This year’s Farnborough Airshow witnessed sparkling revelations from the two grands of the aviation industry. The Boeing Company (NYSE:BA) announced large orders for its remodeled short-haul 737 aircraft, while its rival Airbus announced its first billion-dollar order from Hong-Kong based Airline.
Boeing announcements are based on the commitment of General Electric Company (NYSE:GE) Capital Aviation Services, the commercial aircraft leasing and financing arm of General Electric, to purchase 75 737 MAX 8s and 25 Next-Generation 737-800s. The deal valued at around $9.2 billion is still under negotiation, but if it goes through it will represent second biggest order for Boeing’s 737. The deal would also help Boeing take back ground, which it has lost to its rival Airbus S.A.S. at the Paris Airshow last year, where Airbus has stolen a piece of Boeing’s market with its remodeled airplane, the A320neo.
To catch up with Airbus in orders for single-aisle aircraft, The Boeing Company (NYSE:BA) is pushing the sale of MAX model. Up until now, Boeing has secured more than 1,000 orders and commitments for the aircraft.
In response to The Boeing Company, Airbus also announced its first big deal valued at $4.2 billion for its long-haul A350-1000 with Hong Kong-based airline, Cathay Pacific Airways Limited (HKG:0293) (PINK:CPCAY). The Hong-Kong based airline is expected to order 10 new aircrafts and convert 16 of its existing orders for A350-900, previous vercion of the long-haul plane, to larger A350-1000, valued at $320 million each. The deal is yet to get an approval from Cathay Pacific Airways Limited’s board.
Fabrice Bregier, Airbus President and CEO states, “the A350-100 will be a game changer in the 350-seat category, offering outstanding payload-range capability and a 25 percent reduction in fuel burn.”
Furthermore, he states, “As an all-new design, it will outperform existing aircraft in its size category on every count, as well as any future derivatives of those aircraft.”
Along with the big guns, Airshow also saw announcements from Canada’s Bombardier, Inc. (TSE:BBD.B) (TSE:BBD.A). The Canadians co. signed a letter of intent with Latvia-based airBaltic Corporation AS for 10 CS300 aircrafts along with 10 other jets. The deal is valued around $1.57 billion. Bombardier, Inc. also states that it has a conditional order for five CS100 and 10 CS300 aircrafts by an unidentified customer.
Before coming to the Airshow, both grands were engaged in fiercest market share battle for up to a decade, with both signaling to slash price to poach others customers.”Airbus and Boeing are a duopoly and can’t collude, but they can signal to each other. And Boeing is sending a clear signal to Airbus that ‘if you price down to get market share we are not getting to let it happen so we both get hurt’,” said aid Nick Cunningham, managing partner of London-based researchers Agency Partners.Cunningham.
