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SHOWING FOR ONE WEEK ONLY

SHOWING FOR ONE WEEK ONLY –PARIS AIR SHOW, PALACE OF GOOD CHEER
By Howard Wheeldon, Senior Strategist at BGC Partners

As if to defy gravity no matter how bad economic news flows across the world might get this week you can guarantee that the Paris Air Show will provide plenty to cheer. No matter what relevant issues grab the attention of politicians, economists and markets with regard to recovery and future growth, no matter in what direction the vexing European sovereign debt crisis moves, no matter whether or not ‘rising’ commodity prices or inflation concerns accelerate or abate the point is that the booming commercial aviation industry will this week take yet another giant leap forward.

With GE boasting that it expects to announce $10bn of new engine orders at the Paris Air Show this week, Air Asia announcing that it is close to concluding an order for no less than 200 Airbus A320neo jets that are worth $91m each at catalogue price and what with Airbus confirming an order for another 60 A320neo aircraft from GECAS this morning the show has gotten off to a very good start. Meanwhile, Boeing announced orders and commitments for no less than 17 of its superb stretched 747-8 aircraft together with an order from Qatar Airways for six 777-300 jets plus hinting that an even bigger version of the 787 Dreamliner aimed to compete with the 900/1000 versions of the Airbus A350XWB development might soon be added to the list. Airbus and Rolls-Royce also confirmed that they will develop an even more powerful Trent XWB engine for the A350-1000 version of the plane Paris 2011 is already living up to its exciting expectations at the commercial aircraft end of the aerospace spectrum. There will be more to come, much more I suspect before this week is out and most of it good news too!

AS has been the case for much of the past thirty years Paris Air Show 2011 will gravitate around the affairs of Boeing, Airbus plus big engine makers and a handful of smaller aircraft makers such as Embraer, ATR, Bombardier. Defence related orders rarely if ever occur at air shows but the events such as this do at least provide a chance to see vast numbers of military jets in the air and on the ground plus also allow the manufacturers to provide analyst and specialist press alike the most up to date outlook on projects. As always and as I said in my preliminary view of Paris 2011 last week one of the most important aspects of a show such as this is the potential for networking.

As if to rub salt into the wounds Boeing had the ‘effrontery’ to tell us that they are now sold out on the 737 plane until 2016! How amazing is that! Indeed, if you look right across the industry and Boeing and Airbus space you will find an almost similar though perhaps not quite so severe situation on airplane programmes including the Boeing 777, the Airbus A330 and of course the two new development programmes on the bloc – the delayed Boeing 787 Dreamliner and the Airbus A350XWB. The same is true right across engine and component industry too and one wonders how on earth RR will manage to get all the Trent XWB engines it has on order against the six hundred odd A350 planes ordered from Airbus. OK, so the Boeing 787 may be three years behind schedule and cost the aircraft maker dearly. Deliveries of the mighty Airbus A380 superjumbo have been somewhat slower than desired meaning the cost to Airbus has been significant. But the basics are that this is an industry in pretty rude health. With an order backlog worth $263bn accounting for around seven years total production at current rates of output plus a belief that 33,500 planes worth $4trillion will be required over the next twenty years to satisfy industry demand (70 to be single aisle) the news from Boeing is sweet. Not to be outdone Airbus too has an order backlog that at the end of 2010 stood at 3,552 aircraft equalling six full years production.

This is a good news story so all that I can say is durin

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