Gathering the Herd – Farnborough International Airshow 2024

In a week, 80,000 visitors will descend on a military airfield outside London for the Farnborough International Airshow. Founded in 1948, the Farnborough Airshow is held in even-numbered years, alternating with the Paris Airshow in odd-numbered years. Farnborough is a trade show, a huge networking event, an iconic venue for new product announcements and a discreet opportunity to close deals amid the roar of aircraft and the din of countless evening receptions and lavish dinners.

Attracting executives from commercial aerospace and defense companies and their customers, the AirShow brings together U.S. and foreign military delegations, government representatives, state and geographic business development agencies, airlines, aircraft owners, lessors and investor groups. For five days, beginning Monday, July 23, the world’s eyes turn to Farnborough to take the pulse of the industry.

That pulse is strong but erratic. Commercial aircraft orders remain overvalued amid a recovery in air travel from the pandemic. The war in Ukraine and tensions around the world have pushed defense budgets to new heights. Yet the ripples of Boeing’s troubles and supply chain strains continue to reverberate across all sectors of the industry.

On July 1, Boeing agreed to buy Spirit AeroSystems for $4.7 billion in a bid to reintegrate the aircraft structures subsidiary it spun off in 2005. Spirit makes the fuselage for the Boeing 737MAX plane and supplies 70% of its contents. Then, on July 8, Boeing pleaded guilty to criminal charges brought by the U.S. Justice Department that it defrauded the federal government in its actions related to two MAX crashes that killed all 346 passengers and crew aboard the two flights in 2018 and 2019. In its settlement with the DoJ, Boeing agreed to a $487.2 million fine and to invest $455 million over the next three years to improve safety and compliance.

Boeing’s production of the MAX has been severely curtailed by regulatory limits imposed by the FAA over quality issues. That slowdown has rippled throughout the supply chain, affecting hundreds of companies that own systems, components or parts on the planes, causing cash flow problems as inventories pile up. The search for a new CEO to lead Boeing has been underway for months. Until that process is complete, questions about a new plane to replace or complement the MAX will be up in the air.

Airbus is also facing supply chain tensions, but in a less dramatic way. The company has admitted that the difficult situation of many suppliers has affected some operations, leading to significant financial consequences. The fallout from the pandemic on the labour market, where thousands of skilled workers have left the group or retired, is still a persistent problem across the sector.

At the same time, the return to flight of grounded aircraft fleets and the delivery of new aircraft point to a massive wave of maintenance, repair and overhaul work ahead. MRO companies are looking for new or additional facilities and are struggling to recruit and train the skilled workers needed to inspect and overhaul the engines, landing gear and subsystems that keep the fleet flying. While AI is impacting this sector as it is many others, MRO remains a labor-intensive business, with an installed fleet of aircraft that is decades old.

In the defense and space sectors, the same challenges exist. Despite increased demand, the same systemic forces are causing delays and shortages. Programs such as Lockheed’s F-35 have been hit in the United States, as have Airbus programs abroad. The Pentagon’s reliance on fixed-price contracts is leading to significant losses in some areas and forcing contractors to rethink their portfolios of opportunities or not bid on risky programs.

At the same time, technological advances will also be highlighted. Small defense companies like General Atomics and Sierra Nevada have recently won major contracts, often in partnership with Silicon Valley startups like Anduril. Electric-powered vertical takeoff and landing (eVTOL) aircraft will be showcased, as their parent companies approach the transition from prototype to full-scale production — often a valley of death.

Sustainability will also be a central theme, but the recent closure of Universal Hydrogen illustrates the challenge of reducing aviation’s carbon footprint. Despite backing from industry powerhouses such as American Airlines, Airbus Ventures, GE Aerospace, Toyota Ventures and JetBlue Ventures, the startup announced in June that it was shutting down due to its inability to secure additional funding after burning through $100 million in investment. Sustainable aviation fuel (SAF), which uses non-petroleum energy sources such as waste oil, remains a near-term reality, but it also faces formidable infrastructure and feedstock constraints.

The 2022 Farnborough Airshow was the industry’s first major gathering after the pandemic. Temperatures soared to 100 degrees Fahrenheit, making touring the booths and stands of the 1,500 exhibitors spread across the airfield’s tarmac an exhausting, sweaty task. This year, most are hoping to transfer that thermal energy into the industry’s lifeblood to achieve a more stable ecosystem.