As President of Boeing International since 2015, Allen is responsible for the company’s international strategy and corporate operations outside the US, overseeing 18 regional offices in key global markets. His responsibilities include developing the company’s growth and productivity initiatives outside the US, forming new business and industrial partnerships, overseeing international affairs, enhancing Boeing’s local presence and providing global functional support. Previously, Allen served as President of Boeing Capital Corporation, a wholly owned Boeing subsidiary that arranges, structures and provides financing for Boeing’s commercial airplane, space and defence products. Prior to Boeing Capital, Allen served as VP of Boeing International and President of Boeing China, responsible for leading the company’s business in China from its Beijing headquarters.
On a nice and bright sunny day at the Farnborough Airshow 2018, Vayu Aerospace and Defence Review had the privilege to meet and interact with the (very) tall and affable Bertrand-Marc Allen, President, Boeing International! We touched on and discussed a wide variety of topics of which the synopsis is below.
On Boeing’s success at Farnborough
We have strengthened our position as the global leader of the aerospace industry, booking historic orders and showcasing our innovation and strategy for growth here at the Farnborough International Airshow. We led the way, demonstrating value for our customers, capturing important new business in products and services, and announcing the unique strength of our strategic partnership with Embraer. Boeing marked an outstanding week for order capture in commercial aviation, with customers announcing 673 orders and commitments in total, reflecting a continued resurgence in demand for freighters and strong order activity for the 737 MAX and 787 passenger airplanes. We secured 48 orders and commitments for the 777F, five for the 747-8F, reflecting continued strengthening in the cargo market globally. We announced a total of $98.4 billion in orders and commitments for commercial airplanes at list prices and $2.1 billion in commercial and defence services orders and agreements. Boeing and Vistara confirmed an agreement for up to ten 787 Dreamliners at Farnborough 2018
On Boeing’s Commercial Market Outlook
We revealed our 2018 Commercial Market Outlook, raising the 20-year outlook for commercial airplanes and services to $15.1 trillion. The global market is forecast at almost 43,000 new airplanes, valued at $6.3 trillion, and demand for $8.8 trillion worth of commercial services through 2038. The strength of the cargo market was underscored by more than 50 freighter orders and commitments at the show. According to fleet data, there are more than 900 airplanes today that are over 25 years old. By the mid 2020's, more than 500 airplanes a year will reach 25 years of age – double the current rate – adding to the retirement wave. 44 percent of the new airplanes will be needed to cover replacement alone, while the rest will support future growth. Boeing and Jet Airways announced orders for an additional 75 737 MAX’s at Farnborough’18
Boeing on commercial Aviation
We have around 5,800 commercial airplanes in backlog, globally distributed. In past decades, it was concentrated in the US and Europe, in hub-and-spoke traffic subject to regional economics. Today, it’s a point-to-point connected world-—more than 180 new 787 city pairs have emerged just since we launched the Dreamliner. Also, we’ve been taking actions in our business: discipline on our production rates and a much more tailored R&D profile. Aerospace is perhaps the strongest industrial sector around the world right now. The combination of market strength and innovation is creating wonders. We have a very strong lineup that is positioned for a marketplace worth $7.6 trillion over the next 10 years. Commercial passenger traffic continues to grow at 6-7% a year, defence budget strength is returning to the US and our allies, and there is strength in the services business. We are going to produce over 800 commercial airplanes for the first time this year and go beyond 900 in the relatively near term.
Boeing on the proposed NMA (new midmarket airplane)
We see a market for 4,000-5,000 aircraft and are looking at various options and continuing to talk with dozens of customers. We see an opportunity that can’t be served with derivatives of today’s product lines: 220-270 seats and a range of around 5,000 nm. It is a market that needs the efficiency and comfort of a widebody airplane and the economics of a narrowbody. That’s what is fundamentally different, and that’s the business case we’re trying to close. We are doing what we can to protect a 2025 entry-into-service date. But we’re not going to be rushed to a decision. This is something we will get to during the next one-year time frame, which will be about right to support 2025.
Boeing on the tariff threats
We’ve always stood on the platform that free and fair trade is good and that we all need to play by the same rules. I think it is an important part of what you see happening right now. Global aerospace thrives on a healthy economy and trade. At the same time, with competitors emerging around the world, we want to make sure everybody plays by the same rules. The Trump]administration has been very good about including business in the conversations. We have a seat at the table. We play very heavily into the $80 billion US aerospace trade surplus. While 80% of our commercial airplane backlog is destined for customers outside the US, 80% of our supply chain jobs and 90% of Boeing’s manufacturing jobs are in the US. All of those factors are being considered, and we’re still very hopeful that balanced solutions will be found.
