4 days ago
Will Paris Air Show Signal Shift In Aerospace Trade? Analyst Flags EU Tariff Risks, Order Delays
On Friday, BOfA Securities analyst hosted Richard Aboulafia, a partner at AeroDynamic Advisory, to discuss expectations for the upcoming 2025 Paris Air Show.
The analyst says that regarding news of potential 50% EU tariffs, Aboulafia warned that the Air Show could foreshadow how future international negotiations might unfold.
The analyst notes that the EU might draw lessons from recent agreements in China and the Middle East, which mainly included aerospace and defense products.
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Nevertheless, the analyst writes that given the EU's own substantial aerospace and defense industry, which it aims to protect, U.S. aerospace and defense interests might become a point of contention rather than an incentive in these discussions.
Regarding Boeing Company (NYSE:BA), Aboulafia views recent deals in the Middle East and China as setting a precedent for other nations' trade negotiations, suggesting orders will be held back as bargaining chips, noted the analyst.
The analyst writes that, for both Airbus SE (OTC:EADSY) and Boeing, Aboulafia doesn't foresee many airlines placing large new orders, primarily due to a lack of new aircraft programs and existing backlogs exceeding 10 years for their most popular models.
Further, the analyst noted that, as previously disclosed, Aboulafia doesn't anticipate any major new commercial aircraft program unveilings due to ongoing supply chain issues and global macroeconomic constraints.
In the defense sector, Aboulafia expects numerous companies to compete for subsystem roles on programs like NGAD/the F-47 and CCA.
Additionally, Aboulafia anticipates an outsized presence of unmanned aerial systems at the show, predicting a focus on lower-tech, expendable variants rather than highly sophisticated systems, says the analyst.
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