Proactive Investors - Airbus Group (EPA:AIR) emerged as a key winner from last week’s Paris Air Show, penning plenty of orders alongside a record for the aviation industry early on.
Some 821 jets were sought from the European supplier during the five-day long event, including 500 narrow-body A320 variants from Indian budget carrier IndiGo.
The Boeing Company (NYSE:BA) agreed to sell 316 jets during the air show meanwhile, with a majority of orders for 737s proving narrow-body jets took precedence over larger aircraft as the short-haul sector booms.
However, the combined orders for 1,137 new aircraft underwhelmed compared to market forecasts, which had expected deals for closer to 2,000 jets.
Third Bridge analyst Louis Knight pointed out that news of new orders could well be “irrelevant” in the short term anyway as both Airbus and Boeing struggle with supply issues.
“Aerospace is now a supply-driven market. The bottlenecks, lead times, sourcing challenges and labour shortages continue to plague the industry,” Knight explained.
“Regardless of order intake, deliveries remain to be in full focus,” he added, anticipating supply woes could persist through to 2025, meaning “a sceptical view ought to be taken”.
Deutsche Bank (ETR:DBKGn) echoed the pessimistic view, commenting: “There is no doubt that demand is here [but] lingering concerns over the state of the supply chain remain.”
Airbus was hit with a ‘hold’ rating from the bank as a result, with the company’s ability to meet a 2023 delivery target of 720 aircraft key for the industry.
Citi Group analysts played down supply issues though, adding that an anticipated future hike in wide-body demand should benefit Boeing which is more exposed to the long-haul market than rival Airbus.
Among part suppliers, BAE Systems (LON:BAES) and engine manufacturer Safran (EPA:SAF) were granted ‘buy’ ratings by Deutsche following the air show, while Citi noted growing concern around engine durability which will need a "quick fix".
FTSE 100-listed engine manufacturer Rolls-Royce Holdings PLC (LON:RR.) could well benefit from future growth in the wide-body market which it is mainly exposed to, though it did use the air show to express readiness for a return to powering smaller jets.
Boeing orders at Paris Air Show:
- 737 freighters - 2
- 737 MAX - 296
- 777X - 10
- 787 - 8
Airbus orders at Paris Air Show:
- A220 - 9
- A320 - 740
- A330neo - 20
- A350 - 52