The Farnborough International Airshow opened yesterday with expectations for orders as damp as a British summer thanks to high fuel prices and the credit crisis.
Farnborough is still a key date on the industry’s calendar, and more than 300,000 people are expected to attend this year’s show outside London.
Almost 1,500 exhibitors from 35 countries are expected to show off the latest in aviation technology.
PHOTO: BLOOMBERG
The show, which alternates years with an event in Le Bourget, France, is also traditionally a spot where US-based Boeing Co and its European rival Airbus duel for customers.
But analysts said this year’s pickings would be thin. Escalating energy costs have eaten into airline profits, and 25 carriers have ceased operations in the past six months. The International Air Transport Association is forecasting industrywide losses of US$2.3 billion this year.
“Farnborough in people’s perceptions is all about orders,” ABN AMRO analyst Sandy Morris said. “We have had three absolute bumper years for orders: this year was always going to be quiet.”
Kerosene, the fuel used to power planes, now accounts for around 40 percent of airline costs, up from 13 percent five years ago, the air transport association said.
The Paris show last year set a new record with 506 orders taken between Airbus and Boeing, compared with an average of 226 orders per show over the past 10 years and an average of 400 per show over the past three years, Credit Suisse said.
Credit Suisse analysts said in a research note, however, that “some airlines still have new aircraft requirements.”
They said they expected around 200 to 300 orders to be announced at Farnborough.
Etihad Airways, the national carrier of the United Arab Emirates, is holding a news conference yesterday and has indicated it may order between 50 and 100 aircraft from Boeing and Airbus.
Qatar Airways plans a joint news conference with Airbus today, suggesting the state-backed carrier will announce a major order.
Other possible orders could come from All Nippon Airways Co, which said it was looking into buying about five Airbus superjumbo A380s or other aircraft for long-haul routes. Credit Suisse analysts also suggested orders could come from British Airways and Los Angeles-based International Lease Finance Corp, the world’s biggest aircraft lessor.
But things could go the other way, with airlines announcing major cancelations or deferrals, analysts said.
Both Boeing and Airbus were upbeat nevertheless, saying the oil crisis gave airlines a reason to buy newer, more fuel-efficient jets.
Boeing recently raised its outlook for spending on commercial airplanes over the next 20 years, saying it expected airlines and leasing companies would want to replace aging craft.
Airbus CEO Thomas Enders said on Saturday that the European planemaker had no plans to revise its production schedule, although it is monitoring the situation daily.
Louis Gallois, CEO of Airbus parent EADS, said on Saturday there was no reason to panic because passenger air traffic is holding up despite the economic slowdown.
“We are not in the situation of 2001,” he said. “We have issues concerning the airlines, but not the traffic.”
Airbus and Boeing face another challenge from Canadian planemaker Bombardier Inc, which is seeking compete with their narrow-body aircraft A320 and B737 with its C-series aircraft family, launched on Sunday. The new plane is designed to carry 110 to 145 passengers.
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