Gathering of the Flock

A week from now, 80,000 visitors will descend on a military airfield outside London to attend the Farnborough International Air Show. Beginning in 1948, Farnborough is held in even-numbered years, alternating with the Paris Air Show in odd-numbered years. Farnborough is at once a trade show, a giant networking event, a signing venue for new product announcements and a discreet opportunity to make deals amid the buzz of planes overhead and the din of countless lavish evening receptions and dinners.

Attracting senior leadership from commercial aerospace and defense companies and their customers, the AirShow brings together US and foreign military delegations, government representatives, state and geographic business development agencies, airlines, aircraft owners, lessors and groups of investors. For five days, starting on Monday 23 July, the eyes of the world turn to Farnborough to take the pulse of the industry.

That pulse is strong but irregular. Remaining commercial jets remain oversold going forward amid a post-pandemic rebound in air travel. The war in Ukraine and tensions around the globe have pushed defense budgets to new levels. Still, the ripple effects from Boeing’s struggles and strained supply chains continue to ripple through industry levels.

On July 1 Boeing agreed to buy Spirit AeroSystems for $4.7 billion in an effort to reintegrate the aircraft structures subsidiary that was spun off in 2005. Spirit makes the fuselage of the Boeing 737MAX and provides 70% of its contents. Then, on July 8, Boeing pleaded guilty to criminal charges brought by the U.S. Department of Justice for misleading the federal government in its actions related to the two MAX crashes, killing all 346 passengers and crew on board. the two flights in 2018 and 2019. In its settlement with the DoJ, Boeing agreed to a $487.2 million fine and to invest $455 million over the next three years to improve safety and compliance.

Boeing’s production of the MAX has been significantly limited due to regulatory restrictions imposed by the FAA on quality issues. The slowdown has rippled through the supply chain, affecting hundreds of companies with systems, components or parts on airplanes, causing cash flow problems as inventory grows. The search for a new CEO to lead Boeing has been underway for months. Until that process is complete, questions about a new aircraft to replace or complement the MAX will remain pending.

Airbus, similarly, is facing supply chain strains, but less dramatically. It has acknowledged that the multi-supplier obligation has affected some operations causing significant financial impact. The labor effects of the pandemic, where thousands of skilled workers left or retired, are still an ongoing problem across the industry.

Meanwhile, the return to the air of the fleet of aircraft that were grounded and the new aircraft that will be delivered, predicts a large wave of maintenance, repair and overhaul in the future. Specialist MRO companies are looking for new or additional facilities and struggling to recruit and train the skilled workers needed to inspect and repair the engines, landing gear and subsystems that keep the fleet airworthy. Although AI is impacting this industry like many others, MRO remains a very labor-intensive operation, with an installed fleet of aircraft that are decades old.

In the defense and space sector, similar challenges exist. Despite increased demand, the same systemic forces are causing delays and shortages. Programs such as Lockheed’s F-35 have been impacted in the US, as well as Airbus programs overseas. The Pentagon’s use of fixed-price contracting is causing huge losses in some areas and forcing contractors to rethink their portfolio of opportunities or not bid on risky programs.

Meanwhile, breakthroughs in new technology will also appear. Smaller defense companies like General Atomics and Sierra Nevada have recently won notable contracts often paired with Silicon Valley-type startups like Anduril. Electric vertical take-off and landing (eVTOL) aircraft will emerge as their parent companies approach the transition from prototype to full-scale production – often a valley of death.

Sustainability will also be a central theme, however, the recent closure of Universal Hydrogen illustrates the challenge of reducing aviation’s carbon footprint. Despite backing from industry entities such as American Airlines, Airbus Ventures, GE Aerospace, Toyota Ventures and JetBlue Ventures, the startup announced in June that it was closing its doors due to an inability to secure additional funding after burning through $100 million in investments. . Sustainable Aviation Fuel (SAF), which uses non-petroleum energy sources such as

The 2022 Farnborough AirShow was the first major industry gathering after the pandemic. Temperatures soared to 100 degrees Fahrenheit, making visiting the homes and booths of the 1,500 exhibitors spread across the airport runway a grueling and sweaty endeavor. This year, most will be hoping for a transfer of that thermal energy into the lifeblood of industry to achieve a more sustainable ecosystem.