Global Economics

Signs of Recovery in Airline Industry


A raft of new airplane orders at the Farnborough air show in England underscores a comeback for the world's aviation business after years in the dumps

The aviation industry showed clear signs of recovery from recession with another slew of orders at the biennial Farnborough International Air Show in Hampshire yesterday.

The British no-frills carrier Flybe joined the list of major buyers as it placed a $1.3bn (£853m) order for 35 Embraer (ERJ) 175 aircraft from the Brazilian maker.

Boeing (BA) said it had agreed its second big order this week to supply Air Lease Corporation with 54 next-generation Boeing 737-800s. The first are due for delivery in 2012, with an option for another six to follow. The US manufacturer also announced a commitment from Royal Jordanian Airlines for three 787-8s, which have a list price of about $500m. The Irish leasing company Avolon is also spending $920m on 12 Boeing 737s.

Meanwhile, the world's biggest plane-maker, Airbus (EADSY), said it had reached a $5.7bn deal to supply Hong Kong Airlines with 25 aircraft – 15 of which will be the A350XWB model that is still in development.

Yesterday's deals followed $18bn of new orders confirmed on the first day of the air show on Monday. Although unlikely to meet the record-breaking $89bn of deals signed at Farnborough in 2008, the aviation industry is relieved at having bettered the woeful $7bn total sales at last year's biennial air show in Le Bourget, France.

Flybe, based at Exeter Airport, will take delivery of its first new Embraer jet in September next year. The order is scheduled for completion by March 2017, although Flybe has an option to add another 105 aircraft to the deal, taking the total value up to $5bn.

The new aircraft are central to Flybe's European expansion plans and part of its commitment to using lower-emission aeroplanes, said the chief executive, Jim French.

"We are securing an aircraft that fits with our stated aim of furthering our position as the leading regional airline in Europe," he added. "This is a good time to buy aircraft and fits Flybe's long tradition of ground-breaking deals which power the long-term growth of the company."

On Monday, Boeing said Dubai-based Emirates had agreed to buy 12 777-300s, with a list price of $2.6bn, while General Electric Capital Aviation Services (GECAS) had placed a $3bn order. Meanwhile, Airbus signed a $4.4bn deal with ALC for 20 A321s and 31 A320s, a $4.9bn contract with GECAS for 60 A320s, and a third deal with Aeroflot for 11 A330s. Canada's Bombardier (BDRAF) also announced a $122m order from Qatar Airways.

The flurry of sales follows forecasts from the International Air Transport Association that the global aviation sector would return to a $2.5bn profit this year after suffering losses of $9.4bn as the recession buffeted the industry in 2009.

Alongside the new orders, Boeing's main focus at the Farnborough show is the British debut of its lean, green 787 Dreamliner – the much-delayed composite aircraft scheduled for its first deliveries later this year.

It has also showing off a hydrogen-powered Phantom Eye unmanned spy plane. Its staunch rival Airbus is demonstrating its delayed A400M military transporter, and the vast A380 superjumbo which can carry almost 1,000 passengers.

Provided by The Independent—from London, for Independent minds

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