Interview Synopsis

Boeing – Commercial Aerospace Recovery & Competitive Positioning

  • Credit
  • Industrials
  • North America

The Chinese government’s decision to lift restrictions on Boeing is “great news” for the company, but it still faces strong headwinds, a former VP at the company told Third Bridge Forum.

Environmental factors are a heavy cloud over Boeing and commercial aerospace

The Interview – which began with an overview of the commercial aerospace industry’s recovery from the pandemic – covered Boeing’s short- and long-term goals in China, it’s relationship with the Federal Aviation Agency (FAA) and future fleet changes. 

The specialist said the commercial aerospace industry is recovering from the pandemic at different speeds, with the US rebounding quicker than Europe and Asia. While the specialist said any recovery is tied “directly” into regression from the pandemic, they also said environmental factors could halt recovery, with “no clear approach” to dealing with new regulations yet agreed.

Boeing would, however, be pleased with the recent news from China. The specialist said they couldn’t “understate the importance” of the move to unblock the company, which in the short term would allow it to meet its deliveries in the country. Long term, the decision shows Boeing can navigate any future problems between it and the Cyber Administration of China (CAA), as well as geopolitical issues between the two countries’ governments. 

The specialist said this change, coupled with the Chinese authorities’ ambitions to break Airbus’s monopoly in the country, puts Boeing in a strong position in China. “They want Boeing in the marketplace. I think they realise that just working with Airbus will put them in a bad position, particularly as they’re trying to bring their own aircraft on stream.” 

The specialist was, however, less optimistic about Boeing’s attempts to get its 787 Dreamliner past the FAA. Boeing is used to the European Union Aviation Safety Agency’s (EASA) regulatory environment, not the FAA, and this puts it at a “long-term disadvantage” to competitors like Airbus. The specialist said this disadvantage requires Boeing to put “huge effort” into building its relationship with “all parts” of the FAA, especially if they are to get the 787 licensed.

Fleet changes are also a challenge for Boeing and the rest of the industry, with the specialist warning “a wash out needs to happen” in the short to medium term but that the dynamics to that are not yet clear. One trend the specialist mentioned was commercial aircraft moving from wide bodies to narrow bodies, although the greater demand for freight could see wide bodies retained in some capacity.

Overall, these decisions will be based on environmental factors, the specialist said – factors that are hanging like “a cloud” over the industry.

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The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.

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