Randy's Journal: Reality Check
(Source: Boeing Co.; posted June 29, 2005)
(This commentary was posted on “Randy’s Journal,” a weblog maintained by Randy Baseler, vice president of marketing for Boeing Commercial Airplanes)

As I look through the surprising number of order announcements at the Paris Air Show, my mind quickly runs back to air shows of the past when there were similar feeding frenzies.

Farnborough Air Show 2000, for example. Back then, Boeing and Airbus announced a combined total of 369 airplane orders at the show. Of those, only 39 were actually firm orders!

To put it in context, Boeing that year announced 139 orders at the air show and ended the year with 589 orders. Airbus "won" in orders at the air show, with 230 orders, but "lost" the year with a total of 492 orders.

What this story should tell you is that air show "news" painted a distorted picture in 2000. And it's no different five years later.

If you're going to measure with orders, full-year performance is what matters. An air show is just one week out of 52. And that's why several years ago Boeing got out of the business of saving up orders for big blockbuster announcements at air shows. Could we have asked customers to hold off on all the announcements we made from January of this year up until the air show? Sure. But what's the sense of that?

After Farnborough 2000, our policy has been to only announce orders that customers ask us to announce. We prefer them to lead the announcement and determine the timing.

So here's the story for 2005. Going into the Paris Air Show Boeing had 279 firm orders. We also had about an additional 200 announced customer commitments, where airlines have announced their intention to purchase our airplanes, but have yet to sign a firm contract. If you're counting, that totaled us at approximately 480 orders and commitments going into the show.

Then, during the week of the show we added 146 orders and commitments, some of which were customer announcements not made at the air show. Of these 146 orders, 88 were announced with firm contracts already in place. That's about 60% firm orders during show week.

We stuck to what we said we would do. Drawing a clear line between firm orders and customer announced commitments. And letting customers decide the timing of their announcements. (We even encouraged several of them not to announce their plans during the air show where they might get lost in the show news frenzy!)

Airbus announced something like 280 "orders" at the show. At this point, it's unclear how many of the Airbus orders were firm orders versus intents to buy. Clearly, with the yet-to-be-launched A350, more work needs to be done before the orders are firmed.

One report from Reuters at the end of air show week noted, "Airbus announced deals for 280 planes worth more than $33 billion at list prices, yet only orders for 10 planes appeared to be firm, with the rest to be finalized in coming weeks, months or years."

If that's accurate, it would amount to fewer than 4% firm orders.

All of this is why we don't believe that air shows are something that can be "won" or "lost." Especially with order announcements as the measuring stick.

So we will continue to steer away from the air show over-hype, and stick to our plan for how and when orders are announced and booked.

Speaking of which, you can keep track of Boeing's firm orders on our Orders and Deliveries Website. It's updated every Thursday.

Now it's off to the remaining 26 weeks of the year!


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