Dealing with the realities of trade disputes and tariffs and other concerns around the world, our job is to maintain a long-term perspective. We have to be able to see our way through these local challenges and issues. We win when we have that long-term perspective. We’re going to be a voice at the table to try to resolve these issues, but we’re always going to maintain our long-term view of the marketplace. We are concerned about the impact of possible trade tariffs on the cost of running its supply chain, but has not yet seen any impact from US-Chinese trade tensions on its business. The discussion right now is proposed tariffs, ongoing discussions. So in terms of actual implementation and things that are impacting us, we haven't seen a material impact yet. We are concerned that it could affect supply chain costs. But note that supply chains are flowing in both directions between (these) countries as we both support existing fleets as well as build new airplanes.
Boeing on its 80% Embraer stake
This is a truly strategic partnership that positions us and generates significant value for customers who are pursuing a range of fleet solutions. It’s a natural evolution of our longstanding history of working together. Our two commercial families fit nicely without overlap. We also have complementary service profiles and distribution capabilities around the world. Embraer has some interesting vertical capabilities that overlap with our strategic objectives, such as interiors and landing gear. Boeing and the joint venture would benefit from complementary cultures and engineering workforces, broader resources and scale and accelerated growth across global markets.
On India
Boeing is well placed in the race to supply the Indian Air Force with 110 fighter jets and are also finalists in a separate competition to supply the Indian Navy with 57 fighter jets. We have gotten to know Indian industry, understand the Indian process. The tender for 110 combat aircraft mandates building at least 85 percent of the order locally. The deal is likely to be at least $15 billion. Whichever naval fighter India picks, industrial offsets and technology transfer will be a major factor in the decision. Assembling the aircraft in India seems to be a key component of any deal and we are willing to set up an assembly line in the country under a "make in India" initiative. We already have many parts being built in India and have over 160 suppliers there.
The same factory built for Super Hornet production could be used to build India's next generation indigenous fighter aircraft in the future. By building the Super Hornet in India, the country will then have the aerospace ecosystem that will allow them to build a next generation fighter themselves.
When it comes to what the Super Hornet can bring to the Indian Navy, we think the Super Hornet is a next-gen aircraft. We continue to build them for the US Navy. We are going to bring the Block III Super Hornet online, a next gen fighter that is both networked and survivable. It has a high level of stealth and a great EW suite, it has an AESA radar that has been integrated and flying for years. We're bringing out an infrared search and track sensor—a great package of sensors and equipment that make it a very lethal next generation fighter. It will be operating as a front-line aircraft well into 2040. We think the aircraft speaks for itself from capabilities standpoint and that's a huge advantage as you build a large fleet.
In April 2018, we announced a three-way partnership with Hindustan Aeronautics Ltd. and Mahindra Defence Systems Ltd. to manufacture the F/A-18 Super Hornets in India at a new facility, which can also be used for other requirements. Boeing and Tata Group companies have several partnerships for manufacturing equipment for both commercial and military aircraft in India. We have a Tata Boeing Aerospace (TBAL) joint venture for producing fuselages for the AH 64 Apache attack helicopters for global orders. Tata Advanced Materials delivers composite panels and other equipment for the P-8I long-range maritime surveillance and anti-submarine warfare aircraft, while TAL Manufacturing Solutions makes floor beams for Boeing 787-9, besides ground support equipment for C-17 Globemaster III strategic airlifter.
In early June, Tata Boeing Aerospace Limited delivered the first AH-64 Apache combat helicopter fuselage ahead of schedule from its state-of-the-art facility in Hyderabad. The fuselage was then transported to Boeing’s AH-64 Apache manufacturing facility in Mesa, Arizona for integration into the final assembly line. This delivery comes within a year of the aerospace joint venture facility becoming operational. The facility, which is spread over 14,000-square meters and employs 350 highly skilled workers at full production, was inaugurated by Nirmala Sitharaman, Minister of Defence, Government of India, in March this year. The facility will be the sole global producer of fuselages for AH-64 Apache helicopter delivered by Boeing to its global customers including the US Army. The facility will also produce secondary structures and vertical spar boxes for the multi-role combat helicopter.