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Boeing Weighs ‘Max' Name; GE Nabs Engine Order: Air S...

Newsdeck

Newsdeck

Boeing Weighs ‘Max’ Name; GE Nabs Engine Order: Air Show Update

A Boeing Co. Max 737 jet sits parked in front of a hangar at King County International Airport in Seattle, Washington, U.S. Photographer: Mike Kane/Bloomberg
By Bloomberg
17 Jun 2019 0

The biennial Paris Air Show kicked off on Monday with Airbus SE announcing orders for a new plane, while archrival Boeing Co. said it would consider scrapping the “Max” name as it struggles to contain fallout from the best-selling jet’s grounding.

 

The Max’s troubles have overshadowed the multibillion-dollar order chase that typically dominates the industry’s biggest gathering. The idling of the 737 Max after two deadly crashes has created uncertainty for customers and suppliers, and clouded future aircraft plans. Order totals are likely to be lower than years past.

Here are the latest developments:

  • Mitsubishi said buying a Bombardier unit makes sense
  • Qatar Airways says it will invest in sixth overseas carrier
  • Air Lease said the U.S.-China trade war could boost Boeing leases

(All times, Paris)

Mitsubishi Edges Toward Bombardier (6:03 p.m.)

A takeover by Mitsubishi Heavy Industries Ltd. of Bombardier Inc.’s CRJ regional jet program has merit, according to an executive at the Japanese company’s aviation unit.

“It would make a lot of sense in the context of developing and delivering global aircraft,” Steve Haro, a vice president at Mitsubishi Aircraft Corp. The comment raised the possibility that a deal could be reached soon.

  • Mitsubishi Says Buying Bombardier Jet Division Would Make Sense

Qatar Air Nears New Investment (5:39 p.m.)

Qatar Airways QCSC will announce a stake in a sixth overseas carrier in the coming months, Chief Executive Officer Akbar Al Baker said, as the Persian Gulf operator turns to outside investments to boost revenue and cash amid a Saudi-led embargo restricting its flights.

“We are buying stakes in successful airlines and we will continue to do so,” he said, without naming a target company. “Soon you will hear about another investment.”

  • Qatar Air Closing in on New Airline Stake, Bullish Al Baker Says

Air Lease Sees Trade War Gain (5:33 p.m.)

Air Lease Corp. sees Donald Trump’s trade war with China bolstering demand for Boeing leases from airlines in the country as they refrain from buying planes, said John Plueger, chief executive officer of the leasing company.

“I think the demarcation for the Chinese airlines is right now: no direct buys, no direct purchases,” he said.

  • Air Lease Sees Trade War Boosting China Demand for Boeing Leases

Boeing Weighs ‘Max’ Name (5:20 p.m.)

Boeing is open to dropping the “Max” branding for its latest 737 jetliner, depending on an assessmentof consumer and airline responses to an aircraft name that’s been tarnished by two fatal crashes and a three-month grounding.

“I’d say we’re being open-minded to all the input we get,” Chief Financial Officer Greg Smith said in an interview. “We’re committed to doing what we need to do to restore it. If that means changing the brand to restore it, then we’ll address that. If it doesn’t, we’ll address whatever is a high priority.”

GE Engine Victory (4:08 p.m.)

India’s InterGlobe Aviation, the operator of low cost IndiGo airline, has ordered CFM International LEAP-1A engines to power 280 Airbus A320neo and A321neo aircraft, according to a statement issued Monday.

IndiGo switched to CFM, a joint venture of General Electric Co. and Safran SA, from United Technologies Corp.’s Pratt & Whitney, whose geared turbofan had powered earlier A320 family planes ordered by the Indian carrier.

Virgin Atlantic Roll-Up?

Virgin Atlantic Airways Ltd. plans to use the purchase of U.K. regional carrier Flybe Group Plc for further takeovers of British operators so it can feed more passengers onto its long-haul flights.

