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British air show kicks off with flurry of orders

FARNBOROUGH, England — Boeing and European archrival Airbus racked up billions of dollars worth of aircraft sales at the Farnborough International Airshow on Monday, raising hopes that the aviation industry has touched the bottom of a deep two-year downturn.

But the horizon remains clouded — major European airlines, which are still haunted by recession, mostly kept their hands in their pockets as Middle Eastern carriers and U.S. plane-leasing firms made purchases to build up their fleets.

The optimism also isn't extending to the defense side of the sector, where massive cuts to Western military budgets were the talk of the industry's premier event.

In the United States, the world's biggest defense market, the Pentagon is looking to trim some $100 billion of savings from personnel and procurement over the next five years. In Britain, Europe's largest market, the government is considering cuts of up to 20 percent.

The biennial gathering at an airfield outside London — bringing together plane makers, airlines, government officials and military top brass — is considered by industry watchers a key test of the industry's health. The event runs through Sunday.

More than 1,000 exhibitors from 38 countries have signed up for Farnborough, with delegations from Egypt, Taiwan and Morocco attending for the first time. Organizers also cited stronger interest from major players China and Russia.

"We're gradually starting to see a slow recovery to a new norm," said Owen MacFarlane, chief executive officer of CAV Aerospace.

Analysts don't expect anything close to the record-breaking $88.7 billion worth of deals announced in Farnborough in 2008, but the gathering has already exceeded the slow orders for commercial planes at Le Bourget last year, where deals came in at about $7 billion.

Boeing Commercial Airplanes president Jim Albaugh said the market "has come back faster than we expected," and the Chicago-based company has twice raised its internal forecasts for the number of orders at the show.

The early orders, worth a total of $17.7 billion, included an Emirates deal to buy 12 Boeing 777-300ER jetliners, worth $3.6 billion at list prices. Boeing also received a $3 billion order from GE Capital Aviation Services for 40 737-800s.

EADS-owned Airbus picked up a $4.4 billion order from Air Lease Corp. for 20 A321 aircraft and 31 A320s, and a $4.9 billion order from GECAS, General Electric's commercial aircraft leasing arm, for 60 A320s. Russian flag carrier Aeroflot, the only European airline to buy on Monday, ordered 11 of Airbus' A330-300 aircraft, worth $1.7 billion.

Analysts will also be watching for developments in the bitter Boeing-Airbus battle to win a $35 billion contest to provide aerial tankers to the U.S. Air Force, replacing the fleet of KC-135 refueling planes at MacDill Air Force Base in Tampa. The World Trade Organization ruled earlier this month that European governments gave Airbus illegal subsidies for the project.

British air show kicks off with flurry of orders 07/19/10 [Last modified: Monday, July 19, 2010 8:54pm]
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