Boeing secured its first orders at the 2023 Paris Air Show on Tuesday, following a major victory by its rival Airbus the day before. This caused Boeing’s stock to decline while Airbus experienced a slight gain within its buy zone.
Despite the challenges faced in production and certification of key programs, both aviation giants, along with their jet engine suppliers General Electric (GE) and RTX (RTX), remain optimistic about the strong demand outlook.
Meanwhile, India took center stage at the air show, which will conclude on Sunday. Air India, the national carrier, and its budget competitor, IndiGo, made headlines due to the significant growth in India’s air travel market.
Starting with Boeing, the prominent aviation company announced on Tuesday that Air India had finalized an order for up to 290 new Boeing jets, including 737 Max jets and 787 Dreamliners.
Additionally, China Airlines confirmed orders for eight 787 Dreamliners, while Air Algerie from Algeria solidified an order for eight Max 737 jets.
On the other hand, Airbus, Boeing’s European rival, made waves on Monday by securing an order for 500 A320 narrow-body jets from IndiGo, marking the largest plane deal in history.
Earlier reports from Reuters in March had mentioned that IndiGo was considering the Boeing 737 Max as an option, having exclusively purchased narrow-body aircraft from Airbus until now.
Airbus also revealed that Air India had confirmed a previous order for 250 jets, including 210 A320/A321 narrow-body planes and 40 A350 wide-body planes. Additionally, ultra-low-cost Mexican airline Volaris placed an order for 25 A321 aircraft.
Despite the setbacks caused by the pandemic, commercial aviation is gradually recovering.
Boeing’s recently released 2023 Commercial Market Outlook, unveiled on Sunday, predicts that global airlines will need 42,595 new jets by 2042, surpassing last year’s estimate by 1,425 aircraft.
Paris Air Show Orders Shake Up Aviation Stocks
The Paris Air Show serves as a platform for industry leaders to showcase their latest developments and secure valuable orders.
The recent successes of both Boeing and Airbus, along with the growing demand for air travel in India, highlight the resilience and potential of the aviation industry in a post-pandemic world.
Boeing stock experienced a decline of 3.5%, reaching $212.37 on the stock market today. Despite briefly surpassing a buy point of $221.33 from a flat base the previous week, BA stock has encountered challenges in making further progress.
On the other hand, Airbus shares saw a 0.4% rise, reaching $35.96 on Tuesday. EADSY stock successfully cleared a buy point of $34.85 from a double-bottom base the previous week.
Both Boeing and Airbus, as leading plane manufacturers, are facing ongoing supply challenges as they strive to meet the robust demand from airline customers.
The production issues persist, particularly concerning their flagship models—the 737 Max for Boeing and the A320neo for Airbus, both of which are narrow-body jets.
Suppliers General Electric (GE) and RTX (formerly Raytheon Technologies) are diligently working to address durability problems associated with their respective engines—GE’s Leap engine and RTX’s GTF engine—used in these aircraft.
During the air show’s investor day on Tuesday, GE outlined the improvements being made to address the Leap engine issue. The company maintained its 2023 guidance, expressing confidence in the solid outlook for the aviation industry.
Meanwhile, RTX anticipates a $500 million impact on its free cash flow due to the GTF engine issue. The company made this announcement during its investor day on Monday and also revealed its decision to rebrand from its previous name, Raytheon Technologies.
In terms of stock performance, GE experienced a 2.1% decline, reaching $104.02 on Tuesday, after reaching a five-year high earlier on Friday. RTX stock remained relatively unchanged at $97.70.
Additionally, Spirit AeroSystems (SPR), which specializes in manufacturing fuselages for the Boeing 737 Max, saw a significant drop of 4.4%.
These developments indicate the ongoing challenges faced by major aviation companies and their suppliers as they strive to address production issues and meet the increasing demands of the airline industry.
Investors and industry observers closely monitor these events, as they provide insights into the overall health and trajectory of the aerospace sector.
