Paris Air Show blog 1: Carson’s commanding performance

In his first “state-of-the-nation” address to the assembled press corps at one of the major air shows, Boeing head man Scott Carson gave a remarkably assured performance. Here he is (right) with GECAS chief Henry Hubschman in Paris.

Boeingparisblog.jpg

The affable Carson seemed pleased to be there, relishing the chance to joust with the media about Boeing’s performance on the air transport front much as his predecessor Alan Mulally did. “It’s Monday, it’s Paris, and this is as good as it gets,” proclaimed Carson.
His hour in a steamy auditorium at Paris spanned a wide range of issues, including a debate about the next generation narrowbody replacement, questions on how to tackle the environment issue and the challenge of production rate increases. He also broke with tradition by finished with an order finale.

The order was from Henry Hubschman, the chief executive of mega-lessor GECAS, who announced that he is buying six more 777 freighters. “In a nutshell this aircraft is best-in-class – there is nothing close to it,” said Hubschman.

GECAS now has 39 777s on its books or on order, including 14 freighters. Its latest buy adds a cool $1.4 billion at list prices to Boeing’s current $188 billion backlog.

Where are we in the cycle?
Carson is convinced the industry’s strong performance will continue, although he does not expect the manufacturer to hit the record sales of the past two years. “This is an unbelievable cycle,” he says, which “all tends to talk about an elongated cycle the proportions of which we’ve never seen before”.

Narrowbody news
Boeing is pressing the engine manufacturers to develop technology that will enable it to launch a narrowbody to replace the 737, but Carson says it is “seven or eight years away from when we replace the airplane”. It has been talking to customers for the past 18 months on this issue, but stresses: “We would not want to be first [to the market] with today’s technology.” If Airbus moves first with this level of technology “it’s OK with us”, he added.

“My understanding is not before 2015 and it might even be a bit later,” says Hubschman, of the possible service entry date of a new narrowbody. “It is more important for customers to get the DOC (direct operating cost) improvement than to get the aircraft in their hands a year or two earlier.”

Green stuff
Emissions reduction will be an equally important factor for the new aircraft. Carson says the industry must address environmental issues through IATA and ICAO. “It is up to us to drive those bodies hard to ensure it doesn’t take too much time,” he says, replying to the suggestion that global moves to reduce aviation emissions can move slowly.

Making more aircraft
With its 787 mid-sized widebody set to burst through 600 orders, Carson knows he faces pressure to ramp up the aircraft’s output. However, Boeing remains cautious. “I was CFO in 1998/99 when we were recovering from our last exuberant journey into over commitment,” he says, referring to a time when Boeing stopped its production line in a failed attempt to boost output.

“The worse thing we could do to this industry is dump excess capacity,” says Carson. “We want sustainable real demand before we commit to production increases. If we knee jerk and increase it too quickly it will cost this industry dearly.”

Boeing would have to see durable demand, a supplier base that can support it and a financial community ready to support higher order levels before it makes a move.

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