Dismal economy, Air France crash over Paris show

By AFP

July 15, 2010 Updated Jun 15, 2009 at 2:01 AM CDT

Dismal financial prospects for the airline industry and the puzzling crash of an Air France Airbus have cast a pall over this year's biennial Paris Air Show.

Aviation industry executives and analysts foresee few blockbuster orders emerging from the week-long exposition at Le Bourget near Paris, which this year celebrates its 100th anniversary.

Grappling with dwindling demand and rising oil prices, the airline industry, according to the International Air Transport Association, could lose 9.0 billion dollars (6.4 billion euros) this year, almost double an estimate made three months ago.

Under the circumstances, according to Louis Gallois, chief executive at the European Aeronautic Defence and Space Company (EADS), Airbus' parent company, "this will not be air show of orders."

Two years ago -- well before the world fell into recession -- manufacturers Airbus and US rival Boeing won 800 orders worth more than 100 billion dollars (71 billion euros).

"I don't expect any major announcements next week in terms of sales," said IHS Jane's aviation analyst Chris Yates, who described the state of the industry as "precarious".

"And that's going to be the case until we come out of this recession."

Organisers are nonetheless predicting the presence of 2,000 exhibitors, a record, and around 300,000 visitors, roughly the same as in 2007.

"This ... air show is overshadowed by two events," Airbus head Thomas Enders told a seminar here, recalling the still unexplained June 1 loss over the Atlantic of an Air France Airbus A330 and the deep financial crisis that has whacked global aviation.

Enders, who last week described the A330 as "one of the safest planes ever built" and appealed for patience during the accident probe, said that while Airbus still hoped to receive around 300 orders this year the final tally "could be considerably lower".

From January 1 to May 31 this year Airbus received 11 orders and 21 cancellations. The company in 2008 overtook US rival Boeing with 777 orders and 483 deliveries.

Boeing has said that from January 1 to June 2 it had received 65 new orders, offset by 65 cancellations.

"Priority number one is to secure deliveries and support our customers," Enders said, stressing that 2010 and 2011 would be critical years for the airline sector as it struggles to overcome the impact of global recession.

In addition to questions raised by the loss of the Air France jet, which took the lives of all 228 board, Airbus must also contend with major delays to its A400M military transporter.

Gallois hailed as "good news" a decision by French President Nicholas Sarkozy and German Chancellor Angela Merkel to allow six more months of discussion on the fate of the 20-billion-euro A400M programme, which is now at least three years behind schedule because of technical problems.

France and Germany, along with Spain and Britain, are the principal participants in Airbus.

"My hope is that we could have some kind of agreement before the end of the year," Gallois said.

"France and Germany haven't the capacity to decide alone," he added, but they represent "the first stone of the building".

Gallois noted that Britain has some "specific requests ... we will see if we can accommodate some of them."

Clients signed up so far for the A400M are Germany, Spain, France, Britain, Turkey, Belgium and Luxembourg, some of whom have threatened to abandon the deal, forcing EADS to re-negotiate delivery schedules.

Boeing too has encountered development problems and delays with its long-haul, fuel-efficient 787 Dreamliner, although company officials now hope to see the aircraft make its first test flight before the end of the month.

But the 787, along with the A400M, is likely to be a no-show at Le Bourget this week.

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