Sector Spotlight: Boeing predicts airplane supply will catch up with demand

Welcome to the latest edition of “Sector Spotlight,” where The Fly looks at a new industry every week and highlights its happenings.

AEROSPACE AND DEFENSE SECTOR NEWS: Shares of Boeing (BA) were under pressure on Wednesday afternoon after the National Transportation Safety Board issued an urgent safety recommendation to address the possibility of smoke entering the cockpit or cabin of airplanes equipped with CFM International LEAP-1B engines and issued additional recommendations to evaluate the potential for the same issue with LEAP-1A and -1C engines. CFM LEAP engines are used on variants of Airbus (EADSY) A320neo and Boeing 737 Max narrow-body passenger jets. The NTSB found that the engine load reduction device, or LRD, a safety feature designed to reduce the severity of vibrations transmitted from a damaged engine to the airframe, can result in damage to the engine oil system. Such a condition can allow smoke from hot oil to enter the ventilation system and ultimately the cockpit or passenger cabin. The recommendations stem from the NTSB’s investigation into a December 2023 incident in which smoke entered the airplane after a bird was ingested into the left engine of a Southwest (LUV) Airlines Boeing 737-8 shortly after departing New Orleans, Louisiana. The flight deck filled with what the crew described as “acrid white smoke” so thick that the captain had difficulty seeing the instrument panel. The crew donned masks, were able to clear the smoke, and landed the airplane back in New Orleans. None of the crew or passengers were injured. A similar engine damage event occurred in March 2023 on another Southwest flight when vapor fog filled the passenger cabin after birds were ingested into the right engine shortly after departing Havana, Cuba. The flight crew declared an emergency and returned to the departure airport without further incident. Concerned that flight crews operating these airplanes may not be fully aware of the potential hazard of an LRD smoke-related event along with the appropriate mitigation actions, the NTSB issued an urgent safety recommendation to the Federal Aviation Administration asking the agency to ensure that operators inform flight crews of airplanes equipped with the affected engines. Boeing has revised flight manuals for pilots detailing the steps to take to prevent smoke from entering the cockpit or cabin following an LRD activation. In safety recommendations issued to the FAA, the European Union Aviation Safety Agency and the Civil Aviation Administration of China, the NTSB asked the aviation regulators to determine if other variants of the CFM LEAP engine are also susceptible to smoke in the cabin or cockpit when an LRD activates. The NTSB also asked the FAA and EASA to require all operators of the affected engines to incorporate software modifications developed by CFM and Boeing. The CFM International LEAP is a high-bypass turbofan engine produced by CFM International, a 50-50 joint venture between the American GE Aerospace (GE) and the French Safran Aircraft Engines (SAFRY)

BAE Systems (BAESY) announced that it has partnered with the U.S. Army Combat Capabilities Development Command Armaments Center to advance the M109-52 Self-Propelled Howitzer prototype. The cooperative research and development agreement ensures further development to provide options that enhance long range fires, enhance technology and improve artillery systems soldiers are using in operations today, BAE said. 

Investigators believe Air India Flight 171 had an emergency-power generator operating when it crashed, raising questions on whether the plane’s engines were functioning properly at takeoff, Andrew Tangel and Shan Li of The Wall Street Journal reported, citing people familiar with the probe. The preliminary finding gives investigators a new line of inquiry. The system can deploy automatically in flight if both engines fail or if all three hydraulic system pressures are low, the Journal added, citing the airline’s Boeing 787 manual… Press Information Bureau posted that India’s Directorate General of Civil Aviation held a high-level meeting with senior officials of Air India. Stephanie Pope, the head of Boeing Commercial Airlines, Air India Chairman N. Chandrasekaran on Monday in India as the companies look to find the cause of last week’s fatal crash involving a Boeing 787 Dreamliner, Reuters’ Aditi Shah and Aditya Kalra wrote. The talks come just days after a London-bound Air India plane crashed in Ahmedabad seconds after take-off, killing all but one of the 242 people on board.

The U.K.’s CMA has accepted undertakings in lieu of reference for the anticipated acquisition by Safran S.A. of a part of Collins Aerospace’s, a business unit of RTX (RTX), actuation and flight control business. Prior to the acceptance of these undertakings by the CMA, Safran entered into a legally binding agreement to divest its North American electromechanical actuation business.

Lockheed Martin (LMT) and Boeing said they are setting themselves up to secure a major share of President Donald Trump’s Golden Dome missile defense system, which is projected to cost up to $175B and seeks to establish a network of satellites to detect, track, and possibly intercept incoming projectiles, Reuters’ Joe Brock wrote. “We clearly have a whole number of product lines that will contribute very well, that are going to fit very well with what is necessary to achieve the mission,” said Tim Cahill, President of Missiles and Fire Control at Lockheed Martin at the Paris Airshow. At a separate media briefing, Steve Parker, Boeing’s interim CEO for space and defense, said the company had done “a lot of work” on Golden Dome, though declined to provide details, the author notes. Other companies in contention for early contracts include L3Harris (LHX) and RTX.

Honeywell (HON) is open to acquiring more companies in Europe as it looks to increase its portfolio, Kate Duffy of Bloomberg reported. “We’re open across the board where those things fit,” Chief Commercial and Strategy Officer Ben Driggs said in an interview, according to Bloomberg. “There is absolutely growth in defense that we want to take advantage of.” 

Emerging markets, with expanding middle classes, dynamic and competitive airline networks and sustained aviation investment, will play an outsized role in global air traffic growth, helping drive a need for 43,600 commercial airplanes over the next 20 years, Boeing projected. These markets will represent over 50% of the global commercial fleet in 2044, up from nearly 40% in 2024. Ahead of the Paris Air Show, Boeing released its 2025 Commercial Market Outlook, which also predicts airplane supply will catch up with market demand around the end of the decade, enabling carriers to increasingly renew and grow their fleets. Passenger traffic is forecast to grow 4.2% annually – more than doubling in size as it continues to outpace global economic growth. The global fleet will nearly double to more than 49,600 commercial airplanes as airlines add capacity to meet travel demand. About 80% of in-service airplanes will be replaced with more than 21,000 deliveries, improving fleet efficiency and capability.