Airbus in dash for contracts as Farnborough struggles to take off

Airbus sprinted toward deals worth $20 billion to seize the initiative at a rain-soaked Farnborough Airshow, but industry executives said the mostly lackluster event confirmed a recent boom in aerospace orders was finally fizzling out.

India’s GoAir said it had signed a preliminary agreement to buy 72 of the latest version of Airbus’s top-selling A320 aircraft, worth around $7.7 billion at current list prices and doubling an existing order.
There was some confusion over the status of the deal as negotiations continued behind the scenes following what may have been a premature announcement, but GoAir later confirmed the agreement.
AirAsia CEO Tony Fernandes, meanwhile, flew into the UK to finalize an order for 100 A321neo jets to support the airline’s expansion plans, confident of striking a deal at bargain prices as planemakers brace for a slowdown.
The 185-seat A321neo is worth $125.7 million per plane at list prices, but AirAsia is expected to pay a fraction of that after placing orders for hundreds of jets and establishing itself as one of the planemaker’s largest customers.
One source close to the matter speculated the jets could be sold to AirAsia for less than its previous large order for the smaller A320neo model, though Airbus sales chief John Leahy insisted earlier that A321neo prices were improving.
Some of the new jets will be for the Malaysian-based airline’s leasing business.
It was not immediately clear whether any of the aircraft orders to be unveiled on Tuesday replaced existing ones.
In further evidence of efforts to galvanize what has been a relatively quiet start to the biennial air show, CFM and Pratt & Whitney were competing for the right to supply engines for the A321neos, with negotiators huddled over papers in the corner of an airline award ceremony.
Europe’s Airbus and US rival Boeing have enjoyed years of strong growth thanks to rising air travel and demand for new fuel-efficient models.
On Monday, they both increased their forecasts for aircraft demand over the next 20 years, betting rising wealth in Asia would continue to boost airline passenger numbers.
But analysts are worried growing risks to the global economy, from slowing growth in China to Britain’s decision to leave the European Union, could dry up orders or even lead to some cancelations.
Indeed, air show participants report a lower level of dealmaking than in recent years.
Airbus sales chief John Leahy expressed confidence that record production plans would be upheld, thanks in part to a strategy of building up spare orders, but some airlines that have dominated previous events are widely said to be quietly rescheduling their orders for Airbus or Boeing jets.
“For both Boeing and Airbus, the question still isn’t whether or not all the aircraft they produce will have a taker, but who this taker will be and at what price,” said Bertrand Grabowski, managing director at Germany’s DVB Bank.
Underscoring the growing clout of Asia and the Middle East in the industry, Qatar Airways announced a deal to buy up to 10 percent of Latin America’s largest airline LATAM Airlines in a $613 million deal.
That follows the Gulf airline’s purchase last year of 15 percent of British Airways owner International Airlines Group , which like Qatar and LATAM is a member of the Oneworld airline alliance.
Boeing, meanwhile, said an undisclosed Chinese customer had signed a commitment for 30 of its 737 family of planes, in a deal worth more than $3 billion at current list prices, while China’s Kunming Airlines signed a memorandum of understanding to buy 10 737 MAX 7 planes, worth $660 million at catalogue prices.
Airbus confirmed an order from German airline Germania for 25 A320neos, worth $2.6 billion at list prices, as reported earlier by Reuters.

Source: Arab News