Monday, June 18, 2007

News From Paris

It is reported today that Airbus has gotten some life pumped into its order book so far at the Paris Air Show. Airbus has made a habit of announcing large orders at the show in past years and this one's no different.

Among the orders announced today are one from Emirates for 8 A380s and the previously announced order from Qatar Airways for 80 A350s and three A380s. It's also rumored that Air France has signed a memorandum of understanding for a further 2 A380s although this is unconfirmed at press time.

USAir has ordered 22 A350s and Aviation Lease and Finance of Kuwait ordered a dozen.These two are 'new' customers on the scene and in the case of Kuwait, point to the favored position Airbus enjoys in the Persian Gulf region.

The USAir order marks the first U.S. based airline that has ordered the type. The Qatar order for the A380s is conversion of two options and one new order.

As expected the real volume action was in the smaller aircraft, the A319 and A320 and the B737. They're selling well for Airbus and Boeing.

A substantial order from International Lease and Finance Corp. for the B787 is expected later in the week.

There is also news today of some delays in the A400M program to address structural defects in the engine/nacelle systems. According to one source the program is expected to consume 18 billion euros in development money. Spread over 190 aircraft, that's problematic and it raises questions about the economic soundness of the program.

At present, Emirates is undecided about ordering the B787 or the A350, but a substantial order is in the works, and the delivery date for new B787s is out there with the presently stated entry into service date of the A350. That is, if you believe that Airbus knows how to stick to a schedule.

One might suppose that the orders announced today vindicate to some extent the viability of the A350 program and the A380 program, although they're all 'house' customers so far with a lot invested in the future viability of Airbus. In particular, USAir has been in Airbus' hip pocket for a while as it initially ordered the first iteration of the A350 and as part of that deal, was loaned a cool $250 million by the very same Airbus to go and merge with America West. So it seems that USAir may be a captive customer as well.

The proof of the A380 and A350 puddings will be a substantial order from someone we have not yet heard from who is not in Airbus' pocket and who will order aircraft based on their technical merit, delivery schedule, and the reputation of the vendor for following through-such as a BA or JAL.

Time will tell. I'm not holding my breath but I can and will eat crow as required for any of my predictions that turn out to be full of horsefeathers.

As usual an interesting week so far.

Further details as they become available.


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