Surprise commercial orders eclipse defence


Large commercial airplane orders stole the show at the Farnborough Airshow, as Airbus raised its orders guidance for the year with the help of a resurgent leasing industry.

And on what had been expected to be the military day, there was mostly bad news for the defence industry as Italy cancelled a tranche of 25 Eurofighters and a British minister said the industry had to cut costs or see programs slashed.

Chilean carrier LAN Airlines ordered 50 Airbus A320s worth more than $4 billion, Flybe signed for up to $5 billion in planes from Brazilian group Embraer and aircraft leasing pioneer Steve Udvar-Hazy kept up his liberal spending with the purchase of 60 737-800s from Boeing Co.
“We are aiming for the stars. This industry will grow,” Hazy told journalists on the sidelines of the airshow, basking in the attention a day after buying 51 planes from Airbus and hours after taking another 20 from Embraer.

Airbus Sales Chief John Leahy told Reuters Insider TV that after selling 182 planes at the show, Airbus would easily surpass its 2010 target of up to 300 new orders. He said the ultimate figure for the year could reach as high as 400, thanks in part to orders from lessors like Hazy, reports Reuters.
“The fact they are back means that the market is recovering,” Leahy said.

There were orders for smaller players too, especially Russia, as Sukhoi sold 12 Superjet 100 jets to Orient Thai Airlines and Irkut said it would announce fresh MC-21 sales in the next two days.

All of those deals renewed the focus on commercial sales, particularly from new markets likely to be growth drivers for the sector in coming years.
“Demand from airliners as opposed to lessors is mainly coming from Asia, South America, Middle East and even Russia, which are all considered growth markets,” said Howard Wheeldon, senior strategist at BGC Partners.
“My question is, where are the European and American orders? Will they be here in the next two years? That is unlikely. The airline industry is better than it was but it is still not fit for purpose,” he said.


Commercial and military budgets are in sharp contrast — the private sector is spending more freely than it has in the past two years, while Britain’s Defence Secretary, Liam Fox, came to the show to say the country’s defence program was too costly.
“The current defence programs are entirely unaffordable and the unavoidable reality is that change is coming,” Fox told reporters, adding later that “the industry will need to help us by cutting costs and improving efficiency.”

While that caution has not stopped ostentatious displays of fighter jet capabilities by the likes the U.S. Air Force’s F22 air-superiority fighter, it has subdued the tenor of the show more generally.

Italy’s cancellation of 25 jets — aimed at saving up to 2 billion euros (US $2.6 billion) — was also a surprise, even though the Eurofighter combat jet program had been seen as being at risk in the coming wave of European defence cuts.

Italy had originally placed an order for 121 of the new-generation jets made by a consortium of Finmeccanica, BAE Systems and EADS, which represents Spain and Germany.