Farnborough orders top $28-billion

Virgin America announced plans to buy 40 new Airbus A320 aircraft at the Farnborough International Airshow on Thursday, the last major business day at the biennial event that has this year witnessed a revival in commercial aviation.

Plane makers have so far notched up orders worth more than $28-billion at the show, even though government budget cuts are keeping
the defence sector in the doldrums.

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 about $7-billion at sister show Le Bourget, near Paris, last year.

Virgin signed a memorandum of understanding—not yet a firm order—with Airbus. The 40 new planes, at a list price of $3,3-billion, would be delivered from 2013 until 2016 with options for 20 more in 2017-2018.

“A repeat order from Virgin America—a US airline growing quickly both in terms of their route network and their reputation for excellent service—is a great affirmation of the benefits of operating the A320 family,” said Airbus chief operating officer John Leahy.

Airbus’ arch rival Boeing, meanwhile, announced it had signed an agreement with Azerbaijan Airlines to substitute two Next-Generation 737 airplanes for one 767-300ER (extended range) and two 767 Freighters, a new model type for the airline based in Baku, Azerbaijan.

“With our centralised geographic location, Azerbaijan is becoming a busy hub in the region between east and west and north and south,” said Jahangir Askerov, president of Azerbaijan Airlines. “We are capitalising on this development by expanding our long-haul passenger fleet and growing our cargo business.”

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.

More than 1 000 exhibitors from 38 countries are at Farnborough, with delegations from Egypt, Taiwan and Morocco attending for the first time. Organisers 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. Air Lease has so far signed the largest 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 his company’s leasing arm was noting strong demand.

Other buyers include Thai Airways, Berlin-based airline Germania, Indonesian national carrier Garuda and Australian flag carrier Qantas Airways.

Canadian manufacturer Bombardier has so far failed to line up an order for its much-touted C-series, which the Montreal-based company 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 the show on Tuesday when it was given a send-off by two World War II-vintage Spitfire fighter planes 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 defence 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 US, the world’s biggest single defence market, the Pentagon is looking to trim about $100-billion from personnel and procurement costs over the next five years. The UK, Europe’s biggest defence market, is considering defense cuts of up to 20%.

Italian Minister Ignazio La Russa said his country would reduce its order of Eurofighter jets by 25 planes to save €2-billion ($2,57-billion), while British Defence Secretary Liam Fox told the industry to lower costs or see programmes slashed.

The Eurofighter is built by a consortium of European military manufacturers, including Britain’s BAE Systems, the German-French Eads and Italy’s Finmeccanica.

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 finalised. Eurofighter spokesperson Marco Valerio Bonelli declined to comment on whether Germany, Britain and Spain could reduce last batch orders as well.

Airbus, meanwhile, 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 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 until Sunday at an airfield about 50km west of central London. - Sapa-AP

 

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