August 9, 2022

At the Paris Air Show, Anticipating a Surge in Sales

The organizers of the Paris Air Show, which opens on Monday at Le Bourget airport, north of the capital, said that most major exhibitors had reduced their budgets for the weeklong trade show by 10 to 30 percent from the levels of 2009, the last time the industry gathered here.

Still, the number of exhibitors was expected to reach a record, 2,100 — many of them subcontractors and suppliers to companies like Boeing and Airbus — from 80 countries.

Louis Gallois, the chief executive of European Aeronautic Defense and Space, the parent company of Airbus, said he expected a lively week.

“The market is dynamic and definitely on the right track,” Mr. Gallois said during a recent interview. “Traffic is good and airlines are in a better financial situation.”

The global airline industry made a net profit of $18 billion in 2010, bouncing back from combined losses of nearly $26 billion in 2008 and 2009. The airlines are expected to be profitable again this year, to the tune of about $4 billion, according to the International Air Transport Association.

Despite the recent jump in oil prices and turmoil in Japan, North Africa and the Middle East, air passenger and cargo demand are expected to increase 4.4 and 5.5 percent, respectively, this year, largely in line with long-term trends.

“The downturn in commercial orders was short-lived,” said Philip Toy, a commercial aerospace analyst at AlixPartners in Southfield, Mich. He, too, forecast the signing of a number of new contracts in coming days, particularly for the newest version of Airbus’s popular A320 single-aisle jet, which will be fitted with more fuel-efficient engines and a more aerodynamic wing.

The A320neo — the letters stand for new engine option — will be available for delivery beginning in 2016, and Airbus has been promising fuel savings of as much as 15 percent over current engines. It is expected also to run more quietly, with lower operating costs, and be able to fly farther or carry heavier payloads while emitting less greenhouse gas.

Airbus has booked more than 200 firm orders for the A320neo since it was introduced late last year, with commitments from customers to buy as many as 200 more.

Analysts said the momentum building behind the A320neo was putting pressure on Boeing, the American plane maker, to follow suit with a revamped version of its 737, rather than produce a fully redesigned single-aisle jet. After more than 18 months of deliberation, Boeing has yet to decide which strategy to pursue. Boeing has indicated that an announcement is unlikely at Le Bourget.

“They need to make an announcement very soon, before the end of this calendar year,” or risk losing customers to Airbus, Mr. Toy said. “Airbus is no doubt anxious to increase the noise about Boeing’s indecision.”

Randy Tinseth, vice president for marketing at Boeing, said that the manufacturer continued to lean toward an all-new 737 replacement jet that would enter the market in 2019 or 2020 — an approach he said was preferred by customers. But Boeing was not ruling out a new engine, which he said would be 11 percent more fuel-efficient than those on existing models.

“We are going to take our time,” Mr. Tinseth said. “When the decision is ready to be made, we will make it.”

Meanwhile, Airbus also plans to give an update on the development of its latest plane, the A350-XWB, which is slated for delivery in late 2013. The assembly of the first test aircraft is expected to begin at the end of this year, with flight tests scheduled for 2012.

Analysts said Boeing probably would seek to focus attention during the show on its newest twin-aisle jets: the 787 Dreamliner, its competitor to the A350; and the 747-8, a stretched version of the 747. Both the Dreamliner and the 747-8 will be on display at Le Bourget this year for the first time.

“Boeing will quietly take their blows on the narrow-body front while playing up” its wide-body offerings, said Richard Aboulafia, an analyst with the Teal Group, an aerospace and defense consulting group in Fairfax, Va.

After nearly three years of production delays, Boeing plans to deliver its first 787 — 52 percent of which is made from lightweight composite materials rather than metal — to All Nippon Airways in late July or early August. Meanwhile, delivery of the first freighter version of the 747-8, to Cargolux of Luxembourg, is also expected this summer. Lufthansa will be the first airline to receive the passenger version of the plane, which can seat as many as 500 people, in early 2012.

At the smaller end of the spectrum, analysts said they would be watching closely to see how many orders the makers of regional jets, which typically seat 100 to 200 passengers, would manage to garner at the show.

Despite relatively weak demand, the sector has become increasingly crowded in recent years, with manufacturers from Brazil, Canada, China, Japan and Russia.

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