0: - This parking lot in California

2: is piling up with empty Boeing and Airbus aircraft,

6: planes that, until recently,

9: were busy flying people to places,

12: and then suddenly people stopped flying.

15: Daily traffic is down some 80% from its peak in 2019.

20: Airlines are fighting for survival

22: as airport activity has fallen to near zero.

26: Meanwhile, industry giants, Boeing and Airbus,

29: have seen order cancellations

31: and furloughed or laid off staff.

33: - I don't believe the industry

34: has ever seen anything like this,

36: and because of that, there's no one you can turn to.

39: We're literally all learning as we go.

42: - [Jaden] Boeing, already weakened by the 737 MAX crisis,

46: saw its stock drop more than 70% in February and March

51: while Airbus' fell about 65% in the same period.

55: The plane makers employ hundreds of thousands of people

59: in several countries,

60: and they're major economic players,

63: often at the center of global politics.

66: - Both those companies are in many ways too big to fail.

70: - [David] Nobody has an interest in retaining

72: government equity in their company.

74: - We can recover from this crisis.

77: - So as the coronavirus pandemic shakes up the industry,

81: we wanted to know,

82: what will it take for Boeing and Airbus

84: to survive this unprecedented crisis,

87: and what does it mean for the future of aviation?

92: - Before coronavirus,

93: Boeing was already struggling to get regulator approval

96: to return its 737 Max to the skies,

99: as the jet was grounded after two deadly accidents

102: linked to a faulty flight control system.

105: In another blow, Boeing recently dropped

108: its 4.2 billion dollar bid to team up

111: with Brazilian jet maker, Embraer,

113: which was supposed to transform the aviation industry,

117: and Airbus had already overtaken Boeing

119: as the world's top plane maker in terms of deliveries.

122: - We think our capacity to compete

125: and be strong on the long term is intact, if not improved.

132: - [Jaden] I wanted to get a better idea

133: of how well-positioned the plane makers are

136: to withstand this crisis

138: so I called Addison Schonland, a partner at AirInsight.

143: - It appears as we sit here right now,

146: there's an advantage to Airbus

147: given its particular tools available to airlines.

152: Boeing is at a disadvantage now

154: because of the MAX grounding

156: and the incompletion of the Boeing/Brazil project.

162: - [Jaden] Now, the coronavirus pandemic

164: has forced the companies to draft survival plans.

168: - We will be suspending all travel

170: from Europe to the United States for the next 30 days.

174: - [Jaden] Air passenger volumes fell more than 90%

177: sending airlines into crisis.

180: In February, major airlines like Delta and United

183: started to cut their losses by canceling some flights.

187: Only weeks later, the collapse in air travel

190: had already trickled down to Boeing and Airbus,

193: with many orders being postponed or canceled.

196: In the first three months of 2020,

198: Boeing saw customers cancel 196 of its aircraft orders.

203: Airbus had 66 cancellations

205: and said almost all of its customers have approached it

209: to discuss deferring or canceling orders.

211: - We're accustomed to bad years like 9/11

215: or the SARS year, Gulf War One,

218: but at the end of the day this is just an unprecedented

221: freezing up of the end user market.

225: - Even in this crisis, both Boeing and Airbus

228: have a key customer they can count on, governments.

232: They're some of the world's biggest defense contractors,

235: with the U.S. Navy even ordering new planes

238: from Boeing amid the pandemic.

240: - The ultimate safe haven right now is defense,

242: particularly U.S. defense programs.

245: - [Jaden] Through their history,

246: Boeing and Airbus have become ingrained

248: in defense, industrial development, and geopolitics.

253: Boeing has worked with the U.S. government

255: to build military planes since World War I,

258: and Airbus' very inception

260: is deeply rooted in European politics,

263: as it was formed as an example of how European countries

266: and companies are stronger when they come together.

270: - Airbus doesn't have a hundred years of history,

273: but if you look at what Airbus consists of,

275: all those European aerospace companies

277: that came together that were also very old,

280: brought with them amazing amount of knowledge.

284: - Boeing and Airbus both spend millions of dollars

286: on lobbying every year.

288: They've criticized each other

289: for getting unfair government subsidies,

291: and they're both massive employers

294: with roughly 161,000 and 134,000 employees respectively,

299: so a major hit to one of their bottom lines

302: means a potential hit to a lot

304: of American and European jobs.

307: When the U.S. government was crafting

309: its two trillion dollar coronavirus stimulus package,

312: a big part of the bailout was focused

314: on the aviation industry.

316: The bill included 17 billion dollars

319: for companies deemed essential to national security,

322: which could potentially include Boeing.

325: Here's the thing, as of early May,

328: some airlines had applied for government aid,

330: but Boeing hadn't,

333: and the idea of Boeing getting bailed out

335: by taxpayer money is sensitive.

337: - You can imagine that those companies,

339: the management is going to fight tooth and nail

342: to prevent the government saying,

344: "Here's 60 billion dollars.

346: "By the way, here's the warrants

347: "and here's the stuff that we're taking.

349: "We own you."

350: - [Jaden] Any loans offered by the government

351: would likely come with strings attached,

354: like limiting stock buybacks, layoffs,

356: and giving the U.S. government a stake in the company,

360: something Boeing CEO suggested he wouldn't be open to.

364: - [David] I don't have a need for an equity stake.

366: If they force it, we just looked at all the other options,

369: and we've got plenty of them.

371: - So what are the options for Boeing and Airbus

374: to keep the cash flowing?

375: Well, they have assets.

378: In May, Boeing raised 25 billion dollars

381: from private investors and said it didn't expect

384: to need anymore funds, including government aid.

387: But Boeing has already suffered a number of new setbacks.

392: It's now facing civil and criminal scrutiny

394: over the 737 MAX crisis.

397: It suspended its dividend,

399: is offering staff buyout packages,

401: and plans to cut its workforce by 10% this year.

405: - Airbus and the border (mumbles) sector,

408: we emerge from this difficult period eventually.

411: - [Jaden] Airbus also needs to cut spending,

413: but after the pandemic, analysts expect the market

416: for smaller planes to grow

418: because domestic travel is expected to bounce back first,

421: and Airbus can offer its direct competitor to the 737 MAX,

426: its best-selling A320 family.

429: That includes the A321LR, a single-aisle plane

433: that's capable of transatlantic routes.

436: - Boeing really doesn't have a competitor to that jet.

439: - [Jaden] And both companies will likely face

441: a big supply chain issue.

443: Boeing and Airbus rely on a massive network

446: of smaller companies that are struggling to survive.

449: - The million parts that you see flying in close formation

453: that is actually an airplane,

454: all those parts come from all kinds of places

457: around the globe.

458: Some of these places,

459: the companies that make these small parts,

461: are literally family-owned, they're tiny.

464: They don't have the resources

465: if the system is shaken up like this.

469: How do you protect them?

470: - [Jaden] Analysts say it could potentially

472: take several years before the aviation industry recovers,

476: but whenever people will need new planes,

479: they'll likely come from Boeing or Airbus.

482: Not that there are many alternatives.

484: The duopoly makes up about 99%

487: of all large commercial plane orders,

489: with China's state-run plane maker

491: believed to be 10 to 20 years out

493: from becoming a real competitor.

496: - Will the companies be different

497: at the end of this pandemic?

499: Probably, the longer it goes,

500: the more that there will be some kind of structural change,

505: but neither of those companies,

507: based where they are, are dispensable,

510: so I think that whatever happens, we come through this,

514: and they may be different,

517: but they will remain the two top dogs in that industry.