Boeing kicks off air show with Emirates order

A Boeing 787 Dreamliner flies over Farnborough airport, before landing ahead of the Farnborough International Airshow, Farnborough, England, Sunday, July 18, 2010. Deliveries of the long-range passenger jet to the first Japanese customer have been delayed by more than two years due to production problems. Boeing executives have said they aim to deliver the first Dreamliner to Japan's All Nippon Airways by the end of 2010, but they have cautioned that the delivery could be delayed to early 2011. (AP Photo/Sang Tan)

July 19, 2010 8:42:46 AM PDT
Boeing Co. kicked off the Farnborough International Airshow on Monday with an order for 30 777-300ER jetliners from Emirates airline - and predicted significant new plane orders for itself and European arch rival Airbus in a rebounding market.

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

"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."

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 after a two-year industry downturn.

Airbus chief salesman John Leahy appeared to confirm the cautious optimism when he said 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.

The Geneva-based 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.

Still, concerns remain about the slow global economic recovery and sharp cuts to national defense budgets.

Analysts expect Asia and North America 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, while activity on the defense side of the show is expected to be muted.

The first buyer of the block on Monday was Dubai-based Emirates, which ordered 30 of Boeing's 777-300ER planes - worth $9.1 billion in list prices. That adds to the 71 models of the same aircraft previously bought by Emirates, which said it plans to use the purchase to "become a world leading carrier and to further establish Dubai as a central gateway to worldwide air travel."

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.

Also on show at Farnborough will be another aircraft with a troubled and lengthy production history - Airbus' long-delayed A400M military transport plane.

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.

The project is a high profile symbol of the problems facing the defense industry amid budget cutbacks.

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.

More than 1,000 exhibitors from 38 countries have signed up for Farnborough with delegations from Egypt, Taiwan and Morocco will be 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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