Farnborough air show may mark a return to airline industry recovery

Published on Monday 19 July 2010 15:58

NEARLY $20 billion (£13bn) of aircraft orders were placed on the first day of the Farnborough air show as industry analysts allowed themselves to begin talking about a recovery for the sector following its worst recession.

• Aircraft manufacturers report a return to confidence as orders pile up after two years of woe, although Europe is lagging behind. Picture: PA

The aerospace market "has come back faster than we expected" according to Jim Albaugh, president of Boeing Commercial Airplanes, which has twice raised forecasts for the orders it expects at the biennial show.

Albaugh said: "We are going to have a significant amount of orders. 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."

Commenting on the raft of orders, Airbus chief executive Tom Enders said: "This is a great way to start the show."

Arch rivals Boeing and Airbus - along with smaller outfits such as Bombardier and engine-maker Rolls-Royce - unveiled a series of aircraft and equipment orders, including:

l General Electric (GE) Capital Aviation Services - which buys aircraft and then leases then to airlines - buying 60 Airbus single-aisle A320s worth $4.9bn and 40 Boeing 737-800s for $3bn;

l Air Lease, a new company setup by aircraft rental magnate Steve Udvar-Hazy, placed a $4bn order for 51 Airbus A320s;

l Emirates airline ordered 12 Boeing 777s, worth $3.6bn, adding to an existing order for 18 of the aircraft;

l Russian airline Aeroflot bought 11 Airbus A330-300 aircraft, worth about $1.7bn;

l Rolls-Royce also won a $650m contract from Aeroflot to supply 24 engines for the A330 order;

l Qatar airline bought three executive business jets from Canadian manufacturer Bombardier for about $122 million.

Analysts - who are using the Farnborough show 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 $88.7bn announced at Farnborough in 2008, before the global credit squeeze gripped the aerospace industry.

The International Air Transport Association has forecast that global industry profits will reach $2.5bn this year, reversing the $9.4bn 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.

This week's Farnborough air show marks a return to the skies for Udvar-Hazy, who is credited with inventing the specialist rental industry.

His company, International Lease Finance, eventually became the biggest customer of both Boeing and Airbus. Udvar-Hazy sold it to insurer AIG in 1990 for $1.3bn, only to see it put on sale when the insurer had to be bailed out.

The latest orders from his new outfit, Air Lease, marked the comeback of one of the industry's most influential figures, one who once told Airbus and Boeing how to design their planes.