What felt like another slow August in aviation quickly turned interesting with three developments that could reshape competitive dynamics. Boeing may finally secure the breakthrough it has been waiting for in China, Airbus faces disruption in the UK that may actually work in its favor, and Embraer is quietly positioning itself for a bold next step beyond regional jets.
Boeing is selling 500 aircraft to China – We live in interesting times. Didn’t tariffs mess up trade? Apparently, that has gone by the wayside. Aerospace is outside tariffs (phew) and looks like we are friends again. We have been waiting for a deal
since the last order was in 2017. The reality is China cannot (yet) depend on COMAC. China also cannot push Airbus any harder.
For Chinese airlines to compete effectively, they require access to the best aircraft. The only viable option after exhausting COMAC and Airbus’ production limits is Boeing. The MAX is becoming very compelling as the program seems to have solved its teething issues. You’ll hear more about this from us next week. While China may be buying 787 as well, we bet the majority of the order is for MAXs.
A huge order from China will immediately lead to a phone call from Kelly Ortberg to the FAA asking to hasten the MAX production increase beyond 38/month. That call may have already taken place. The FAA may need to ease its approach because this deal is crucial for the US, not just Boeing.
Airbus workers at Filton go on strike – Bad news, right? Actually, it may be fortuitous. Airbus is struggling to meet its delivery target this year. We did a piece on this just two days ago. The strike is a blessing in disguise. Airbus can now say the company will miss its delivery target because of this strike.
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