Orders for planes set to heat up
Source: Agencies |
June 11, 2012, Monday
|
Print Edition
Print Edition
A SUMMER battle for orders is underway in the global jet industry, which gathered in Beijing yesterday for the first of two crucial events in two months, pitting the world's largest planemakers against each other in a race for deals worth US$50 billion at catalogue prices.
The potential deals span all continents and every pattern of powered flight from the largest airliners to warplanes and luxury business jets, shielding aerospace workers from the worst effects of a slowdown due to0 Europe's debt crisis.
But analysts say Airbus and Boeing are having to offer sporadically hefty discounts to ride out economic uncertainty, especially for maturing models or early batches of new ones like the 787 Dreamliner.
Boeing may win the fiercely contested annual order race for the first time since 2006 as it catches up with a decision by Airbus to revamp medium-haul jets, resulting in big fuel savings for airlines on the Airbus A320 and Boeing 737.
The dominant civil planemakers are also positioning themselves early ahead of the July 9-15 Farnborough air show in the UK, with deals worth US$14 billion announced in the past 72 hours.
Both companies have accused each other of waging a price war to win hundreds of orders for the revamped A320neo and 737 MAX respectively, and deny cutting corners themselves. Several industry analysts say pricing is under pressure this year.
"Both sides are heavily discounting," said Richard Aboulafia, aerospace analyst at US-based Teal Group.
Although the made-over medium-haul jets offer airlines a 15 percent cut in fuel, the industry's highest cost, most carriers remain under financial pressure and some are delaying deliveries to shore up their cash positions.
Airlines meeting in Beijing were expected to hear that their industry body, the International Air Transport Association, has left its forecast for 2012 sector profit unchanged at US$3 billion, but unease is growing as Europe discusses a new bailout and China's economy slows.
Manufacturers are also seeing a steady rise in demand for top-line business jets from China as the number of millionaires in the world's second largest economy rapidly expands.
China accounts for a quarter of global consumption of luxury goods despite a recent cooling of its economy.
The potential deals span all continents and every pattern of powered flight from the largest airliners to warplanes and luxury business jets, shielding aerospace workers from the worst effects of a slowdown due to0 Europe's debt crisis.
But analysts say Airbus and Boeing are having to offer sporadically hefty discounts to ride out economic uncertainty, especially for maturing models or early batches of new ones like the 787 Dreamliner.
Boeing may win the fiercely contested annual order race for the first time since 2006 as it catches up with a decision by Airbus to revamp medium-haul jets, resulting in big fuel savings for airlines on the Airbus A320 and Boeing 737.
The dominant civil planemakers are also positioning themselves early ahead of the July 9-15 Farnborough air show in the UK, with deals worth US$14 billion announced in the past 72 hours.
Both companies have accused each other of waging a price war to win hundreds of orders for the revamped A320neo and 737 MAX respectively, and deny cutting corners themselves. Several industry analysts say pricing is under pressure this year.
"Both sides are heavily discounting," said Richard Aboulafia, aerospace analyst at US-based Teal Group.
Although the made-over medium-haul jets offer airlines a 15 percent cut in fuel, the industry's highest cost, most carriers remain under financial pressure and some are delaying deliveries to shore up their cash positions.
Airlines meeting in Beijing were expected to hear that their industry body, the International Air Transport Association, has left its forecast for 2012 sector profit unchanged at US$3 billion, but unease is growing as Europe discusses a new bailout and China's economy slows.
Manufacturers are also seeing a steady rise in demand for top-line business jets from China as the number of millionaires in the world's second largest economy rapidly expands.
China accounts for a quarter of global consumption of luxury goods despite a recent cooling of its economy.
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