Big order helps Airbus glide over glitches

LE BOURGET, France Mon Jun 20, 2011 10:24am EDT

1 of 2. The Airbus A380, the world's largest jetliner with a wingspan of almost 80 meters, is seen on the tarmac near the structure which the plane touched, damaging its right-hand wing-tip, on the eve of the opening of the Paris Air Show in Le Bourget, near Paris, June 19, 2011.

Credit: Reuters/Niek van der Zande

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LE BOURGET, France (Reuters) - Airbus EAD.PA bagged billions of dollars of orders for its revamped A320 plane on day one of a rain-sodden Paris Air Show, where it is vying with rival Boeing (BA.N) and trying to recover from pre-show mishaps.

Airbus said on Monday it had won an order for 60 narrow-body A320neo planes worth $5.1 billion at list prices from the commercial aircraft leasing and financing arm of General Electric (GE.N).

Analysts expect narrow-body planes, the backbone of fast-growing budget airlines, to be a key battleground for orders between Europe's Airbus and U.S. rival Boeing at the biennial air show.

Airbus believes it has the upper hand with the A320neo, whose more efficient engines save airlines 15 percent in fuel costs, according to the company.

Engine maker Pratt & Whitney boss David Hess said on Monday he expected an "astounding" amount of demand for the A320neo. Sources close to the matter said Airbus was also likely to report an order on Monday for 30 A320neos worth about $2.4 billion at list prices from Scandinavian airline SAS (SAS.ST).

Qatar Airways said it hoped to conclude a deal this week to buy A320neo planes as well.

Boeing conceded it might lose some custom while it makes a decision about whether to re-engine or redesign its competing 737 narrow-body plane, although it was confident of winning out over the longer term.

It also upstaged Airbus with successes in other plane sizes and booked the first big order of the show for six 777-300ER wide-body jets worth $1.7 billion at list prices from Gulf carrier Qatar Airways.

Analysts expect Middle Eastern and Asian airlines to dominate the buying as they seek to boost transport links for their booming economies.

The Boeing deal came a day after Airbus unveiled plans to boost the range of its future competing A350, of which Qatar is the biggest customer.

AIRCRAFT WITHDRAWN

Airbus was left red-faced following a series of mishaps on the eve of the show, including a taxiway collision involving an A380 superjumbo.

The right-hand wing-tip of a test plane for the world's largest jetliner, with a wingspan of almost 80 meters (yards), scraped a building at Le Bourget airport on Sunday and was withdrawn from the air show's traditional flying displays.

The aircraft was hidden out of sight on Monday as President Nicolas Sarkozy inaugurated the show, and was a source of embarrassment for Airbus only hours after the arrival of its new competitor -- Boeing's elongated 747-8 superjumbo, which is showing its distinctive silhouette abroad for the first time.

The latest version of the legendary 747 jumbo touched down in orange and red "sunrise" livery symbolising the economic importance of Asia.

Boeing said on Monday it had taken orders and commitments for 17 747-8 Intercontinental aircraft from two undisclosed carriers in deals worth a combined $5.4 billion at list prices.

A second Airbus aircraft, the delayed European A400 airlifter, was also initially withdrawn from air display after a gearbox problem.

ASIAN DEMAND

Despite its setbacks, Airbus is confident of racking up orders for the A320neo in particular and the air show could bring two record deals on successive if its plans come to fruition.

A $16 billion provisional deal from IndiGo to buy 180 A320neo passenger jets, first announced in January, could be finalised, although talks may also drag beyond the air show.

If sealed, that would set a record for the number of planes in one transaction.

Sources close to the matter said that deal could be rapidly eclipsed by a 200-plane order being fine-tuned between Airbus and Malaysia's AirAsia (AIRA.KL).

Demand for aircraft is on a sharp rebound driven by demand from Asia's rapidly growing airports and the Middle East.

"Those two markets will enjoy at least one third if not more of the demand increase for global air traffic in the next decade," said Philip Toy, a managing director at Alix Partners.

Airbus sales chief John Leahy said on Monday he expected to sell more planes this year than in 2010, though he declined to give an estimated figure

The Airbus A320neo has also benefited from airlines' concerns about fuel costs. Boeing said on Sunday it would decide by end-year whether to upgrade its 737 with new engines from about 2016, as Airbus has done, or build an all-new jet in 2019.

"They will sell hundreds but it is hard to tell what is gross and what is net, what is a conversion from an earlier order. There are myriad complications," said Teal Group analyst Richard Aboulafia of the A320neo.

Orders are likely to include a confirmation of an $8 billion 100-plane order from leasing giant ILFC.

Russia and China will flex their muscles as potential rivals to Airbus and Boeing, especially during a Tuesday visit by Russian Prime Minister Vladimir Putin and some analysts expect surprise sales. But Western planemakers say it will be some time before newcomers mount a serious challenge in civil aerospace.

Brazilian group Embraer (EMBR3.SA) also made its presence felt, saying it had won orders for 39 190 regional jets, worth $1.7 billion at list prices. (Additional reporting by Joanna Partridge, Karen Jacobs, Kyle Peterson, Rhys Jones, Victoria Bryan, Lionel Laurent) (Writing by James Regan and Mark Potter; Editing by Louise Heavens and Erica Billingham)

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