Tags: EU | Britain | Farnborough | Airshow

Farnborough Airshow Orders Top $28 Billion

Wednesday, 21 July 2010 07:37 AM EDT

Plane makers notched up orders worth more than $28 billion at the Farnborough International Airshow by the close of the event's third day, underscoring a revival in commercial aviation even as budget cuts keep the defense sector in the doldrums.

New deals announced Wednesday included orders for Airbus jets from Berlin-based airline Germania and Indonesian national carrier Garuda, while Middle Eastern airline Qatar agreed a deal with Boeing to take earlier delivery of the U.S. company's fuel-efficient 787 jetliner.

"Air travel demand is continuing to rise in the Middle East and it is becoming clear that international demand is returning as the global economy shows signs of recovery," Qatar Airways CEO Akbar Al Baker said at Farnborough.

"Commercial business travel is so dependent on innovation that there will always be opportunities," Al Baker added. "Each downturn is an upturn somewhere else."

Orders at the show are well off the record-breaking $88.7 billion worth of deals announced at Farnborough in 2008, but the gathering has already exceeded the slow orders for commercial planes of around $7 billion at sister show Le Bourget, near Paris, last year.

The International Air Transport Association recently forecast that the global industry would make a small profit of $2.5 billion this year, after a huge loss of $9.4 billion in 2009 — a quick improvement from its predictions late last year of more losses this year.

"The number of orders shows that the economic recovery is on its way," said Commercial Aviation Consulting analyst Max Sukkhasantikul.

More than 1,000 exhibitors from 38 countries are at Farnborough, with delegations from Egypt, Taiwan and Morocco attending for the first time. Organizers also cited stronger interest from major players China and Russia.

Among the big buyers at the industry's premier event were two plane leasing companies that have only been created in recent months. New leasing company Air Lease Corp. has so far signed the biggest deals, dividing orders for 115 planes worth $8.6 billion between Boeing, Airbus and French-Italian regional turboprop manufacturer ATR. Qatar's Al Baker said that his company's leasing arm was noting strong demand.

Garuda CEO Emirsyah Satar said the airline planned to use its purchase of six long-range A330-200s, worth $1.1 billion at catalog prices, to expand its new premium service "to more international destinations in a profitable and efficient way."

Germania signed a contract for five Airbus A319s, valued at $372 million dollars at list prices. The deal is the airline's first with Airbus, marking a win for the European company over arch-rival Boeing as Germania starts a complete fleet rollover to eco-efficient Airbus A319s.

EADS-owned Airbus also agreed a commitment with Thai Airways to buy seven A330-300s worth $1.48 billion at catalog prices, which Airbus expects to be firmed up by the end of the summer.

The European company's arch rival, Boeing, confirmed deals with Air Austral, a French airline based on the island of Reunion, and with Qatar for two long-range 777-220 aircraft each. Both deals, worth just over $1 billion at list prices, had already been on the plane maker's books, but the names of the buyers had not been disclosed.

The catalog prices quoted by plane makers often represent an inflated value on the deals as airlines typically negotiate substantial discounts.

Meanwhile, smaller rival Bombardier said Australian carrier Qantas Airways ordered seven Q400 turboprop airliners, worth $218 million at list prices.

But the Montreal-based company has so far failed to line up an order for its much-touted C-series, which it is marketing as a fuel-efficient alternative to the current offerings from the Boeing-Airbus duopoly.

Boeing has notched up a number of sales for its fuel-efficient 787 jetliner, which is making its international debut at Farnborough after a problem-plagued production line delayed the delivery schedule. The first 787 is due to be handed to Japan's ANA later this year, more than two years overdue, and Boeing has said that could slip into the first few weeks of 2011.

After making its international debut at Farnborough, the 787 stopped business at Farnborough on Tuesday when it was given a send-off by two World War II-vintage Spitfire fighter planes on Tuesday as it made its journey back to Seattle to rejoin the four other test models.

The renewed optimism in commercial aviation, however, could not dispel the bad news from the defense industry, where governments are cutting budgets after spending billions bailing the global economy.

Cuts to Western military budgets have been the talk of Farnborough.

In the U.S., the world's biggest single defense market, the Pentagon is looking to trim some $100 billion from personnel and procurement costs over the next five years. The U.K., Europe's biggest defense market, is considering defense cuts of up to 20 percent.

Italian Minister Ignazio La Russa said his country will reduce its order of Eurofighter jets by 25 planes to save 2 billion euros ($2.57 billion).

The plane is built by a consortium of European military manufacturers, including Britain's BAE Systems PLC, the German-French EADS NV and Italy's Finmeccanica SpA.

Italy had originally ordered 121 jets and the 25 it wants to cancel come from the last batch of planes, for which contracts have not been finalized. Eurofighter spokesman Marco Valerio Bonelli declined to comment on whether Germany, Britain and Spain could reduce last batch orders as well.

Airbus sought to gloss over problems that have dogged its A400M military transport plane.

The hulking gray airlifter is one of two star performers — the other being the also delayed Boeing 787 — of the flying displays at Farnborough.

But the plane is still around four years late and 3.5 billion euros over budget, and despite reaching an agreement in principle earlier this year on how to share the cost overruns, the seven customer nations have still to sign the final agreement.

The show runs through Sunday at an airfield about 30 miles west of central London.

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Plane makers notched up orders worth more than $28 billion at the Farnborough International Airshow by the close of the event's third day, underscoring a revival in commercial aviation even as budget cuts keep the defense sector in the doldrums. New deals announced...
Wednesday, 21 July 2010 07:37 AM
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