Farnborough Faces Fewer Orders This Year

July 10, 2016

The aerospace industry is preparing to celebrate major milestones at the Farnborough Airshow this week as Boeing turns 100 and Bombardier marks the entry into service of the CSeries.

The July 11-17 event, which alternates with the Paris Airshow as the industry's premier showcase, will see new aircraft displayed, but is not expected to produce the flood of airliner orders seen in previous years.

After a record multi-year sales bonanza for fuel-efficient new models, sellers are on the road drumming up business for the show. But industry observers say many airlines are reluctant to make decisions as doubts over the economy disrupt the self-confidence and big money usually displayed at such events.

"The issue is how do you as a manufacturer survive the ill winds blowing from the outside world," said Richard Aboulafia, vice-president at Virginia-based consultants Teal Group.

"It is getting grimmer out there."

Despite the uncertainties - including Britain's shock decision last month to leave the European Union - jet-makers are expected to confirm bullish 20-year outlooks. They face some doubts over Asian demand, though there could be surprise orders from one or two of the region's low-cost players.

"GDP and traffic growth are pretty positive but there are unknowns," said Eric Bernardini of consultancy AlixPartners.

"If China’s slowdown spreads to the rest of Asia… then traffic in Asia could slow and that could lead to deliveries being delayed or halted to some Asian companies."

Already there have been signs of some order deferrals but Airbus and Boeing have plenty of cushion in their backlogs.

There are particularly concerns over a possible glut in wide-body aircraft later this decade, while smaller planes are still in demand and are expected to dominate orders at Farnborough.

While the latest generation of wide-body jets showcased advances in carbon composite airframe construction, the focus of innovation in smaller aircraft is led by the engine makers.

Airbus so far leads in a fierce market battle triggered by the latest engine upgrades, but delays in engine deliveries from Pratt & Whitney have left around 25 incomplete aircraft on the ground in Toulouse.

The delays mean the A320neo will have to sit out the Farnborough Airshow and will not be parked among rival models that for the first time include the rival Boeing 737 MAX.

Compounding its woes, Airbus was struggling on the eve of the show even to obtain permission for its back-up plan to fly a pair of A320neos over the Farnborough gathering, following a tightening of formation display rules that also affects Britain's Red Arrows display team.

Hinting at further order announcements, though, an Airbus spokesman said the A320neo would still be "all over the show."

By contrast, Boeing plans to fly its rival 737 model, but faces potentially costly economic questions over the design of the 737 MAX family, which has been outsold by the A320neo.

Delegates will be watching for any updates on plans to beef up the smallest version of the MAX and add a larger new version called the 737 MAX 10.

Airbus and Boeing generally split the market for narrow-body jets which generate most of the industry's revenue, and without which they could not afford to invest in bigger planes.

That lifeline is increasingly being challenged by new producing nations including Canada, China and Russia.

Canadian manufacturer Bombardier's CSeries will go into service on Friday, as Boeing celebrates its centenary, but the plane has failed to make a dent so far in sales of the two industry giants.

(Reuters)