Airbus piles pressure on Boeing

LE BOURGET, France Tue Jun 21, 2011 2:35pm EDT

1 of 5. The Boeing 787 Dreamliner lands during the 49th Paris Air Show at the Le Bourget airport, near Paris June 21, 2011.

Credit: Reuters/Pascal Rossignol

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New planemakers aiming high

Tue, Jun 21 2011

LE BOURGET, France (Reuters) - Airbus dominated the Paris Air Show on Tuesday with a stream of new orders for its fuel-efficient A320neo and hammered out a long-awaited final deal with an Indian airline that will set a new record in terms of numbers of planes sold.

Indian budget carrier IndiGo is set to unveil on Wednesday the $16 billion order for 180 Airbus aircraft, the biggest boost to date for the revamped A320neo.

The hike in oil prices this year has helped spur a rush of orders for more fuel-efficient aircraft at the show, giving a boost to Airbus's revamped A320neo passenger jet.

But this has increased pressure on arch-rival Boeing and limited scope for newcomers Russia and China.

European plane maker Airbus notched up $25.9 billion of orders by the second day, outselling U.S. rival Boeing's $19.1 billion. Early on Tuesday, the Airbus sales chief said it had 544 commitments for its new A320 aircraft, including a memorandum of understanding with leasing company CIT for 50.

The healthy demand from buyers has provided evidence that a solid upswing in civil aviation is underway, powered by emerging markets in Asia. High fuel prices have also given buyers a new sense of urgency to buy fuel-efficient planes.

"It highlights the pressure that mature airlines are under to make themselves more efficient and have up-to-date aircraft," said Howard Wheeldon, senior strategist at London brokerage BGC Partners.

China and Russia are under the spotlight at the show as they try to enter the market for passenger jets with more than 100 seats. Russian Prime Minister Vladimir Putin visited the show on Tuesday to tout his country's aerospace industry.

More established newcomers from Brazil and Canada, are also edging into Airbus and Boeing territory by building planes with 120-130 seats in additional to regional jets.

Long-time rivals Boeing and Airbus are locked in a strategy battle over the huge market for single-aisle aircraft. These narrow-body planes, the backbone of the fast-growing budget airline market, are set to be the main battleground for orders between Airbus and Boeing at the biennial show.

Airbus is marketing a revamped version of its A320 and Boeing is holding back on deciding whether to upgrade or redesign its 737 passenger jet, the best-selling plane in aviation history.

"I think it is going to be a different conversation at the end of the week, depending on what Airbus achieves this week in terms of orders for the neo," Henri Courpron, Chief Executive of International Finance Lease Corporation, the world's largest aircraft leasing company told Reuters.

"So if we assume, based on rumors and reports, that the (Airbus) neo is going to be a great success this week, then it prompts Boeing to do something. It cannot do nothing," he said.

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.

Boeing conceded it might lose some custom while it ponders the future of its 737. The firm said on Sunday it would decide by year-end on its new strategy.

EMERGING PLAYERS

Moscow is pushing for Russian companies to up their spending on research and development as the government tries to diversify the economy away from oil and gas and resources.

Russian planemaker Sukhoi is to bring a business jet version of its regional airliner to the market, showing the country's intent to make an impact on the international aircraft business.

Sukhoi has signed a memorandum of understanding to sell 12 of its Superjet 100 mid-size aircraft to Indonesia's Sky Aviation, a spokeswoman said.

SuperJet International is a joint venture between Italian Finmeccanica's Alenia and Sukhoi. "We are targeting a market of between 80 and 100 aircraft over the next 20 years," SuperJet International CEO Carlo Logli said.

China has come to the show for the first time with a model of its own passenger jet.

Commercial Aircraft Corporation of China (Comac) expects to have its C919 aircraft up and running by 2014 with first deliveries two years later.

The plane could eventually rival Airbus' A320 and Boeing's 737 in the short- and medium-haul market. It has signed a deal with budget carrier Ryanair for aircraft development.

Brazil's Embraer, the market leader in the regional jet market, sees "good chances" of firm orders from U.S. carrier Delta Air Lines.

"Our expectation is that Delta decides about all this in October ... they are in talks with everyone," Paulo Cesar de Souza e Silva, who heads Embraer's commercial aviation unit, said in an interview with Reuters at the show.

Canada's Bombardier has announced a provisional order for up to 30 of its CSeries aircaft worth close to $2 billion

(Additional reporting by Victoria Bryan, Gilles Guillaume, Kyle Peterson, Rhys Jones, John Irish, Tim Hepher; Writing by John Irish and Jane Merriman; editing by Sophie Walker and Erica Billingham)

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Comments (6)
phuyayyay wrote:
Now that the airliner business has gone global, now is not the time for the NLRB and the Obama administration to pile on Boeing with law suits. But what do the unions care about maintaining their jobs when they have Obama in their corner? And what does Obama know about the global economy unless it concerns a union? The answer is nothing. Oh, he knows a lot about Boeing from his numerous trips on AF 1. Other than that, he is clueless of the industry, business and creating private sector jobs.

Jun 21, 2011 10:22am EDT  --  Report as abuse
UltraDave wrote:
btw, it’s interesting to note that the c919 is built on designs stolen, err, negotiated with mcdonnell douglas that ultimately proved to be smoke & mirrors for our friends in long beach, ca.

Jun 21, 2011 12:50pm EDT  --  Report as abuse
SanPa wrote:
The advantage Airbus has is the patience of the state as a shareholder. Unlike the Wall Street type who seek immediate ROI and will cut out at a moment notice, or sell out to the Chinese, the state owner can be patient. Airbus has been investing in a future, that the capitalist worms of Wall Street have eaten away from Boeing.

Jun 21, 2011 1:32pm EDT  --  Report as abuse
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