* Cathay ends drought for A350 with potential $4.2 bln deal
* Boeing bags $9.3 bln 737 provisional deal with GECAS
* Analysts see subdued air show, Airbus remains bullish
* Defence firms see long-term downturn in US, Europe mkts
By Victoria Bryan and Andrea Shalal-Esa
FARNBOROUGH, England, July 10 Airbus
has won a potential $4.2 billion order for its A350 passenger
jet, its first major deal at a subdued Farnborough Airshow,
where a faltering global economy is casting clouds as dark as
the skies over southern Britain.
The deal announced on Tuesday with Hong Kong airline Cathay
Pacific is a major boost for the European planemaker,
which has been struggling to sell its A350-1000 "mini-jumbo" and
make a dent in Boeing's hold on the lucrative corner of
the passenger jet market, just below 400 seats.
Boeing itself announced a provisional deal to sell 100
next-generation narrowbody 737 airliners to leasing firm GECAS.
They are worth around $9.3 billion at list prices.
That was the U.S. group's second big deal for the revamped
plane in as many days, bolstering its fightback against Airbus's
A320neo in the top-selling short-haul segment of the market.
Both deals, however, were well flagged in advance of the
show, where there have so far been no major surprises.
The event "really has been pretty quiet," said Scott
Donnelly, chairman and chief executive officer of Textron Inc,
the U.S. manufacturer of Bell and Cessna aircraft. He told
Reuters: "It's certainly one of the quieter Farnboroughs."
Boeing and Airbus, which battle for the bulk of a jet market
estimated at $100 billion a year, played down expectations ahead
of the aerospace industry's showcase gathering, arguing their
order books were already bulging.
Despite stuttering economies, they say demand remains strong
as airlines modernise fleets to survive high fuel costs and the
balance of growth shifts towards Asia, with Boeing raising its
long-term industry forecasts last week.
Airbus sales chief John Leahy was in typically combative and
upbeat form: "The party's over?. Why, it's only the second day
of the show, for heavens' sake," he said of suggestions orders
were drying up. "We'll have some important announcements.
"The order rate has to slow down at some point," he told
Reuters Insider TV. "We're looking at six to seven years worth
of production running flat out if we don't sell anything for the
next six or seven years."
However, some analysts say the euro zone debt crisis and
slowing economic growth in China could see existing orders
delayed or cancelled, and that some recent deals suggest Airbus
and Boeing are heading into a price war.
"We can't see how it could be a very successful airshow this
year," Cheuvreux analysts said in a research note, predicting
the Farnborough week will produce a combined 300-400 orders for
Airbus and Boeing, less than half the number at the equivalent
annual show at Paris last year.
ATTACK, THE BEST FORM OF DEFENCE
Defence firms are braced for even tougher times as
governments on both sides of the Atlantic rein in spending to
reduce their debts, although they expect demand from Asia and
the Middle East to ease the pain.
"We're anticipating that the defence budget downturn in both
the United States and Europe is a longer-term downturn, so we
expect that to be a relatively flat market for us over the next
decade," Dennis Muilenburg, chief executive of Boeing's defence
division, told Reuters Insider TV.
Marillyn Hewson, who will take over as president and chief
operating officer of Lockheed Martin Corp, agreed the
outlook was challenging at home, but saw opportunities in areas
like unmanned systems and cybersecurity.
"It's an unpredictable world that we're in. We don't know
what's going to happen with global security," she told Reuters.
ALL SHAPES AND SIZES
Airbus, owned by European aerospace giant EADS, said Cathay
Pacific planned to buy 10 new A350-1000 aircraft, worth around
$3.2 billion at list prices. It also converted an existing order
for 16 A350-900 jets to the larger model, adding a further $1
billion to the possible new income from the day's signing.
The carbon-composite A350 spans two of the accepted
categories of airliner, aiming to challenge the Boeing 787
Dreamliner as well as the U.S. company's most profitable plane,
the 777 mini-jumbo.
Boeing, meanwhile, said GECAS had committed to buy 75 of its
737 MAX 8 planes as well as 25 of its next-generation 737-800.
That deal leaves Boeing well ahead of Airbus in terms of
orders at the rain-soaked airshow.
The GECAS deal was widely anticipated. The leasing firm's
parent company General Electric has a joint venture with
France's Safran to produce the LEAP engines that will
power the 737 MAX.
Earlier in the day, Boeing unveiled long-awaited details on
the payload and range of the 737 MAX, arguing it would fly
farther and offer more revenue potential than both its
predecessor and its main competitor.
"We did come a little bit late to the party, but the
acceptance of this product is overwhelming. Customers really
like what they see," Randy Tinseth, vice president of marketing
at Boeing Commercial Airplanes told Reuters Insider TV.
Like Airbus's Leahy, he was optimistic demand would hold up.
"There's no question here in Europe, the airlines have been
suffering. At the same time, we do see markets that are
successful," he said. "But the goods news is: traffic is growing
and airlines as a whole this year should be profitable."