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July 18, 2014

Airbus beats Boeing at Farnborough in orders race

Danica Kirka
Associated Press

Airbus beat rival Boeing in the aircraft order stakes at this year’s Farnborough International Airshow, garnering nearly twice as many orders and commitments.

The victory by the European aircraft manufacturer is its second in a row in the unofficial air show competition after last year’s triumph in Paris – the French capital and Farnborough, a town in southern England, alternate the location of the airshow.

For years, the airshow has served as a platform for a sales race between the world’s two major aircraft makers, who are having to cater to customers increasingly interested in new-generation, energy-efficient planes to offset huge increases in the price of jet fuel.

Though Airbus clinched more deals at Farnborough, Boeing insisted that it has won more in the year to date. It put its figure at 783 against Airbus’ 645.

Airbus said July 17 its orders and commitments at Farnborough for 496 aircraft were valued at $75 billion. Demand for its A320neo, or new engine option, was particularly strong. Boeing, meanwhile, secured business worth $40.2 billion for 201 airplanes.

The orders and commitments we’ve received at this record-breaking Farnborough for both the A330neo and A320neo families are together an unequivocally resounding endorsement for these most cost-efficient aircraft, said John Leahy, Airbus’ chief operating officer.

Airbus’ orders intake included the largely updated versions of its A330 wide body aircraft, which launched this week. Airbus says the plane is more fuel efficient and has a longer range to help it compete against Boeing’s 787 Dreamliner.

Edward Hunt, a senior consultant with IHS, put Airbus’ win in part to the fact that the Airbus plane was sort of an old standby. The A330 has sold well and is widely in use, making it simple to service and avoiding the necessity to train pilots on a new aircraft.

But he said both manufacturers had similar offerings and that what airlines were looking for were good deals.

Each company tends to inflate its sales figures – and save up previously announced agreements to make a big splash at the show. Customers regularly negotiate enormous discounts, but the details on such sales are usually secret.

Airbus has definitely caught up, said Hunt. If I were Boeing, I would be a little bit worried.

But Hunt said the race for top numbers at the air show obscures the fact that aircraft are purchased all year long – where buyers can take their time and have a tour of the factory.

Of the 494 orders and commitments Airbus announced this week, 369 were for the A320 family of planes, which generally seat up to 180 passengers. The A320 new engine option incorporates the latest technology together with sharklet wing tips that help deliver fuel savings.

Airbus’s biggest order came from SMBC Aviation Capital, an aircraft leasing company that focuses on emerging markets. The company ordered 110 A320s equipped with the more fuel-efficient new engine option, and five A320s with the current engine option. Hong Kong Aviation Capital ordered 70 planes, including 40 A320neo models and 30 A321neos.

Boeing’s orders were also dominated by single-aisle planes, with the Boeing 737 accounting for 123 of the company’s 201 orders. China’s Hainan Airlines made a commitment to buy 50 737 MAX 8 models, reaffirming its practice of flying only Boeing single-aisle planes. Monarch Airlines, a U.K.-based carrier that serves holiday destinations around Europe, plans to buy 30 of the same aircraft, too.

If we’re underestimating anything it is the growth of the industry, said aviation analyst Howard Wheeldon. There are new players.

Though single aisle planes sold the best, the larger ones did well too.

Wheeldon noted that air travel has become accessible and possible in many regions where even a few years ago easy, cheap and available air travel was unthinkable. One of Airbus’ biggest customers was Air Asia X, which bought 50 A330-900 neos worth about $13.8 billion.

Boeing last week forecast that the Asia-Pacific region would drive demand for aircraft over the next 20 years, with single-aisle planes dominating the market.

Airlines will take delivery of 36,770 planes valued at $5.2 trillion from 2014 through 2033, Boeing estimated in a market outlook released July 10. Boeing forecast that 70 percent of those deliveries would be single-aisle planes seating up to 230 people, with the Asia-Pacific region accounting for almost 37 percent of overall sales.

Based on the overwhelming amount of orders and deliveries, we see the heart of the single-aisle market in the 160-seat range, Randy Tinseth, Boeing’s vice president for commercial aircraft marketing, said when the forecast was released. There’s no question the market is converging to this size, where network flexibility and cost efficiency meet.




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