Airbus, Boeing See Farnborough Orders Surge as Flights Take Off

Airbus SAS and Boeing Co. won 237 jetliner orders worth $28 billion at this week’s Farnborough Air Show, more than three times the number announced in Paris a year ago, prompting some executives to say the global slump is over.

Airbus won 130 contracts with a list price of $13 billion, edging out Boeing on 103 orders worth $10 billion. The European company also announced $15 billion of pledges versus $4 billion at Boeing. In the regional market, Brazil’s Embraer trumped Bombardier Inc., which failed to win new buyers for its CSeries.

Orders were dominated by the resurgent aircraft-leasing industry, with Steven Udvar-Hazy’s Air Lease Corp. acquiring 105 single-aisle planes and General Electric Co.’s GECAS adding 100, both spreading orders across the two main manufacturers. Airbus, which leapfrogged Boeing as the largest jet manufacturer in 2003, lifted its order forecast for this year to more than 400 jets, and Boeing said it had raised internal targets.

“I’m surprised by the level of enthusiasm for sustainable recovery, given that we’re in the early stages of an economic decline that could go on for years,” said Howard Wheeldon, senior strategist at BGC Partners LP in London. “The industry is saying we’re through this, we’re moving on -- the light at the end of the tunnel is already here. That’s the sense you get.”

Embraer, or Empresa Brasileira de Aeronautica SA, scooped 37 contracts worth $1.4 billion for its regional jets, the bulk of them from Flybe, Britain’s biggest domestic airline, together with pre-orders for an additional 34 planes valued at $1.3 billion.

CSeries Flop

Bombardier presented 23 firm orders valued at $1 billion for its business jets and turboprops at the Farnborough event. It announced no regional jet contracts and failed to secure Qatar Airways Ltd. as a buyer for the CSeries, after the Gulf carrier couldn’t reach terms with engine maker Pratt & Whitney.

The biggest single airline contract was from Dubai-based Emirates, which bought 12 Boeing 777-300ER long-haul planes valued at $3.25 billion. Gulf rival Qatar also added two 777s.

“The world will start traveling again, there’s plenty of traffic for everyone,” said Emirates President Tim Clark, whose airline has ordered 90 of Airbus’s A380 superjumbos in total.

Among Western carriers, AMR Corp.’s American Airlines will buy 35 Boeing 737s, OAO Aeroflot is adding 11 Airbus A330 and Virgin America Inc. signed a pledge for 40 A320s.

The airline industry will post a $2.5 billion profit in 2010, reversing two years of losses, the International Air Transport Association predicted last month, scrapping an earlier estimate for a $2.8 billion deficit.

Traffic Returns

Passenger traffic climbed back above the pre-recession highs of early 2008 in May, and premium travel rose the most in six years as business confidence increased. While seat occupancy reached 76 percent, fleet utilization is still 5 percent below pre-recession levels for single-aisle planes and 8 percent lower for wide-body jets, IATA says.

The orders won by Boeing and Airbus this week eclipsed the 78 orders and pledges in Paris last year. They also fell 82 short of the total for the last Farnborough show in 2008, which predated the credit crunch and recession, having been held two months before the collapse of Lehman Brothers Holdings Inc.

Airbus Sales Chief John Leahy said the sales surge shows “the recession is definitely over,” while Tom Enders, the chief executive officer, said the show was “good for the industry,” with more contracts signed than anticipated.

Airbus had previously targeted as many as 300 orders for 2010. Enders said the Toulouse, France-based company will achieve a production target of more than 20 A380 double-deckers and aims to sign up one more customer for the jet in 2010.

‘Hot Cycle’

“The business will stay hot, because it’s a hot cycle,” Marlin Dailey, Boeing’s commercial sales chief, said in an interview. “Whether that will translate into orders is hard to say, but there’s definitely a lot of interest. On balance, we’ll see a growth trend over the next couple of years.”

General Electric Co., the world’s biggest maker of jet engines, predicted the fastest growth in the industry coming from emerging markets such as the Middle East, Asia and Latin America. Developed economies will expand more slowly, GE Aviation Chief Executive David Joyce said.

“It makes you feel good that everyone is feeling some part of the recovery versus last year,” Joyce said in an interview. “In the past month we’ve started to see some positive trends.”

Louis Chenevert, CEO of United Technologies Corp., which owns Pratt, said external events could still impede the recovery, citing past developments such as the Sept. 11, 2001, attacks on the U.S., the SARS epidemic in Asia and the Icelandic ash cloud that closed European airports this spring.

“While we’re optimistic that the outlook looks a lot better, external forces can change the picture,” he said in an interview. “You just never know what’s in front of you.”

To contact the reporters on this story: Susanna Ray in Farnborough, England, via sray7@bloomberg.net; Andrea Rothman in Farnborough, England, via aerothman@bloomberg.net; Rachel Layne in Boston at rlayne@bloomberg.net

To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net; Ed Dufner at edufner@bloomberg.net

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