Air show orders fuel economy hopes
by Tim Hepher

Reuters    Translate This Article
22 July 2010

PARIS (Reuters) - Europe's Airbus pronounced the recession over on Thursday after wrapping up a busier-than-expected Farnborough Airshow with a $3 billion-plus order for dozens of jets from Virgin boss Richard Branson.

The British entrepreneur announced the preliminary Virgin America order for 40 Airbus A320 jets, plus options for 20 more, by live video link beamed from his island in the Caribbean.

'I am happy to celebrate my 60th birthday this week and I can't think of a better present than getting 60 new planes,' Branson told a news conference.

Virgin Atlantic founder's order capped a rush of air show orders for short- and medium-haul jets, which began with the return of another aviation industry icon on Monday.

Steve Udvar-Hazy, who created aircraft leasing in the 1970s, ordered 100 Airbus and Boeing jets for his new concern Air Lease Corp, prompting a stampede of orders from other financing firms.

'Ladies and gentlemen, the recession is definitely over,' Airbus sales chief John Leahy told a news conference.

'Liquidity is back in the market, traffic is back in the market and GDP growth is back,' Leahy added.

Chief Executive Tom Enders said Airbus would sell 'north of 400' planes in 2010 compared with a previous target up to 300.

Airbus unveiled net new orders for 130 planes worth over $13 billion and Boeing 103 new orders worth over $10 billion. They had a combined 176 provisional orders worth over $19 billion.

Boeing hailed what it called a 'continuing recovery.'

Aerospace shares in Europe rose sharply, led by Airbus parent EADS which gained almost 6 percent. In mid-afternoon U.S. trading Boeing Co shares rose about 6 percent.

The optimism fed into a broad 2 percent share-market rally as confidence was also boosted by encouraging earnings.

'It looks as though we have turned the corner and that is why we are seeing strong growth,' Airbus's Leahy said.

He said airline figures showed that premium traffic was rebounding after a slump during the financial crisis.

'It went down when investment bankers and lawyers got fired, but they got hired back and planes are flying full again.'

SWAGGER RETURNS

Leahy won a bet with EADS Chief Executive Louis Gallois by doubling year-to-date orders at the show and had said on Tuesday Airbus would top its order forecasts for 2010.

Together with Branson and Udvar-Hazy, Leahy completes a trio of charismatic dealmakers whose showmanship suggests the industry has recovered a little swagger after months of misery.

But it was the Boeing 787 Dreamliner, making its debut outside the United States, that stole the show out on the tarmac in front of rows of temporary business chalets.

Industry analysts welcomed the flow of orders, which also boosted sales of regional jets but proved elusive for Canada's Bombardier as it failed to find a new C-Series buyer.

'Orders have exceeded expectations,' said U.S.-based aerospace consultant Scott Hamilton of Leeham Company LLC. 'The economy is coming back sooner than we thought.'

The International Air Transport Association said this week airlines were growing more confident as economic recovery took hold, with financial performance at pre-crisis levels.

Airbus said it was considering further increases in its staple single-aisle A320-family production to cope with the demand and may also increase production of larger planes.

Other companies at the air show reported positive signs from the market, though several executives were less forthright when talking about the recovery, saying the lights remained on amber.

While emerging markets are driving most new business, airlines in Europe and North America have yet to place big bets.

'I'm worried about the overall strength of the economy worldwide, especially places like Europe, which still have deficit and credit problems that they are working their way through,' Rockwell Collin CEO Clay Jones told Reuters.

Western defence firms were hit by fresh announcements of spending cuts in their home markets this week, but reported a steady flow of demand in Asia and the Middle East.

(Additional reporting by Andrea Shalal-Esa, Rhys Jones, Kyle Peterson, Peter Apps; Editing by Karen Foster and Richard Chang)

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