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<< Previous   of   Next >>   ADVERTISEMENT   CONTACT THE HERALD Robert Frank, City Editor frank@heraldnet.com   Published: Tuesday, July 15, 2008 Boeing splits new orders with Airbus At a relatively slow start to the Farnborough Airshow, Boeing gets a 45 firm orders from a Middle Eastern carrier. Associated Press and Herald staff FARNBOROUGH, England -- Airlines from oil-rich Middle Eastern countries saved the world's largest air show from an otherwise lackluster start on Monday, booking orders for about 150 planes valued at more than $25 billion. Many European and U.S. airlines are expected to refrain from signing any big deals at the Farnborough International Airshow as they cope with rocketing fuel prices and flagging passenger demand. In contrast, several Middle Eastern carriers with the benefit of oil-backed sovereign wealth are banking on huge investments and greater tourism in the Gulf region to justify spending for aircraft at a time when there is talk in the industry of potential cancellations and delays on existing orders. "The Middle Eastern airlines have less constraints, particularly in terms of finance," said Kepler Equities analyst Pierre Boucheny. Escalating energy costs have eaten into airlines' profits, and 25 carriers have ceased operations in the past six months. The International Air Transport Association forecasts industrywide losses of $2.3 billion this year. Kerosene, the fuel distilled from crude oil used to power planes, now accounts for around 40 percent of airline costs, up from 13 percent five years ago, the IATA said. The biggest deal Monday came from Etihad Airways, which split an order for 100 aircraft between Airbus and Boeing valued at $20 billion at list prices. Most buyers pay significantly less than the list price. "The size of our order ... mirrors the rising prominence of the Middle East and its increasing emergence as a new focal point of global aviation," CEO James Hogan told reporters. The order slightly favored Airbus, which won an $11 billion firm order for 55 planes including 20 single-aisle A320s, 25 midsize A350s and 10 of the superjumbo A380s. Hogan declined to comment on whether the dearth of orders from other parts of the world meant he was able to secure a bigger discount on the catalog price, saying only that the size of the deal involved "extensive negotiations." Etihad also announced a firm order valued at $9 billion at list prices for 35 Boeing 787 aircraft and 10 Boeing 777-300ER. In addition Etihad placed options for 25 more Boeing 787s and 10 Boeing 777s and has purchase rights for an additional 10 Boeing 787s and five Boeing 777s. Deliveries of the Boeing aircraft will start in 2011 and should be completed in 2020, while the Airbus jets will be delivered between 2011 and 2017. The recently launched low-cost airline FlyDubai also used the biennial show -- it alternates years with an event at Le Bourget in France -- to announce an order for 50 next-generation 737-800s, valued at around $3.74 billion. FlyDubai has substitution rights to convert its 737-800 orders to 737-900ERs in the future. In a smaller deal, Saudi Arabian Airlines signed a contract with Airbus for eight of the European plane maker's A330-300 wide body aircraft, valued $1.6 billion at list prices. More deals are expected throughout the five days of the trade show, starting today with Middle Eastern carrier Qatar Airways, which has a press conference scheduled. Airbus chief salesman John Leahy said he would be disappointed if the European plane maker does not book firm orders for 200 planes this week. Despite the gloom surrounding the sector, aerospace executives have been quick to strike a reassuring stance at Farnborough, suggesting the difficult economic outlook could in fact prompt more efficiency in the industry with the introduction of cleaner planes. "Is it over? No, I don't think so," said Scott Carson, president and CEO of Boeing's Seattle-based commercial airplanes division. "I think the opportunities that are presented by the crisis we find ourselves in will drive manufacturers to produce products that allow our customers to be more efficient and be profitable," he added in a briefing at the opening of the weeklong show. Carson said that Boeing had not received any cancellations, although "a handful" of customers had asked to delay their purchase.

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