Aircraft Makers Set For Orders Battle At Farnborough Airshow

All world’s biggest aircraft manufacturers will be here on Monday for the start of the Farnborough International Airshow, hoping to secure major deals despite record-high oil prices.

Earlier kerosene, the fuel used to power planes, is distilled from crude oil, which rocketed to a historic peak above 147 dollars a barrel on world markets last Friday.

Soaring fuel costs are causing airlines to collapse as they push up inflation and contribute to weaker economic growth around the world, and in the case of Denmark, a recession.

Canadian planemaker Bombardier on Sunday said it planned to launch its eco-friendly CSeries single-aisle passenger jet in 2013 — a plane it promised would “deliver dramatic energy savings.”

Canadian planemaker Bombardier has issued a challenge to bigger rivals Boeing and Airbus with the launch of a new jetliner.  The C-series plane will carry 110-145 passengers and is designed to compete against the aging Boeing 737 and Airbus A320 jets – as well as the ERJ 190 made by regional jetmaker Embraer of Brazil.  Bombardier’s largest plane currently flying, the CRJ-900, has a maximum of 88 seats.

German airline Lufthansa says it provisionally has ordered 30 of the new planes with an option of buying 30 more.

Bombardier Chief Executive Officer Pierre Beaudoin says the planemaker is also in discussions with other airlines, which he declined to name. The company has said it needs 50-100 solid plane orders before moving ahead with production.  Bombardier, based in Montreal, says the plane would enter service in 2013, and each would cost $46.7 million at list price.

Bombardier said it had received “significant interest” worldwide regarding the new plane.  Bombardier also announced that final assembly of the CSeries will be done at the company’s plant in Mirabel, Quebec.

The main fuselage will be manufactured by China Aviation Industry Corp. I, known as AVIC I, which Bombardier said has agreed to invest $400 million in the CSeries program.

The government of Canada has committed US$350 million in financing and the provincial government of Quebec an additional $118 million, while the Northern Irish and U.K. governments have agreed to invest £155 million, or about $300 million.

Bombardier will provide one-third of the expected $3.2 billion development cost, and key suppliers the remainder.

German airline major Lufthansa said it is interested in buying 30 CSeries jets in the role of launch-customer, adding it could increase the order to 60 which would earn Bombardier a total of 2.8 billion dollars (1.8 billion euros).  Nico Buchholz, senior vice president, corporate fleet, Lufthansa, said Bombardier’s CSeries would meet the German airline’s “stringent requirements for sustainable fleet development, both in terms of environmental and commercial requirements, and flexibility for the future.”

Other fuel-efficient commercial planes already being flown or awaiting their launch include the Airbus A380 superjumbo and mid-sized A350, as well as Boeing’s Dreamliner.

The week-long Farnborough airshow outside London is a traditional battle ground for planemakers, especially European aerospace giant Airbus and its US rival Boeing, for securing orders of new aircraft.

Oil-producing Gulf states were expected to make large deals for commercial planes at the biennial event thanks to extra revenue generated from soaring crude prices.

Surging oil prices are an “opportunity” which will advance orders for new, more fuel-efficient aircraft, the chief executive of Boeing, James McNerney, said in an interview published Sunday.

“The high price of oil is speeding up the process of the oldest, least efficient planes being taken out of service because they are no longer profitable,” he told the French weekly Journal du Dimanche.

Etihad Airways, the national carrier of the United Arab Emirates, has said it is likely to announce orders of between 50 and 100 aircraft at Farnborough, but did not reveal which ones.

But analysts warn that publicly owned airlines in countries suffering from inflation, the credit crunch and slowing or negative economic growth, may find it difficult to afford big deals at the air show.

In the first six months of this year alone, 25 airlines went bust or ceased operating and more could fold as fuel prices continued to rise, a spokesman for aviation industry association IATA said last week.

~ by krishna Raj on July 14, 2008.