Issue No. 725

A New Star in Paris

Notre Dame cathedral, Paris promises, will be rebuilt. And so will, Boeing promised in Paris, the reputation and reliability of the B737 MAX. Airbus meanwhile, had something new to offer in Paris: a revamped version of its already-successful A321 NEO.

The MAX, to be clear, is in less trouble than all the media hype suggests. Airlines, for sure, are extremely frustrated by the plane’s grounding, removing valuable capacity during the peak summer season, on short notice no less. Boeing too, will suffer financially as it compensates customers. But virtually no airline has cancelled any of its orders (they’ve ordered more than 5,000 in total). And most have little doubt that before too long, the MAX will be back in the air, its safety concerns addressed and its economic benefits as good as ever.

Acting on such confidence, IAG CEO Willie Walsh—a B737 pilot himself—announced one of the biggest orders at last week’s Paris Air Show: A letter of intent to buy 200 MAXs (both -8s and -10s), worth $24b at list prices. Did Boeing offer IAG deep discounts in its eagerness to reassure the public with a big MAX order? Probably. But IAG, make no mistake, wants these planes and will plan its future fleet under the assumption they’ll fly again soon. If finalized, the transaction would be especially satisfying for Boeing, given IAG’s past proclivity for Airbus narrowbodies.

Proclivity for Airbus narrowbodies is hardly uncommon. The airframer’s A321 NEO is a huge hit, scoring triple-digit orders from Wizz Air, India’s IndiGo, VietJet, and Delta. The jet’s single biggest buyer is AirAsia, which upsized 253 of its A320 NEO orders to the larger A321 variant—the airline now has an astounding 353 A321 NEOs in its order backlog. Like many of the plane’s enthusiasts, AirAsia relishes its ability to accommodate almost 250 passengers, a number typically associated with midsized widebodies; the more the merrier in a growing number of Asian cities constrained by airport capacity limitations (Bangkok Don Muang and Manila, to cite two AirAsia bases).

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