistic if the best strategy Boeing can come up with is rebranding the plane in hopes of putting its troubles away.

As we reported earlier, CFO Greg Smith said - in all seriousness - that the Max’s branding could be dropped depending on an assessment of consumer and airline sentiment. Perhaps observing the uniform derision that greeted the news, Boeing emphasized in a subsequent statement that it had no immediate plans for a name change.

But if the first day was bad, the final airshow total will be devastating for Boeing. According to aviation consultancy IBA Group, firm and outline orders will total 575 planes, with 435 going to Airbus. That would compare with close to 1,000 at Farnborough.

"Like Farnborough 2018, the Paris Air Show started relatively slowly," Morris said, suggesting Monday’s action would be eclipsed in coming days. "Perhaps the fashion is now for Day 3 to be the high-water mark."

Which begs the question: yes, buyers may be recoiling at the thought of buying a Boeing, so to speak, but just how much of a global collapse is there in aircraft demand right now, and is that an indicator that the global recession has - as Morgan Stanley mused earlier today - indeed arrived?