Airlines over order at Paris Airshow
The last week was a good one to be a commercial aircraft salesman. Airlines and leasing companies placed options for 1,223 aircraft worth $69 billion at list prices at the Paris Airshow this week. (Obviously many of these aircraft will not be delivered to airlines and no one paid list price, but we should not let that get in the way of a good story).
Airbus and Boeing have sold out production for an astonishing eight to 10 years. Low oil prices are helping airlines make profits and carriers and leasing companies are keen to buy. Both manufacturers have had three years of record orders. This is a complete contrast to business jet OEMs where backlogs are still falling. Commercial OEMs are upping production whilst we will see less business jets delivered this year rather than next. Bombardier did not announce big orders for the C-Series, but hopefully these are on the way.
Although they are two completely different markets (with the business jet market being the far cooler, more interesting one), it does not really make sense that the mood in the commercial aircraft market is so upbeat whilst business aviation is flat.
The two markets have different drivers, but they both fundamentally rely on economic growth and globalisation. One of them is out of kilter with reality. It would be great if airlines are right, but they have been notorious at over ordering at the top of the cycle only to take delivery when demand is falling.