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Air Show Leads To Lift-Off In Boeing, Airbus Sales

Mon, 07/19/2010 - 4:53am
Emma Vandore and Jane Wardell, AP Business Writers

FARNBOROUGH, England (AP) — Arch rivals Boeing Co. and Airbus announced new orders worth almost $13 billion at the start of the Farnborough International Airshow on Monday, raising hopes that the aviation industry is on the way back up after a dire two-year slump.

The aerospace market "has come back faster than we expected" and Boeing has twice raised its internal forecasts for the number of orders at the biennial show, said Boeing Commercial Airplanes President Jim Abaugh.

"We are going to have a significant amount of orders over the next few days," Abaugh said as he updated analysts, journalists and other industry players on Boeing's commercial plane program. "This is going to be a good air show for us and I think it's going to be a good air show for Airbus as well."

Boeing kicked off the traditional order book race by unveiling a deal with Dubai-based airline Emirates for 30 777-300ER jetliners, worth $9.1 billion at list prices. But it revealed that 18 of these were previously attributed to an unidentified customer on its order book, taking the value of the new deal down to $3.6 billion.

Boeing also announced that GE Capital Aviation Services ordered 40 Boeing 737-800s for $3 billion at list prices.

EADS-owned Airbus announced a $4.4 billion order from Air Lease Corp. for 20 A321 aircraft and 31 A320s, while Russian flag carrier Aeroflot ordered 11 of its A330-300 aircraft, worth $1.7 billion at list prices.

Airbus chief salesman John Leahy said on Saturday that he had bet EADS head Louis Gallois "that we'll more than double" the 131 gross orders that Airbus has made to the end of June.

Canada's Bombardier, a rising challenger to established giants like Airbus and Boeing, received an order for three business jets from Qatar Airways, a deal worth $122 million at list prices.

Analysts, who are looking to the Farnborough show outside London to take the pulse of the industry's health, expect the event to be more upbeat than last year's sister show in Le Bourget near Paris.

But they aren't looking for commercial plane orders anywhere near the record-breaking $88.7 billion worth announced in Farnborough in 2008 before the global credit squeeze took hold of the industry.

The International Air Transport Association has forecast that global industry profits will reach $2.5 billion this year, an upturn from the huge $9.4 billion loss in 2009.

Asia and North America are expected to lead the recovery, with Europe lagging behind. Strikes at some airlines, the debt crisis and the volcanic ash cloud that caused major disruptions this spring are all hurting Europe's recovery.

Most of the new plane buyers are expected to be from strong emerging markets in the Middle East and Asia.

ATR, an Italian-French aircraft manufacturer based in Toulouse and owned by EADS parent Airbus and Finmeccanica, may announce orders for turboprop planes.

Boeing and Airbus also head into the event facing growing challenges to their duopoly in the mid-sized civilian jet market from smaller manufacturers, including Canada's Bombardier and Brazil's Embraer.

Boeing made an early bid to keep the limelight on Sunday with the international debut of its fuel-efficient 787. But it was forced to acknowledge that the first delivery of the aircraft to Japan's ANA — already more than two years overdue because of production problems — could slip into 2011. The company blamed administrative delays.

As the aviation side of the biennial event began to take off, concerns remained about the defense sector amid sharp cuts to national defense budgets by debt-wary government.

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

Analysts will also be watching for developments in the bitter Boeing-Airbus battle to win a $35 billion contest to provide aerial tankers to the U.S. Air Force — the World Trade Organization ruled earlier this month that European governments gave Airbus illegal subsidies for the project.

Airbus' long-delayed A400M military transport plane is providing a high profile symbol of the problems facing the defense sector.

Britain has already scaled down its order for the four-engine military transport, which will take part in the daily flying display at Farnborough.

Airbus expects to start delivering A400Ms sometime after December 2012 , around four years behind schedule and 50 percent over budget because of technical glitches. The original seven customer nations for the aircraft — Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey — agreed with Airbus' parent European Aeronautic Defense & Space Co. in March to spend an additional euro3.5 billion to save the project after months of bickering about who should pay for cost overruns.

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

The show runs July 19-25 at an airfield about 30 miles (50 kilometers) west of central London.

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Associated Press Writer Andrew Khouri contributed to this report.

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