Michel Merluzeau

The current situation in the People’s Republic has further emphasized the complexities associated with the global aerospace supply chain and the exposure of global airlines to an event of this magnitude in the world’s fastest growing market.

Our media colleagues have been discussing the current Coronavirus-19 situation on their website. We are using some of their material to provide additional perspective on the Chinese supply chain, the PLAAF contribution and the possible implications for aerospace supply chain.

The past weeks have been a source of significant concern about the Boeing company. While we have been surprised, to a degree, at the delays towards a resolution of the MAX crisis, it is the noise surrounding the crisis that has increasingly become the key restraints to a satisfactory exit.

Grandstanding, inept media coverage, and political hijacking of this crisis have deteriorated to such an extend that we are at times unable to provide a clear path to resolution of this situation as so many known unknowns might still eventually come to pollute the situation in the first half

This is how 2019 will be remembered by the team at AIR. Our research notes recurring themes for 2019 centered around themes such as crisis (MAX), disruption (supply and production), evolution (China) and uncertainties (Trade).  In this note, we will focus on the first two themes.  Needless to say, these themes are not wholly positive and they may even take a more negative turn in 2020. The coming new year will be a year of correction for some, disruption for the supply chain, growth for others and continuing crisis at Boeing.

Chicago, February 2029

In its annual call with investors to discuss 2028 results, Boeing CEO Travis Sullivan (or Marc Allen, or replace with your personal favorite) highlighted significant enterprise level accomplishments and decisions for the year.

Full production rate achieved for the Boeing 797 (formerly known as NMA) with production output of 12/month reached in the last quarter of the year. The aircraft backlog now stands at 1,108. Deliveries of 124 aircraft were delivered in 2028 out of the Huntsville FAL
Successful initiation of production for the Boeing 708 (FSA). A total of 36 aircraft were delivered out of the Charleston facility with the second FAL in Sao Jose Dos Campos slated to become operational in 2030.

The attached presentation will provide an overview of our revised 2019-2030 business aviation outlook. This material was presented during NBAA last week.

This presentation is only accessible by our Notes and Forecast customers.

Let’s go into reactive mode here. This has indeed been much of the story for 2019 when it comes to the Boeing company. With the 737MAX not anywhere near a return to flight by Q4, the ramification of the crisis is affecting the entire enterprise product strategy forward.

It perhaps is necessary to recap how we view a prolonging (we suggested this would carry on well into 2020 back in early June) of the grounding at this stage:

NMA – No change of course aside from the delays associated with the engine development. The NMA is well underway internally and there are no signs that…