PNAA 2019 Highlights

The Pacific Northwest Aerospace Alliance held its annual convention near Seattle earlier this week. There were a number of interesting presentations, with some interesting views and speculations. We’ve summarized some of the highlights below:

Felicia Coney of Collins Aerospace delivered an excellent briefing on their zero defects program and integration of smart factory concepts. As further automation and smart factories become the norm, there are implications for the supply chain

to be on board with Industry 4.0. Message: The supply chain of the future needs to be automated and fit with more rigorous data requirements for quality and on-time performance. Invest in technology upgrades. Analysis: All that is good, but who is going to pay for it? Implications: Lower margins for lower tier suppliers as the top tier suppliers and OEMs flex their muscle and requirements for additional technology.

Richard Aboulafia from the Teal Group projected continued a strong commercial aircraft market, and no slowdown in sight for the 14 year super-cycle without a major downturn that the industry has enjoyed. He titled his talk Two Thoroughbreds and a Herd of Donkeys in describing Airbus and Boeing as the clear industry leaders. He indicated a 60-65% probability that Boeing will build the NMA, and cited a number of potential new aircraft programs from Airbus, including A322 and A350-2000, A320X and A330X models. Message: He believes we are entering a decade of correction for wide-bodies, but that narrow-bodies will continue strong through 2023. Analysis: We share his concerns on the business case for the NMA, and see Airbus in a position to minimize the profitability of the NMA with aggressive A321LR and A330-800 pricing. Insight: While the party isn’t over yet, the first signs of slowing down are appearing and will manifest themselves in the first half of the 2020s. The new technology narrow-bodies may be 5 years after they are needed to re-spark the market.