Donald Trump’s victory in the American election, a breath of fresh air for Boeing? The American aircraft manufacturer’s military activities could benefit from the Republican’s return to the White House, according to Paul Chiambaretto, professor at the Montpellier Business School and director of the Pégase chair on the economics and management of air transport. For the rest of the aeronautics sector, the outlook is more mixed, between the expected surge in customs duties and the risk of a challenge to the subsidies granted to the sustainable fuels sector.
L’Express: What does Donald Trump’s re-election change in the aeronautical sector?
Paul Chiambaretto: Barely a few hours after his election, it is difficult to make predictions. Nevertheless, we can try to learn some lessons from his campaign. For Airbus, the tariff barriers mentioned in recent months by Donald Trump should not have a negative impact, because the group has a factory in the United States, in Mobile, Alabama. A factory built at the time [NDLR : en 2015] to allow it to win contracts with local companies and to say that buying Airbus was buying American.
For suppliers, whether they serve Airbus, Boeing or even SpaceX, it all depends on their location. If the parts – engines, seats, slides – are produced in the United States, suppliers will tend to be protected from this trade war. But if they are manufactured outside the United States, they will be subject to customs duties of 40, 50, or even 60%. American manufacturers will therefore look for alternatives in the United States and abandon these partners in favor of more competitive local competitors.
For Boeing, in great financial and operational difficulty for several months, is the return of the Republican candidate good news?
Donald Trump has a more “warrior” profile than President Joe Biden. However, Boeing generates a very significant part of its revenues from defense activities, which is one of the reasons why the group moved its headquarters to Washington, to be closer to the Pentagon. A good part of its “research and development” – even civilian – benefits from military funds. A president favorable to military spending can therefore have very lucrative positive repercussions for Boeing and contribute to a faster recovery than expected. He is also a president who has a very patriotic vision of the economy, who seeks to promote American champions to the detriment of their foreign competitors.
If Donald Trump reverses the Inflation Reduction Act (IRA), introduced by Joe Biden, to what extent could this shift disrupt the sector?
The IRA has made it possible to largely subsidize renewable energies, and it has contributed to the development of an important American sector of sustainable fuels, SAF. The removal of this aid could have various consequences for airlines, whether American or not. In Europe, a European Union regulation is forcing airlines to carry more and more SAF on planes, mixing sustainable aviation fuel and kerosene. But Europe does not produce enough to meet its needs. Our airlines therefore source their supplies from the United States, where these SAFs are significantly cheaper. If the Americans reduce their production for lack of aid, the Europeans will be penalized. Reversing these subsidies would jeopardize the SAF sector while this fuel makes it possible to reduce CO2 emissions by 80% – but everyone is aware that, for Donald Trump, environmental issues are not a priority.
In aeronautics, the target of the trade war wanted by Donald Trump will therefore be Europe more than China?
We do not know whether this announced trade war will take place or not. Nor if it will be oriented against Europe or against China. If it targets the Chinese market, it will turn into a clash between Boeing and Comac, the local aircraft manufacturer. But Boeing also sells a lot of planes in China…
Can Comac become a serious competitor for Airbus and Boeing?
Forecasts for aircraft deliveries over the next twenty years show that 20% will be in China. In this market, Comac is already an important player, strongly supported by the Chinese state, which is increasingly inviting local airlines to order Comac aircraft. Its C919 is increasingly in demand, but it is not yet certified by European and American authorities to fly anywhere other than Chinese skies. In the short term, it is therefore not a threat.
In the longer term, it is difficult to estimate what Comac will represent. Nobody imagined at the beginning of the 1970s that Airbus, a small European manufacturer, would become the biggest global player forty years later. Perhaps in forty years, Comac will be on par with Airbus and Boeing, or even surpass them.
For now, the market is still a duopoly. Does Airbus benefit from Boeing’s setbacks ?
In the commercial aircraft market, Airbus and Boeing account for almost 90% of deliveries. The remaining 10% mainly comes from regional manufacturers: Comac, but also Embraer, the Brazilian. However, Airbus does not benefit from Boeing’s difficulties, precisely because of this duopoly. Aircraft manufacturers today have an order book of seven to eight years in advance: the company that orders an aircraft in 2024 from Airbus or Boeing will receive it by 2032. There is therefore no real of commercial aggressiveness between the two players. Their outlook is such that in reality, seeing their competitor go bankrupt and having to fulfill their orders would be more of a problem than anything else. The waiting period would extend to fifteen years!
What are these delays due to? Why don’t manufacturers increase their production rate?
Beyond the fact that planes are complex products to build, the problem currently comes from the suppliers. We tend to define Airbus and Boeing as aircraft manufacturers, but in reality they are assemblers. They carry out “R & D,” design the devices and finalize the assembly. But the different parts of the plane are mainly manufactured by thousands of suppliers, all over the world, which are often common to Airbus and Boeing.
During the health crisis, factory production at Airbus, as at Boeing, was significantly slowed down. The two groups then implemented voluntary departure plans: the most experienced workers and engineers retired early. Post-Covid, when they wanted to restart production, they had great difficulty finding these skills on the market.
In France, in Europe, as well as in the United States to a lesser extent, interest in industrial professions has been lost. Young people don’t dream of being boilermakers for Airbus, even though they could earn a very good living. They prefer to join a service company, even if it means receiving a lower salary. Sometimes due to lack of knowledge of these professions, sometimes because they think they are not made for it. Airbus is generally ready to relaunch its pace at a pace equivalent to or even higher than pre-Covid, but finds itself waiting for parts from its suppliers who are having real difficulty recruiting. The system is now running at maximum capacity, or at least at the rate of the maximum capacity of the weakest link in the production chain.
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