FARNBOROUGH ROUND-UP - Record orders lift air show spirits

21st Jul 2014 07:00

Aerospace and defence companies notched up a record $201bn of business at last week's Farnborough Air Show, striking a positive note for the industry despite recent turbulence.Analysts had expected a relatively quiet show, saying the focus would be on Airbus and Boeing to prove they could deliver on their large order backlogs rather than adding to them.Rising oil prices, a profit warning by Air France-KLM and the cancellation by Gulf carrier Emirates of an order for 70 Airbus A350 jets have recently sparked questions about the industry's prospects.But Airbus and Boeing lifted the mood by unveiling a string of orders from airlines and aircraft lessors, as well as launching new versions of flagship aircraft.Boeing announced orders and commitments for 201 Boeing jets valued at more than $40.2bn at list prices, bringing its number of net orders for 2014 to 783.The Chicago-based group unveiled a new 200-seat 737 Max 8 giving airlines up to 11 more seats of revenue, although it faced questions over alleged ongoing problems with its 787 Dreamliner. The group said it was continually working on improvements.A Boeing spokesman said: "Farnborough 2014 was filled with excitement and enthusiasm among our customers, partners and suppliers and strong endorsement of our product line."Airbus announced $75.3bn of business for 496 aircraft, which the European group said made it by far its most successful Farnborough in terms of financial value and also the number of aircraft.The group announced an upgrade of its A330 wide-body aircraft but acknowledged that the A330neo may reduce or eliminate demand for the smallest version of its A350 aircraft, the A350-800.There were also orders for other companies ranging from jet engine maker Rolls-Royce and aircraft parts maker GKN to Canadian regional jet maker Bombardier and Brazil's Embraer. BubblesAnalysts at Westhouse Securities said: "Farnborough confirmed a slowing, though still high, pace of order intake this cycle, with notably high intake from leasing companies, which tends to be a cyclical peak indicator, driven by new products."The investment debate seems to have become more bearish, with a focus on order bubbles, overcapacity and potential margin erosion. Our view remains positive." Meggitt declined to comment on talk at the show that United Technologies may offer 625p a share for the aircraft braking system maker, but it said it would continue to seek value-adding acquisitions.The event ended on a sombre note as news came through about the crash of a Malaysia Airlines Boeing 777 in eastern Ukraine, allegedly shot down by pro-Russian separatists.Boeing said in a statement: "Our thoughts and prayers are with those on board the Malaysia Airlines airplane lost over Ukrainian airspace, as well as their families and loved ones."Boeing stands ready to provide whatever assistance is requested by authorities."Around 100,000 people visited the air show, where orders and commitments for civil jet engines reached 1,600 units worth $34.5bn and aircraft orders totalled 1,100, worth $152bn. A further US$14.5bn was also achieved in service contracts.Farnborough Air Show Chief Executive Shaun Ormrod said the $201bn of business done at the show was "extremely positive" for the global aerospace industry."There is already an order backlog and these additional orders will keep manufacturers in business and people employed for some years to come," he said.PW