Jim Corridore, Senior Insights Manager at SimilarWeb, joined Closing Bell's Kristen Scholer to discuss Boeing's big deal with Delta, and break down why the airplane manufacturer could get a big boost from rising air travel demand.

Closing Bell

Boeing Closes Major 737 Max Deal with Delta as Air Travel Demand Recovers from Pandemic

Welcome back to closing bell on shadow news everyone. Well, the big news this morning Boeing, looking to get back to cruising altitude after closing a big deal with Delta to deliver 107 37 max planes Now, the airline manufacturers still dealing with lingering production issues of course, made worse by supply chain and labor constraints as has been the case during this pandemic. But joining me now is Jim Corridor senior insights manager at similar web. That's the digital intelligence provider for small to medium sized businesses. Jim good to see you. So let's start with this Delta deal. It is Delta's first big purchase from Boeing in more than a decade. So very monumental. How big of a deal is this as going tries to compete with Airbus. Yeah, I think it's a huge deal. First of all what it says about the travel industry as a whole. Um, here is similar. We are able to track web traffic and our data shows that traffic to airline websites is above pre pandemic levels rising 254% above the pandemic low. So we're clearly in a position where demand is recovering. Delta is looking to grow for the first time in many years and that's a great sign for aerospace manufacturers like Boeing and Airbus. Any insight there, Jim I know you follow the website traffic but any insight as to why Boeing a US manufacturer might be better for Delta than Airbus which is based in France. Well, Delta is one of the few airlines that does split its order between both manufacturers. They do have about 350 Airbus jets, they have 450 Boeing jets currently. So I think the economics right now, obviously Boeing after having sitting on the sidelines for quite some time with the 7 37 grounding and then the 7 87 grounding probably gave Delta pretty good incentive to to place this order. So they probably got a pretty good price. Okay, got it. So obviously the news of the day is that Delta is making this big purchase with Boeing hasn't made a purchase like this in about a decade. So that's definitely good news for Boeing. But as someone who tracks the web numbers for small and medium sized businesses you're following that traveler traffic. What might this insinuate for future Boeing demand potentially from other carriers? Yeah, obviously today is the first day of the Farnborough air show, which is you know when, when Delta has placed this order, these manufacturers usually hold orders for this show. So I think over the coming days we will see other orders from other airlines. Clearly international demand is recovering. Business travel is starting to recover. Airfares are high and consumers are choosing to travel rather than do other things with their pocketbook right now during the inflation and the recession so it's a good sign for manufacturers that demand is so strong are likely to continue to recover. We should see other orders this week. Look, I think everyone wanted to take a summer trip two years into this pandemic jim. I just feel like based on the data based on my own travel experience and everything that we've been hearing on this show and of course from family and friends is that people were finally comfortable and ready to get out there. We have coronavirus vaccinations, we have treatments and people have built up some immunity in certain cases to the virus itself. Any indication from your end tracking website numbers again as to what that demand might become the fall. Do you think that some of the strong summer travel demand can actually carry into the fall? Yeah. Well, clearly we're worried about inflation. We're worried about people, you know, voting with their pocketbooks in other ways. But like you said, people have been cooked inside for two years. They're ready to travel. Our traffic data shows that demand has built throughout the year. Since january of this year, people are feeling more comfortable flying and, and that those numbers have continued to build through june uh, fall may weaken a little bit in line with seasonal trends, but I think we are likely to continue to see above pre pandemic levels. Airfares are high airlines are looking to make up for higher fuel prices. So airfares are rising as well and, you know, so far that hasn't deterred the consumer at all. So it sounds like based on the data that you follow that perhaps this Delta deal is the first of more to come in the airline space that other air carriers will be looking to ramp up their fleets as well. Is that the case? I believe so I know united has alluded to growing the fastest in its history uh an international and making a big push. I wouldn't wouldn't be surprised to see them make a big order this week as well. Um and other airlines have not been obviously buying planes over the past few years. It's actually been fortuitous for Boeing that you know, there are problems with the 737 and then with the 787 came during the time when nobody wanted to acquire planes. So that gave them some time to fix their issues and now that demand is rising, they should be able to get the 7 87 flying again at just the right time. I'm just curious to any insight you might have about supply chain challenges. I mean one thing Delta is based in the U. S. Boeing is based in the US. Right. And so these are two U. S. Companies. Delta decided to go with Boeing instead of Airbus which is based in France, but again, any insight as to which of these companies for US Air carriers might be in a better position from a supply chain perspective to actually have these vehicles ready for delivery. Yeah if I had to use my knowledge to guess, I would say that Boeing probably has an advantage right now because a lot of their manufacturing is located in one place uh two places on the east coast and obviously up in Seattle area but you know it's less dispersed that Airbus which has a multi country multi supply chain issues. So I would think that Boeing would probably be able to ramp up their capacity a little bit quicker. Uh and now that they get the 7 87 flying again they are right now producing them at a rate that's going to probably rapidly rise. You know I do want to turn back to Boeing. My last question here is in the wake of those two deadly 7 37 max jet crashes. Both Boeing planes both the same make and model of a plane taking nose dives in dramatic instances and everyone dying on board before the pandemic. I think for us travelers, they still weren't necessarily looking at the actual make of their model when booking flights, whether it was a Boeing plane, an Airbus plane or something else. I think some of the data did show that that wasn't necessarily top of mind for us travelers even though we had seen those two tragic, deadly crashes. Are you finding that online people look at that sort of data, do U. S. Travelers have an affinity to travel on a Boeing plane versus an Airbus plane or vice versa. This is a topic we looked at extensively and I think we found that in the early days of the tragedy, which obviously was horrible for all concerned, people were concerned about flying 7 37 max aircraft. But what's happened is that plane has gone through more rigorous testing than any other aircraft in the history of aviation. And I believe the traveling public, number one feels it's safe and number two, they're not looking at the issue as much. I don't think consumers really do too many searches on what kind of plane they're gonna be flying unless they're just trying to figure out what seat is more comfortable for them. So for Boeing as long as they continue to run safely, which we believe they will, it's relatively non issue at this point. You know, that's the same thing that I heard from Delta's own Ceo just a year ago. He was down here on the floor of the stock exchange and said that he thought that Boeing plane had been through so many tests. It was perhaps the safest plane going forward. Lo and behold a year later they signed this big deal. So it's interesting to see Jim Corridor, senior insights manager, a similar web. Jim thanks so much