(Corrects para 3 - show dates Feb. 11-16)
By Siva Govindasamy and Tim Hepher
SINGAPORE Feb 7 Aerospace firms will finalise
billions of dollars of deals at next week's Singapore Airshow,
hoping to ride out a storm in emerging markets whose prosperity
is vital to their plans to keep producing record numbers of
Asia's largest aerospace gathering is usually a "show and
tell" event where executives come to mingle with some of the
world's biggest long-haul carriers and Asia's ambitious new
travel tycoons, as well as the region's busy military buyers.
After a record $200 billion of deals at last November's
Dubai Airshow, few expect Asian buyers to be ordering in similar
quantities - yet the Feb. 11-16 event will test the appetite of
one of aviation's fastest growing regions.
"Asia is a huge market but has been somewhat eclipsed by the
Gulf which has the same idea about how to pursue traffic and got
to the orders race a few months before Singapore," said
aerospace analyst Richard Aboulafia, vice president at
Virgina-based Teal Group.
Vietnamese, Indian and Thai carriers will place orders for
over 100 Airbus or Boeing passenger jets worth
$12 billion at list prices, industry officials say. Malaysian
Airlines could also place an order for Airbus
long-haul and medium-haul jets.
Both Airbus and Boeing have committed to record production
rates for their most popular models and have longer-term plans
to produce more than 100 narrowbody jets a month between them -
churning out a $100 million jet every few working hours.
But executives will be looking out for any signs that
financial turmoil in key aviation markets like Indonesia and
Thailand will threaten economic growth, which directly
determines the level of air traffic demand.
"The manufacturers might be getting ahead of themselves
given the troubles in emerging markets," said Aboulafia.
"Many of these markets are in some form of currency crisis
or economic downturn and the focus will be coming back to the
Middle East and a hoped-for North American resurgence."
The world's no. 1 planemaker Boeing does not see its
commercial jet business affected by weakness in emerging
markets, Chief Executive Jim McNerney said this week. But he
noted more divergence among such countries, and China and the
Middle East remained strong.
"Some perspective is very important. We have a short term
blip in growth and the orders that are being placed are for the
long term, for the requirements eight, nine or 10 years out,"
said Peter Harbison, chairman of the aviation analysts CAPA.
Airbus and Boeing will face off for the first time with
their latest lightweight long-haul jets, the 787 Dreamliner and
the Airbus A350. The A350 will make its first full air show
As well as being a magnet for commercial aviators, next
week's event in Singapore is a weapons bazaar which has grown in
importance as China's increased military assertiveness has
U.S. arms makers are counting on increased foreign sales to
offset slower demand from U.S. and European governments, whose
military budgets are under increasing pressure.
While global military spending has been on the decline over
the past few years, reflected in the Pentagon's own budget cuts,
Asian spending is on the up.
"Asia Pacific is the only region where from 2009 onwards we
have seen a steady rise in defence expenditure," said Craig
Caffrey, senior analyst, IHS Jane's Aerospace, Defence &
Security, in a recent report.
"Based on IHS Jane's Defence Budgets projections, Asia
Pacific's share of global budget spend will grow to 28 percent
from its current 24 percent by the end of the decade, reaching
China looms large in Asia, where it has overlapping
territorial claims with several Southeast Asia countries in the
South China Sea. At the same, China-Japan tensions have risen
over their rival claims to a set of tiny uninhabited islands in
the East China Sea.
North Korea's pursuit of nuclear weapons adds another
serious dimension to what is shaping up as an arms race in Asia.
In Singapore, shoppers can choose from fighter jets,
trainers, cargo planes, maritime patrol aircraft, drones,
defence radar systems, missiles, and missile defences.
The host country, although one of the smallest in the
region, has the deepest pockets and is eyeing new jets.
Its immediate priority is a billion dollar upgrade of its
F-16s, but it is also looking at buying the stealthy F-35, which
is built by Lockheed Martin Corp.
Japan has already placed an order for the F-35 - a so-called
"fifth-generation" warplane designed to be nearly invisible to
enemy radar - and South Korea is expected to finalise an order
for the jet this month.
Malaysia is assessing the Boeing F/A-18, Dassault
Rafale, Eurofighter Typhoon and Saab Gripen to
replace its ageing MiG-29 fighters, while Indonesia is also seen
as a potentially big customer for fighter jets.
Singapore and Japan are also eyeing the V-22 Osprey
tilt-rotor plans built by Boeing and Bell Helicopter, a unit of
Textron Inc. The U.S. Marine Corps is sending two of the
planes, which take off and land like helicopters but fly like
planes, to the air show.
U.S. officials are expecting questions and interest in
missile defense systems built by Lockheed and Raytheon
Co, Boeing's maritime P-8 surveillance plane, and the
KC-46A refueling plane, also built by Boeing. South Korea is
expected to kick off a tanker competition this spring.
(Additional reporting by Andrea Shalal-Esa in Washington;
Editing by Jeremy Laurence)