Boeing Vs. Airbus: Who Stole The Dubai Air Show 2017?

Dubai Air Show 2017 witnessed some landmark deals involving renowned jet makers from across the globe, showcasing their state-of-the art aircraft both in the defense as well as commercial space. The Air Show ended on Nov 16.

Dubai Air Show 2017 — A Grand Success

Air Shows are often held as trade events wherein aircraft manufacturers unveil their new jets alongside demonstrating upgraded avionics to promote their product lines to global customers. The Dubai Air Show is also no exception. A number of record-breaking deals have been signed at the event, following which value of total orders booked was $114 billion.

This figure is nearly three times the $37.2 billion orders signed in 2015 (according to Gulf News). Trade visitors to the event increased 20% compared to the 2015’s figure. These statistics certify the fact that the air show was a grand success.

Global Aircraft Market

Considering the fact that a lion’s share of deals sealed in the Dubai Air Show came from commercial airlines, it is imperative to mention that the global market for commercial jets have improved considerably. Rapid escalation in passenger and freight traffic has been bolstering the demand for commercial airplanes.

In this line, aerospace giant The Boeing Company (NYSE:BA) released its global market outlook for commercial jets this June, wherein the company raised its 20-year forecast for global jetliner demand by 3.6%. Boeing predicts that there will be a requirement of around 41,030 new planes worth $6.1 trillion between 2017 and 2036, globally.

Moreover, during the Dubai Air Show, Boeing issued its 20-year forecast for jetliner demand in the Middle East. The company expects that demand for jetliners in the region will be around 3,350 new planes, worth $730 billion, between 2017 and 2036.

Overall, the Middle Eastern commercial fleet is expected to be fueled by sustained 5.6% annual growth in commercial passenger traffic. Keeping in account these improving statistics, jet makers across the world will try to make most of the opportunity and clinch deals with global airlines.

The rising geo-political turmoil globally have considerably boosted the defense space. The recently passed fiscal 2018 U.S. Defense Policy Bill worth $700 billion has also been a notable catalyst for U.S. defense contractors to expand their business. Therefore, the growth prospect of global military aircraft market is also immense at the present.

Hence, considering the above discussion it is evident that the global aircraft market, both commercial as well as military, holds strong growth potentials. This in turn act as primary growth drivers for air shows like the latest one in Dubai.

Highlights of the Air Show

The Dubai Air Show 2017 witnessed some of the game-changing deals being signed. Majority of the deals were won by Boeing and Airbus Group (OTC:EADSY) — the two dominating players in the global manufacturing market for commercial aircraft. On the other hand, stocks like General Dynamics Corp. (NYSE:GD) and Orbital ATK, Inc. (NYSE:OA) exhibited their new designs.

Boeing sealed a deal worth $15.1 billion for delivering 40 787-10 Dreamliners to Emirates airline, on the very first day of the show. The company clinched another significant deal worth $27 billion for delivering 225 737 MAX airplanes to flydubai airlines. This marked the largest-ever single-aisle jet order for Boeing, from a Middle East carrier.

Apart from these two orders, Boeing received an order from the Kuwait-based ALAFCO Aviation Lease and Finance Company for supplying 20 additional 737 MAX 8s, valued at $2.2 billion. Additionally, the company secured an order for five more 787-8 Dreamliners and a commitment to purchase two large freighters, valued at $1.9 billion, from Azerbaijan Airlines. Further, the aerospace giant got a new customer, when Egyptair agreed to lease six Boeing 787-9 Dreamliners.

In terms of the defense and space businesses, the company unveiled its key capabilities including the CST-100 Starliner docking and KC-46 re-fueling simulators, apart from announcing services agreements at the event.

The company carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Airbus won the largest commercial jet order in its history when Indigo Partners agreed to buy its 430 aircraft in its A320neo family, for nearly $50 billion. With this order, Indigo Partners doubled its existing order of 427 A320 family aircraft.

Apart from this, Golden Falcon Aviation, the exclusive aircraft provider of Kuwaiti carrier Wataniya airways signed a deal to lease 25 Airbus A320neo Family aircraft for $2.7 billion, while Air Arabia, the Middle East low cost carrier, agreed to lease six Airbus A321neo aircraft. AerCap and Egypt Air negotiated a deal with Airbus during the Dubai Air Show to lease 15 Airbus A320neo.

On the other hand, the UAE Ministry of Defense announced a US$250-million purchase deal for five Airbus CN295 tactical airlifter aircraft.

General Dynamics exhibited three of its business jets at the Dubai Air Show, the flagship Gulfstream G650ER, the award-winning Gulfstream G550 and the class-leading Gulfstream G280. These exhibitions are expected to induce interest in customers, creating an opportunity for future agreements. The company carries a Zacks Rank #3 (Hold).

Orbital ATK earlier announced plans to highlight a variety of products, including the Palletized Weapon System (PaWS) and advanced capabilities for customers in the Middle East, Africa and Asia at the program. PaWS combines Orbital ATK’s combat proven GAU-23 30mm cannon and mission system operators console. The gun system incorporates a modified variant of Orbital ATK’s Mk44 Bushmaster Automatic Cannon and is designed to fire numerous types of NATO 30MM X 173 rounds, including the 30MM PGU-46/B munitions.

Additional products to be featured include Orbital ATK’s Eliminator, the latest version of the highly-successful AC-208B Armed Caravan aircraft. The Eliminator is able to locate, fix, identify, track, target, and engage emerging and time-sensitive targets with two Hellfire missiles per wing or 2.75-inch guided rockets, based on mission requirements.

Orbital ATK currently carries a Zacks Rank #3 (Hold).

Bottom Line

Some milestone deals, both in scope and size, were signed at the Dubai Air Show, reflecting the expanding global market for aircraft. Nevertheless it’s difficult to gauge which company gained more at the event in terms of deals, since the real impact will be ascertained after a timely delivery of the jets.

We expect to witness similar deal wins at the Farnborough Air Show, scheduled to take place in July 2018.

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