Paris Air Show Overshadowed by Dreamliner Disaster and Rising Military Tensions

This was Kelly Ortberg’s first Paris Air Show as Boeing CEO, and the mood was expected to be relatively positive.

Since he took the helm in August, the company has made progress in boosting its production of the popular 737 Max jets, increasing the delivery of new planes to generate cash, and signaling a recovery from previous manufacturing and safety issues, as well as years of lagging behind Airbus. Shares have risen over 13% this year, which surpasses the S&P 500.

However, following a tragic incident where an Air India flight crashed on Thursday—the first deadly accident involving a Boeing Dreamliner—Ortberg decided to skip attending the upcoming air show.

The Paris Air Show, a significant industry event held every two years and alternating with the Farnborough Air Show in the UK, typically features extravagant parties hosted by Boeing, Airbus, and other aerospace leaders, alongside deals celebrated with executives surrounded by model aircraft and thrilling aerial displays for the audience.

“As our industry gears up for the Paris Air Show, both Stephanie and I have chosen to cancel our plans to attend so that we can be with our team, focus on our clients, and the ongoing investigation,” Ortberg communicated in a message to employees on Thursday, referencing Stephanie Pope, CEO of Boeing Commercial Airplanes.

Almost all of the 242 passengers aboard Air India Flight 171 perished when the Boeing 787-8 Dreamliner, which was over 11 years old and en route to London, crashed into a student dining hall mere seconds after taking off from Ahmedabad in western India. The only survivor was a UK national born in India, seated in 11A.

The cause of the crash remains unclear and may take weeks or months to uncover. Investigators are looking into how the plane lost altitude so quickly and uniformly, resulting in a catastrophic crash. The cockpit voice and data recorders, commonly referred to as “black boxes,” are likely to provide crucial insights.

“It’s vital that we refrain from speculating about the accident and allow the investigators to do their work,” Ortberg expressed.

The engine manufacturer of the plane, GE Aerospace, announced it will delay an investor day event set for Tuesday.

The crash is not the only factor affecting the Paris gathering.

Just before the Air Show was about to commence, Israel conducted missile strikes on Iran. Shortly thereafter, Iran retaliated by sending drones into Israeli airspace. As a result, several airlines either canceled flights or diverted aircraft already in the air, and numerous others opted to avoid the region’s airspace entirely.

These increased tensions will heighten the focus on military budgets and spending during the air show and raise concerns about the effects of conflicts and geopolitical issues on the demand for commercial air travel.

Despite the crash and other external challenges, Boeing, Airbus, and Embraer are still set to secure hundreds of new airplane orders. Currently, demand for popular aircraft models has resulted in wait times extending into the next decade.

Boeing projected over the weekend that the global market will require 43,600 commercial airplanes in the next 20 years, with significant growth expected from emerging markets, which are predicted to represent more than half of the worldwide fleet by 2044, an increase from 40% last year.

Some of the anticipated orders may come from new customers, although analysts predict a significant number of fresh orders will be placed.

Ongoing challenges, like a shortage of qualified personnel, have caused delays in delivering new aircraft, while fluctuating tariffs have raised worries about the potential for higher aircraft and component prices.

Aircraft prices have also increased. The new Airbus A321neo was priced at $65 million by the end of April, rising from $58 million at the start of 2023, while

As of April, the price for a new Boeing 737 Max 8 stands at approximately $55.5 million, an increase from $50.25 million earlier in 2023, based on data from Ishka, an aviation analytics and advisory company.

Due to the ongoing shortage of aircraft, leasing costs for older models are also rising. This trend is notable for airlines that prefer to avoid significant upfront expenses for new planes or those that need aircraft for shorter durations. For instance, renting a 12-year-old Boeing 737 costs $241,000 per month at the end of April, which marks a nearly 42% increase compared to two years ago. Similarly, an Airbus A320 of the same age rents for $239,000 per month, reflecting a 50% rise, according to IBA Insight, another aviation data firm.

IBA, based in the U.K., anticipates that manufacturers might receive between 700 and 800 orders for commercial aircraft during the Paris airshow. This estimate includes confirmed orders, options, and less formal commitments such as letters of intent and memoranda of understanding.

Potential buyers may include Ethiopian Airlines, the Polish airline Lot, as well as Vietnam Airlines, AirAsia, Royal Air Maroc, Etihad, and Saudi Arabia’s Riyadh airline, according to Ishka.

“A substantial order from China seems unavoidable at some point, whether for replacement or growth reasons,” Ishka noted in a recent report.

Air India, which Ishka previously identified as a likely purchaser, is now not expected to order new aircraft following last week’s unfortunate incident.

Airline customers are opting for larger planes as international travel continues to generate revenue.

“Previously, single-aisle orders dominated the market,” remarked Richard Aboulafia, managing director at aerospace consulting firm AeroDynamic Advisory. “Now, however, there is a surge in orders for substantial twin-aisle aircraft catering to international travel.”

He pointed out that major international airlines, including Turkish Airlines and various Gulf carriers, have been expanding their operations in recent years to capture a larger share of the global travel market, effectively “slicing the pizza into smaller portions.”

Since aircraft orders are typically placed well in advance, Aboulafia does not anticipate a significant change in demand resulting from the recent crash, although some decisions might be postponed during the show.

“It’s an unfortunate tragedy. It complicates matters for everyone,” he stated. “However, based on what we currently know, it seems unrelated to the aircraft’s design or construction. It doesn’t appear to have any connection.”