BACK in November 2013 at the Dubai Air Show, the aviation cycle was clearly in full upwards swing. The four big Gulf carriers alone, Emirates, Etihad, Flydubai and Qatar Airlines, bought planes worth more than $170 billion, at list prices, off Boeing and Airbus in one day. Fast forward two years to the most recent Dubai show, in November 2015, and the picture is, at first sight, more worrying for the world’s two biggest planemakers. There was only one big airline order of note, by Vietjet of Vietnam, for Airbus planes worth $3.6 billion.
Could this signal a downswing in the aviation cycle, and a collapse in demand for planes? That is the question on investors’ minds as Boeing prepares to announce its full-year results on January 27th, with Airbus to follow in February. Although in recent days Boeing and Airbus have revealed record production figures for 2015, new orders net of cancellations fell by almost half at Boeing and a third at Airbus compared with the previous year (see chart).
With bulging order books that ought to keep them busy into the 2020s despite planned production increases, the planemakers are not panicking yet. Indeed, the fall in orders in...Continue reading
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