A few days before the opening of the 2023 Paris Airshow, Stuart Hatcher, chief economist at IBA, has tried his hand at the very difficult exercise of estimating the number of orders that could come in at the show.

Saudi Arabia and Turkey announce the color

"In February, many of us were surprised by the size of the Air India order covering just about everything the OEMs had to offer (including the Boeing 777X). Now, we knew that Air India had to renew its fleet, but to go from a fleet of just over 100 to an order for 470 plus 70 options is a real leap for a mature "full service" carrier that had maintained a stable in-service fleet. (with Indian Airlines) for such a long time. Following this in March, we had the announcement from Saudi Arabia for 78 Boeing 787s (plus 43 options) to be split between Saudia and the new start-up Riyadh Air. Finally, last month Ryanair placed its memorandum of understanding for 150 Boeing 737 MAX 10s (plus 150 options), which is due to be approved at its annual general meeting in September. In total, that's 961 potential orders of which Boeing will take the majority, itself covering more than a full year's production," explains Stuart Hatcher.

"In terms of announcements in Paris, then, we'd expect there to be something to cover the Air India and Saudia orders, which would make the tally pretty good based on historical levels. But then there are the countless announcements and rumors circulating in the background. These paint a picture of a much broader commitment to growth and, if fully concluded, will highlight the need for infrastructure investment that doesn't yet exist today. The first of the big news was the announcement by Turkish Airlines (THY) that it will order up to 600 aircraft (including options) covering 400 single-aisle and 200 wide-body aircraft split between Airbus and Boeing. THY has not shied away from expressing its growth aspirations to restore Turkey's position as a gateway to Europe. However, being so close to the Middle East hub (at a time when large orders are already emerging there from new entrants) will undoubtedly trigger a counter-reaction from the big three," continues Stuart Hatcher. "Already, Sir Tim Clark has indicated that Emirates will continue to place orders for twin-aisle aircraft from the pool of available options, as the A380 retirement process will not begin until 2032. While an Emirates order is possible in Paris, I'm of the opinion that it's still a little early, and more likely to happen at the Dubai Air Show later this year. For Qatar, they already have 197 remaining order books covering just about every option, so maybe another big order to look forward to later in the year." 

India, out in force? 

Beyond Air India, a big order could also come from IndiGo. "No sooner had we caught our breath on the THY order, than IndiGo indicated that they planned to place an order for 500 aircraft to capture growth both in India and further afield, and this is in addition to the 488 they still have in the pipeline ! I don't doubt India's capacity for growth, but how on earth will the infrastructure catch up ? One thing to consider with IndiGo's business model is that they generally only keep aircraft in their fleet for six years before returning them to the lessor, so ultimately the total fleet number will not be incremental in the same way as the vast majority of other operators around the world. This does, however, highlight the expectation that lessors will be preoccupied for years to come with negotiating leasebacks and lease rotations for these aircraft. To add icing to the cake, Akasa's CEO tweeted in March that they would also be placing a triple-digit order!" 

"Returning to Europe, apart from Ryanair and THY, a number of other rumors have been circulating recently about potential activity that could lead to orders in Paris this year. Just when we thought Turkey was going to be busy, Pegasus hinted at a further expansion of aircraft deliveries beyond 2027 with another order for single-aisle Airbus. Further north, LOT Polish may succeed in replacing some regional jets, and airBaltic is said to be expanding its A220 fleet beyond the recent fiscal year and the placement of more options. As for the major groups, while additional orders are commonplace, the level of order activity from other operators in the region is likely to trigger some kind of response to protect market share. AirFrance/KLM could potentially announce a number of orders to cover replacement and growth for themselves and other members of the group. There is still a large LOI (letter of intent) of 100 aircraft to be confirmed on the A320neo for Air France, while KLM needs to tackle its ageing twin-aisle fleet replacement strategy. Likewise, the Lufthansa Group and IAG still have a few loose ends to tie up. Aging fleet populations within their group structure and exceptional letters of intent that could be confirmed covering regional, single-aisle and twin-aisle operations. Although they may or may not be part of groups, I'm also expecting a few orders from smaller low-cost carriers  who are maintaining an aging fleet and/or expanding at a steady pace - such as Transavia, Eurowings, Volotea, Smartwings, etc. Finally, in the far northwest, Icelandair is expected to confirm its XLR order."

Americas: Delta, Air Canada and Aerolineas in action

"For the Americas, I see less activity in volume occurring in Paris compared with that from other regions. Delta could potentially step in with a twin-aisle order for 50 A330/A350s as they continue to develop their relationship with Airbus. Likewise, I could easily see Hawaiian placing a small complementary order as well. North of the border, rumor has it that Air Canada is confirming an order for 20 Boeing 787s to add to its backlog, while in Latin America, rumors are circulating that Aerolineas Argentinas may also be ready to place an A330-900/Boeing 737 MAX order."  

Asia-Pacific: An area on hold? 

"As far as the Asia-Pacific region is concerned, it's not surprising that orders have been light in recent years given the effect of the Covid pandemic on its intra-regional and long-haul traffic. Even today, capacity on traditionally heavyweight routes still has some way to go before returning to 2019 levels. However, orders placed in 2023 should contribute not to recovery today, but to future growth aspirations, so it should come as no surprise to hear that I expect some activity to come from the Pacific and Southeast Asia regions. Starting from the northernmost point, ANA and JAL would extend their domestic and intra-regional capacity to A321neos and other Boeing 787s. However, I think Paris may be too early for such a call. Similarly, it may still be too early to call for Chinese expansion, given the political climate, but I wouldn't be surprised to see further orders coming in. Next come Malaysia and Thailand, two operators that have undergone major restructuring in recent years, with the former already committed to fleet replacement, while Thailand has been in major fleet reduction mode since 2020. I expect Malaysia to be looking to confirm an A330 order, while the Thais would be looking to buy 30 new twin-aisles to replace the ones they've abandoned. Although I haven't heard any specific rumors, Air New Zealand has grown considerably over the last five years and will want to maintain this growth with a top-up."

Classified cargo orders? 

"Although not covered geographically, factory freighter orders will probably make a dent in the final tally. I expect several single-digit orders for 777-8F and A350F during the week. Perhaps less for the conversion market, as it is shorter-term and faces low revenue forecasts," says Stuart Hatcher. 

Leasing companies, always in ambush

"The Paris Airshow wouldn't be the Paris Airshow without the usual order from ALC, perhaps to cover some of the twin-aisle orders already mentioned above, or perhaps with an order for the Boeing 737 MAX 10. There hasn't yet been a direct order on this model so far from the leasing community, and it wouldn't be the first time ALC has started the ball rolling. Likewise, we could see action from other giants such as AerCap, SMBC or Avolon, but given the potential for such large orders from operators, there will be no shortage of sale-leaseback activity. Overall, relative to operators, I don't think orders from lessors will be significant given how high inflation and interest rates are, and it may be a few years before we see the same level of speculative activity we saw during the low interest rate period of 2010."

"Adding it all up, we arrive at a number just under 3,000, which seems crazy and well above anything seen in the past. Naturally, I don't expect any of this to happen. In compiling the full list, I relied on those of which IBA was aware, those that were the subject of rumors, and those from IBA's fleet analysis on those that needed to consider fleet replacement and growth given regional competitive tension or because their fleet is aging. However, we cannot rule out that speculative lessor orders booked in the past will provide a good proportion of the intermediate elevator before any of these orders are delivered. The regions of Turkey, the Middle East and India is an area that could potentially see orders exceed the 2,000 mark, which will require both heavy investment in infrastructure and investment in asset ownership," concludes Stuart Hatcher.