Bourget, France: Dismal financial prospects for the airline industry and the puzzling crash of an Air FranceAirbus have cast a pall over this year’s biennial Paris Air Show that opened Monday.
Aviation industry executives and analysts foresee few blockbuster orders emerging from the week-long exposition at Le Bourget near Paris.
Grappling with dwindling demand and rising oil prices, the airline industry, according to the International Air Transport Association, could lose $9 billion (Rs43,110 crore) 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 Co. (EADS), Airbus’ parent company, “this will not be air show of orders.”
Rain-soaked: Visitors at the first day of the 48th Paris Air Show on Monday. The show comes at a time when the International Air Transport Association estimates sector losses this year could touch $9 billion. Pascal Rossignol / Reuters
Two years ago—well before the world fell into recession—manufacturers Airbus and US rival Boeing Co. won 800 orders worth around $100 billion.
“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.”
Organizers 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 1 June 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 1 January-31 May, this year, Airbus received 11 orders and 21 cancellations. In 2008, the company overtook US rival Boeing with 777 orders and 483 deliveries. Boeing has said that from 1 January-2 June, it had received 65 new orders, offset by 65 cancellations.
“Priority No. 1 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 the 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 Nicolas Sarkozy and German Chancellor Angela Merkel to allow six more months of discussion on the fate of the €20 billion (Rs1.3 trillion) 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 them have threatened to abandon the deal, forcing EADS to renegotiate 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.