The Dubai Airshow takes off next week, marking a five-day showcase of the latest innovations and developments for the aerospace industry. It's a major event among companies competing for lucrative contracts from airlines, militaries and governments.
Investors will watch to see whether Boeing or Airbus will book the most deals. The two jet makers are struggling to hit delivery targets as they mend their relationship with supplier Spirit AeroSystems.
The biennial Dubai Airshow runs Monday through Friday and will feature more than 1,400 exhibitors with over 180 aircraft flying and on display. This year's lineup includes the latest commercial, corporate and military aircraft and technology, as well as helicopters and electric vertical takeoff and landing aircraft (eVTOLs).
The exhibitor list at the airshow ranges from industry heavyweights like Bombardier, L3Harris, Emirates Airline and Etihad Airways, to emerging players such as Archer Aviation, Bellwether Industries and Riyadh Air, the Saudi Arabia Public Investment Fund startup.
Defense Presence At The Dubai Airshow
A host of defense contractors plan to attend the event, which takes on added significance as tensions rise in the Middle East following the Oct. 7 Hamas attack on Israel. Lockheed Martin, GE Aerospace, RTX and its business segments will all have a presence at the airshow.
"Our partnership with the Middle East has endured for over five decades, and it is one of our most important international markets," said Bob Harward, Middle East chief executive for Lockheed Martin, in an interview with the Dubai Airshow ahead of the event. He noted that 30% of Lockheed's overall business is international, with the Middle East representing "an important and growing portion of that market."
"Today's challenging and dynamic geopolitical environment and the added budgetary pressures nations are facing are shaping the regional defense sector in unique ways," Harward said. "I see tremendous opportunity to grow regional security partnerships built on trust and collaboration while helping catalyze the local economic growth and domestic capabilities of the UAE and greater region."
Harward expects next-generation advanced materials, autonomous systems, human-machine collaboration, and cyber-hardened platforms and mission systems will be the most meaningful aerospace and defense technology over the next five years.
Air Mobility, Autonomous Vehicles And Drones
The advanced aerial mobility (AAM) market will be a key focus this year. The Dubai Airshow will launch a new pavilion dedicated to AAM and drones, which will feature exhibitions for eVTOLs and a dedicated AAM conference across two days.
Among the various AAM exhibitors, Archer Aviation will debut its Midnight electric Air Taxi at the event. And Archer CEO Adam Goldstein is set to deliver a keynote speech unveiling the company's plans to bring electric air taxis to the UAE in 2026.
Embraer spinoff Eve Air Mobility will also be in attendance. The eVTOL and air-Taxi maker signed an agreement in June to launch operations in San Francisco in 2026. Eve received a $15 million investment from United Airlines in 2022 with a conditional purchase agreement for 200 eVTOLs, plus an option for 200 additional aircraft.
U.K.-based Bellwether Industries will also debut its Oryx aircraft, the third generation of its eVTOL, at the airshow, the company announced in October 2022. Bellwether is developing a private, propulsion-powered eVTOL, unlike many of its competitors' propeller-powered aircraft.
The Dubai Airshow also partnered with the UAE Space Agency to expand the Space Experience Zone exhibit pavilion and events.
Boeing, Airbus Exhibits At The Dubai Airshow
Boeing plans to showcase its 777-9 aircraft during the show's flying display and demonstrate the capabilities of its F-15QA (Qatar Advanced) fighter. It will mark the first performance of the Qatar Emiri Air Force F-15 at an airshow.
Boeing's 777, 787 Dreamliner and 737 MAX will be on display, as well as the CH-47F Chinook, AH-64E Apache, P-8A Poseidon and a training simulator for its T-7A Red Hawk.
The Dow Jones giant is also a strategic sponsor of the Dubai Airshow's Aerospace 2050 conference as industry works toward its goal of achieving net-zero emissions by 2050.
Rival Airbus will display its A321-211 P2F, A321neo, Airbus A330, A400M Atlas and its H225 helicopter at the airshow. Other topics of focus include its ZEROe hydrogen-powered commercial aircraft, its CityAirbus NextGen four-seat eVTOL, as well as other innovations and low-carbon developments.
Boeing Delivery Delays
The Dubai Airshow will be a major opportunity for Boeing and Airbus to rack up orders at a time when the jet manufacturers are falling behind on deliveries.
