Planemakers' Order Books Bulge On Asia, Middle East Demand

Airbus (AIR.PA) and Boeing (BA.N) opened the Paris air show with a flurry of multi-billion-dollar plane deals on Monday as demand from Middle Eastern and Asian airlines swelled their already bulging order books.

Airbus signed up Saudi Arabian Airlines to be the launch customer of its new A330-300 Regional aircraft, with the carrier committing to 20 of the planes as well as 30 A320neo jets in a deal worth about $8.2 billion at list prices.

The European planemaker also said Garuda Indonesia (GIAA.JK) had signed a letter of intent to buy 30 A350 XWB jets, potentially worth around $9 billion.

The same airline, meanwhile, committed to buy up to 30 of Boeing’s (BA.N) 787-9 Dreamliners and 30 737 MAX 8 jets in a deal that could be worth about $10.9 billion.

Despite the activity, analysts expect this year’s aerospace industry meeting to produce fewer blockbuster deals than in the recent past, with the focus turning to the task of producing the $1.8 trillion of jets already sold.

Nonetheless, demand remains robust, particularly from fast-growing Middle Eastern and Asian airlines.

Airbus on Monday raised its 20-year forecast for jet demand by nearly 4 percent to 32,600, driven by growth from these regions.

That broadly echoed Boeing’s assessment of the market last week.

Unlike Boeing, Airbus sounded upbeat about prospects for four-engined superjumbos, including its A380 – the world’s biggest passenger plane, which has so far failed to live up to sales expectations.

“Very large aircraft are required over the next 20 years, we can’t just increase efficiency,” Airbus sales chief John Leahy told a news conference, pointing to airport congestion as a reason to use larger planes.

In a bid to revive interest in the A380, Airbus is in talks with customers about possibly putting new engines on the jet or making a version with about 50 more seats.

BACKLOG
Boeing said on the eve of the air show that it was exploring a potential market of more than 1,000 jets in a niche between its single-aisle 737 and wide-body 787, but had not decided whether to invest in a new plane.

Many in the industry, however, are increasingly wary of an order backlog stretching out over almost a decade and of manufacturers’ plans to keep pushing up output levels.

GE Aviation (GE.N) said on Monday it wanted to secure a record increase in production of engines for Airbus and Boeing single-aisle aircraft before deciding whether it could guarantee going even higher.

Heading into the air show, Airbus had a lead over Boeing in plane orders this year, with 247 versus Boeing’s 175.

Adding to Monday’s flurry of deals, Qatar Airways ordered 10 Boeing 777-8X jets and four 777 freighters, valued at a total of $4.8 billion at list prices, while GE Capital Aviation Services ordered 60 Airbus A320neo aircraft valued at around $6.4 billion.

Airbus’s deal with Saudi Arabian Airlines comes after French President Francois Hollande met the head of the airline in May during a Gulf Arab leaders summit in Saudi Arabia.

France, deemed to have the toughest stance among the six world powers negotiating with Iran over its nuclear program, has been able to nurture new commercial links with the region in the face of what some Gulf countries perceive as disengagement on the part of traditional ally the United States.

At 7.10 a.m EDT, Airbus shares were up 0.4 percent at 60.67 euros in a European blue-chip index .FTEU3 down 1.1 percent.

REUTERS