Richard Aboulafia: March 2019 Letter

Dear Fellow World-Weary World Watchers,

Useful phrase for Boeing people in China: Zhè gāo yú wǒ de gōngzī děngjí. If Google Translate works, that’s mandarin for “That’s above my pay grade.” Over the past few weeks, Boeing’s China situation has deteriorated markedly, for reasons that are largely out of the company’s control, adding to the company’s woes after the Ethiopian 737MAX tragedy. There’s not much they can do, and since China is their biggest export market, there’s a lot at stake…. [More]

Richard Aboulafia: February 2019 Letter

Dear Fellow Obscure Island Dispute Watchers,

Fighter jets are geopolitics with wings. If I’ve stolen this line from someone, apologies – there were no Google hits. Recent global political trends are having a big impact on the fighter market. My last letter discussed how change in China and Saudi Arabia are impacting aviation; if that was too cheerful for you, perhaps this one will do the trick.

First, big news in Japan over the last few months, with two unexpected moves. One, the country increased its planned F-35 buy from 42 aircraft to 147, including 42 B models. Two, it decided to stop buying these planes off the domestic Final Assembly and Check Out (FACO) line at Mitsubishi. The FACO will close in FY 2022, after around 24 jets have been delivered. F-35s delivered after that will come directly from Ft. Worth. … [More]

Richard Aboulafia: December 2018 Letter

Dear Fellow Aero TrendWatchers,

Big theme for 2018? How to put this gently…The world got worse. It’s tough to quantify the world getting worse. But it did. In Germany, Angela Merkel announced that she would quit her job as the world’s Adult In The Room. France looked good, until, suddenly, a mob of people in fluorescent vests started throwing rocks. Yellow vests. What is it about France? It’s always with the haute couture. Even Britain got much worse, and looks set to get more so. As a card carrying Anglophile that hurts. We booked a flight to Heathrow in February, because we want our kids to see London before March’s Brexitocalypse (my wife pointed out the pound would be cheaper in April, but we then realized that restaurants would only have local mutton and turnips).

Unfortunately,… [More]

Richard Aboulafia: November 2018 Letter

Dear Fellow New Org Chart Watchers,

For years, the world has watched for the next emerging jet producer. Will it be in Bandung, Sao Jose dos Campos, Beijing, or Nagoya? Perhaps we should look in Connecticut and Iowa. The new United Technologies, created this month, incorporates Pratt & Whitney, Rockwell Collins, and UTC Aerospace Systems (plus legacy names like Goodrich, B/E, Rohr, etc.). Somehow, this giant collection of businesses has no real overlap and builds everything a plane needs to fly except aerostructures. All they need to make a jet is someone who connects the dots and covers it all with metal or CFRP. And, of course, someone who creates a product the market wants. Bank of America/Merrill Lynch analyst Ron Epstein termed New UTC a Tier 0.5 supplier, or a virtual prime. If it isn’t now, it could be in the future…. [More]

Richard Aboulafia: August 2018 Letter

Dear Fellow Global Crisis Junkies,

There’s this country. It’s an emerging market with fast economic growth and outsized aerospace industry aspirations. Unfortunately, the government is deeply incompetent, and uses a thin veneer of nationalism, religion, and conspiratorial thinking to disguise its stupidity. Inevitably, there’s a debt crisis and a currency plunge, both of which threaten regional shock waves, with possible global impact. As a tangential consequence, the country’s massive aerospace ambitions are imperiled.

Turkey today? Sure, but also Indonesia 21 years ago. The similarities (above) are striking. There’s much to learn from a comparison. First, two differences:… [More]