Monday Insights – November 1, 2021

More On Boeing…

Watching Global Effects At Three US Airports

The global economy, as we’ve pointed out in our Airports:USA forecast program, is a major underpinning of domestic air travel demand throughout the USA, and not just at major international gateway airports.

New On The Watch List: Three airports are now on Airports:USA forecast watch.

Seattle, Wichita and Charleston. Potential volatility.

All three are now being affected by what’s happening across conference tables (and virtual conference tables) in places like Dublin and Beijing.

In the Middle Kingdom – As we covered last week, Boeing is negotiating with the authorities in Beijing for a Get Out of Jail card that will free up delivery of around 180 737 Max orders on file for Chinese airlines. No guarantees, especially since China’s economy is flying like a lead balloon and its air transportation volume reflects it. The last thing that country’s airports need is more airliners. So, they may not be real incentivized to do any favors.

This Boeing backlog is especially challenged as more and more of the globe is recognizing that while China is a big market, it is also controlled by a government that’s falling from international favor due to things like genocide, forced labor, ghastly social services and little things like threatening to invade democratic Taiwan. International factories are starting to move out, and local ones are getting zapped by the CCP’s own Wuhan virus.

Not to mention that the real estate collapse is now threatening huge projects elsewhere in the world. The Chinese people are saddled with some real hoodlum losers running the place. In this context, Boeing is in a tough position.

On the other side of the world, now it comes out that Ryan Air has walked away from negotiations for 100 or more new Max 10 airliners, complaining that the price was increased “double digits” by Boeing.

For the folks watching the global economy home game, these two situations will have an effect on the the USA, as Boeing is a key exporter, and driver of a lot of jobs across the USA.

Three Big Centroids In The Crosshairs. The most obvious is the Seattle area, a key Boeing production region, but which due to civil events over the past year or so, isn’t on the top of any sane company’s expansion program, anyway.

The other two are Wichita and Charleston – the 787 factory at the latter location is reported down to just two airplanes a month. Wichita is the location that supplies the fuselages and other major components for the @180 737s not being delivered yet to China, not to mention the 100 or so Michael O’Leary wants to buy but won’t – at least for the foreseeable future.

Point: as Boeing goes, so does the economy of production supply regions like these three. The open forecast question is how much this situation will affect growth prospects. A lot of the damage has already been absorbed.

The open issue is whether it could go deeper. These three airports are on the Airports:USA watch list.