Farnborough – the show where the party stopped?

In odd years, its companion show is held across the Channel in Paris. Farnborough, need-less to say, is no City of Light, but it is no fault of the English town if this year’s show lacked something of the glitter and pa-nache of last year’s Paris rollick.

The 2011 Paris Airshow, as may be remembered, witnessed an aeroplane buying spree such as had never been seen before. It was, in particular, a triumph for Euro giant Airbus, which sold a whopping 720 aircraft valued at US$72 billion. This, of course, came in spite of an eco-nomic crisis already unleash-ing itself on the old continent and threatening to spread to the rest of the world. If all was not exactly well in the aviation industry, then demand for new commercial aircraft seemed largely immune as airlines – stung by soaring fuel bills – scrambled to upgrade their fleets to more fuel efficient air-craft. Records continued to fall as the sales party marched on to shows in Dubai and Singapore.

It is perhaps too early to say for sure – one airshow does not necessarily make a trend – but Farnborough may well be remembered as the place where the party finally stopped.

That is not to say that Farnborough has been a disaster. Boeing, in particular, had a solid time of it, with its re-engined 737 MAX shaping up as the belle of the ball. After being outsold four-to-one by rival Airbus at the Paris show, Boeing had placed considerable hopes in the upgraded nar-rowbody, tabbing 2012 as ‘the year of the 737 MAX’. Farn-borough appeared to confirm those hopes as the MAX – due in 2017 – led a Boeing charge that saw the US manufacturer sell US$35. 5 billion worth of aircraft, including 260 of the future 737. The headline deal during the show came from United Airlines, which placed a firm order for 100 737 MAX-9s and 50 current gen-eration 737-900ERs (although the order was in fact announced in Chicago). After the scare of last year’s show, Boeing appears set to hold its share of the all-important single-aisle market.

But while the 737 MAX grabbed the headlines at Farnborough, there was in truth little competition. United’s 737 order, valued at US$14. 7 billion, nearly equalled the total of Airbus’s deals as the latter took in orders and commit-ments for 115 aircraft valued at US$16. 9 bn. Some were significant, including an order from Cathay Pacific for 10 A350-1000s – the first order for that aircraft in four years. But none were eye-grabbing, and the news away from the order book was not much bet-ter. Though Airbus announced a minor upgrade to its A330, it also revealed new production problems with the already-de-layed A350 and acknowledged that it would likely fail to meet its goal of selling 30 A380s this year, having sold only four through the first half of 2012.

Nor was the show all good news for Boeing. Aside from the strong sales of its smallest airliner, Boeing sold nothing. The company has not an-nounced a new deal for its larg-est jet – the 747-8 Interconti-nental – in more than a year.

At the other end of the aircraft spectrum, the news was not much better. Em-braer, the world’s third largest planemaker, saw its order book hit a six-year low amid slack demand for its regional E-Jets, of which it announced sales for only five at Farnborough. The Brazilian company said slipping demand in Europe and in some developing econo-mies would leave it increas-ingly reliant on the North American market in the short term – not exactly a sure bet.

Further clouding the outlook after Farnborough, the orders and commitments that did come out of the show included a large helping of the latter. While commitments generally do translate into firm orders eventually, the difficulty of Boeing and Airbus in closing their deals suggested a grow-ing skittishness among airlines. That sense was highlighted by the predominance of leasing companies, which aside from United accounted for most of the show’s major deals. Again, that is not necessar-ily worrying in itself – leasing companies often leverage their ability to buy big into better discounts. But the absence of airlines, and in particular the absence of European airlines, further underscored the sense of a market losing its nerve – preferring to hedge than to bet.

The long-term outlook re-mains officially optimistic. Boe-ing opened the Farnborough show by releasing a forecast predicting a doubling of the global fleet of commercial air-craft over the next 20 years, cre-ating demand for 34,000 new aircraft valued at US$4. 5 tril-lion. But if Farnborough is any indication, the journey to that happy future may have finally hit some real turbulence.

Farnborough Sales (orders & commitments)

Airbus

• US-based financing company CIT signed a firm order for 10 A330s, including five orders that had previously been announced and five orders for Airbus’s upgraded A330, a longer-range variant announced earlier at the show. The deal was valued at US$2. 3 billion at list prices, with deliveries expected to begin in 2014.

• China Aircraft Leasing Company signed a memorandum of understanding for 36 current-genera-tion A320 Family aircraft, including eight A321s. The deal was valued at US$3. 1 billion.

• Cathay Pacific committed to buy 10 A350-1000s, the first new order for Airbus’s largest twin-engine jet in four years. Cathay said it would also convert 16 orders for A350-900s to the larger -1000 version.

• South American holding company Synergy Aerospace placed a firm order for nine A330 Family aircraft, including six passenger versions of the A330-200 and three A330-200 Freighters.

• Russian carrier UTair placed a firm order for 20 current-generation A321s, which will be config-ured in a single-class layout seating 220 passengers.

• Lebanese flag carrier Middle East Airlines signed a memorandum of understanding for five A320neo and five A321neo aircraft, plus options on an additional eight A321neos.

• Irish leasing company Avolon signed a memorandum of understanding for 15 A320neos.

• Arkia Israeli Airlines, Israel’s second largest carrier, signed a purchase agreement for four A321neos.

Boeing

• United Airlines placed a firm order for 100 737 MAX-9s (see image below) and 50 737-900ERs. The deal, valued at US$14. 7 billion, will see United become the US launch customer of the MAX-9.

• Los Angeles-based Air Lease Corporation signed a firm order for 75 737 MAX aircraft, including 60 737 MAX 8s and 15 737 MAX 9s. The deal, valued at US$7. 2 billion, included reconfirmation rights for an additional 25 737 MAXs.

• GE Capital Aviation Services, the aircraft leasing arm of General Electric, signed a commitment for 75 737 MAX 8s and 25 737-800s. The deal was valued at US$9. 2 billion.

• Kuwaiti leasing company ALAFCO committed to buy 20 737 MAX 8s valued at US$1. 9 billion.

• Irish leasing company Avolon signed a commitment for 10 737 MAX 8s, five 737 MAX 9s and 10 737-800s in a deal valued at US$2. 3 billion.

Embraer

• China’s Hebei Airlines has purchased five E-190 regional jets, valued at US$226 million.

ATR

• Air Lease Corporation ordered two ATR 72-600 turboprops. The deal represented the conversion into firm orders of two of the 10 options included in a previous deal signed at the 2010 Farnbor-ough Airshow. Deliveries were slated for 2013.

• Lao Airlines ordered two ATR 72-600s valued at US$47 million. Deliveries were scheduled for late 2012 and 2013.

• Taiwan-based TransAsia placed firm orders for eight ATR 72-600s plus an option for one addi-tional aircraft. Deliveries of the aircraft, valued at US$210 million, were scheduled for 2014-2017.

• Danish leasing company Nordic Aviation Capital purchase a single ATR 42-600.

Bombardier

• Latvia-based airBaltic has signed a letter of intent to order 10 CS300s and take purchase rights on a further 10, while another, unnamed customer has placed a conditional order for five CS100s and 10 CS300s.

• Chorus Aviation, the parent company of Canada’s Jazz, has placed a firm order for six Q400s.