Both companies have been hammered by complications throughout the year, particularly regarding supplier Spirit AeroSystems. Spirit workers went on strike earlier this year before reaching a new compensation deal in June. Meanwhile, quality defects with Spirit's fuselage systems have curbed Boeing's 737 production, which already suffered from supply chain issues during the pandemic. Some of the issues included misdrilled holes in the aft fuselage bulkhead of the 737, Boeing's bestselling jet.
Boeing lowered its 737 delivery target on Oct. 25 to range from 375 to 400 jets this year, from its previous guidance of 400 to 450 aircraft.
Spirit Shake-Up
Spirit AeroSystems suffered $315.8 million in forward loss charges on its Boeing and Airbus programs over the past three quarters due to higher changes in estimates, inflation pressures, supply constraints and higher labor costs, according to its earnings reports. The company reported a net loss of $691.6 million over the first nine months of 2023.
Spirit tapped 30-year Boeing veteran Pat Shanahan to serve as interim CEO on Oct. 2 as it announced that Tom Gentile resigned.
"My principal goal is to be cash flow positive as soon as possible," Shanahan said during Spirit's November earnings call. "Executing on programs, increasing deliveries is the most crucial lever to achieve that goal."
Boeing and Spirit reached a memorandum of agreement on Oct. 18 which Spirit says will "enable greater collaboration to achieve improved quality and higher deliveries in the future." Under the deal, Boeing will pay higher rates and provide Spirit with a $100 million cash infusion to accelerate 737 and 787 production.
Spirit plans to deliver 345 to 360 fuselages for the 737 MAX this year, down from the lowered August guidance of 370 to 390 units, it announced Nov. 1. The company initially guided 390 to 420 deliveries for 2023.
Airbus Complications
Spirit AeroSystems is also in similar negotiations with Airbus, which the company hopes will improve its margins. Shanahan noted a deal could be reached as early as February during the Nov. 1 earnings call.
Meanwhile, Airbus is facing challenges with its A320 aircraft program due to Pratt & Whitney engine defects. RTX noted it made "significant progress" on the powdered metal complication in its October earnings beat.
Airbus maintained its 2023 delivery target of 720 aircraft in its Nov. 8 earnings and plans to ramp up production in 2024. CEO Guillaume Faury noted RTX's Pratt & Whitney segment reconfirmed its commitments to the company "several times."
Still, Air Lease Chairman Steven Udvar-Hazy doubts Boeing and Airbus will hit their 2023 delivery goals, according to statements in the company's Q4 earnings call. "Our feeling at the moment is that neither of the two big players will reach the target deliveries that they forecast," he said.
Stock Action
Supply chain woes and decelerating revenue growth have dragged Boeing stock down nearly 20.5% from its August highs. Boeing rallied nearly 8.6% for the week ended Nov. 3, ending an 11-week slide, after reporting mixed Q3 results from October. BA stock is up 1.4% this year.
Spirit AeroSystems stock dove 6% on Wednesday after the company announced a $200 million public stock sale and plans to issue $200 million in convertible debt set to mature in 2028. SPR Shares vaulted 40% in October after the executive appointment and positive contract negotiations. Still, the stock has tumbled roughly 20% in 2023.
Airbus, which trades in American depositary receipts (ADRs) under the ticker EADSY, rallied more than 14% this year and is approaching its 2023 highs from late July.
RTX stock rallied roughly 13% since its earnings report to surge above its 50-day moving average. Still, shares unraveled 18% this year after disclosing the engine defect in July.
Delivery Deals
Riyadh Air is looking to order 300 to 400 single-aisle jets ahead of its 2025 launch, according to May reports from Bloomberg. Riyadh Air is expected to order 150 Boeing 737 MAX jets and Airbus could claim another significant portion of the order.
Meanwhile, UAE airline Emirates is finalizing negotiations with Boeing and Airbus on substantial widebody jet orders, Aviation Week reported Nov. 1. Emirates is deciding between taking more Airbus A350s, Boeing 787s or 777-9s, but the "ability to deliver on a firm schedule" will be a deciding factor, COO Adel Al Redha told the outlet.
The airline has an outstanding order for 150 aircraft from Boeing and 50 A350-900 jets from Airbus. Boeing's first 777-9 delivery was scheduled to arrive in 2021 but is now delayed until 2025. Emirates expects the A350s to arrive in August 2024. Its current fleet includes 87 Airbus A380s and 134 Boeing 777-300ERs. Emirates expects to have up to 92 A380s flying by the end of the year following repairs.
The 2021 Dubai Airshow generated $74 billion in orders according to industry outlet Simple Flying. Airbus secured 408 orders at the previous event while Boeing trailed with 101.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