The carrier, founded by billionaire Richard Branson, would like to use Flybe to roll up more airlines into an expanded short-haul business as part of a plan to double the number of intercontinental services from its London Heathrow hub, Chief Executive Officer Shai Weiss said in a Bloomberg TV interview on Monday.

Embraer Order

Embraer SA sealed a $1.9 billion order to supply as many as 39 of its E175 regional jets to United Airlines, notching its deal before Boeing got on the board. Boeing, which plans to take over the Brazilian company’s commercial-jet business through a joint venture, is focused on fence-mending as the grounding of its bread-and-butter 737 Max enters its fourth month.

  • United Airlines Orders 20 Firm, 19 Options Embraer E175

Airbus Wins Virgin Atlantic Order

Airbus clinched a deal to sell as many as 14 A330neo passenger jets to Virgin Atlantic Airways Ltd., giving a lift to a re-engined wide-body that has lagged behind Boeing’s 787 Dreamliner in sales.

The order includes eight firm purchases and options on six more, which would add as much as $4.15 billion before typical industry discounts are factored in, Airbus said.

More Apologies From Boeing

Chief Executive Officer Dennis Muilenburg isn’t the only Boeing official stressing contrition at this year’s air show.

“Obviously it was a time of intense reflection for me personally,” said Kevin McAllister, chief executive of the commercial airplane division, about a recent visit with Tewolde Gebremariam, CEO of Ethiopian Airlines. On March 10, a 737 Max plane operated by the airline crashed minutes after takeoff from Addis Ababa, killing 157.

Meanwhile, Leanne Caret, the top executive for Boeing’s defense and space business, was working to placate Pentagon officials furious over worker tools and debris left inside KC-46 tankers after the planes were delivered to the U.S. Air Force.

“We had missteps. We’re putting a fierce, focused approach to ensure it never happens again,” she told reporters.

Longer-Range Narrow-Body

Airbus lifted the veil on its newest model, the A321XLR, in a bid by the European planemaker to capture untapped demand for long-range flights on smaller planes.

The manufacturer, seeking to take advantage of rival Boeing’s grounded 737 Max, also announced orders for the long-anticipated jet. Air Lease Corp. will take 100 Airbus planes, including 27 of the new XLRs and 50 of the new A220 acquired from Bombardier Inc. last year, confirming a Bloomberg News report.

Read More
Airbus Launches New Longer Range A321 Plane in Swipe at Boeing
Airbus Wins 100-Plane Order From Air Lease at Paris Air Show

Robust Defense

Meanwhile, Boeing’s CEO mounted a robust defense of the Max, saying it can re-establish its position as a single-aisle workhorse for decades to come, as the company sorts through an in-depth review of the airframe design and its internal processes in the wake of two deadly crashes.

“The long-term, multidecade strategy hasn’t changed,” Dennis Muilenburg said in an interview with Bloomberg Television.

Buy American

Donald Trump’s commerce secretary, Wilbur Ross, came to the show with a firm message for European governments: Pay your fair share in defense if you want the U.S. to help protect you.

Nations such as Germany must do much more to meet a commitment to spend 2% of GDP on security, Ross told Bloomberg TV, adding that the U.S. is prepared to do “quite a bit more” than its fair share to support NATO but that the Europeans need to “step up.”

Ross also lit into European carmakers, saying they talk free trade but “practice protectionism.” He amplified on the sidelines, pointing out that U.S. tariffs on automobile imports are 2.5%, versus 10% in the EU. “That’s a heck of a difference,” he said.

Apology Tour

For Boeing, plunged into crisis by the grounding of the 737 workhorse, the show will be an exercise in damage control. Unable to say when the new Max version of the jet will fly again after two fatal crashes in five months, the U.S. firm must convince customers and suppliers alike that it has a strategy in hand to cope with all eventualities.

CEO Dennis Muilenburg, who acknowledged a mistake in communication around Max issues, is doing damage control. “We come to this air show focused on safety. We come to this air show with a tone of humility and learning,” he said in a pre-show briefing in the French capital. DM

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