Posted on: Tuesday, July 20, 2004
Demand for planes on the rise; Boeing reports $2.96B deal
By Bruce Stanley
Associated Press
FARNBOROUGH, England — Demand for new passenger and freight aircraft is rebounding after an unprecedented global downturn and in spite of chronically high fuel costs, U.S. manufacturer Boeing Co. and its European rival Airbus said yesterday at Britain's Farnborough International Air Show.
Boeing announced a $2.96 billion sale of 777-300ER planes to Emirates Airline, while Airbus predicted it would exceed its planned delivery of new planes this year.
Embraer, a Brazilian maker of regional jets, announced three sales of its own.
More than 300,000 people were to attend this week's air show, where more than 1,300 exhibitors from 32 countries will show off the latest in aviation technology, including flight simulators and a space pavilion run by the British National Space Center.
A miniature town complete with traffic circles and avenues has sprung up on the 66-acre Farnborough Aerodrome site in southeastern England for the temporary exhibition.
Boeing foresees 5.2 percent annual growth in global passenger traffic and 6.2 percent growth in cargo business, after almost three years of lost production because of the Sept. 11 attacks, the SARS epidemic in Asia, the bursting of the technology bubble and the wars in Iraq and Afghanistan.
The company estimates that airlines will buy some 25,000 new planes worth $2 trillion over the next two decades, said Alan Mulally, Boeing Commercial Airplanes' chief executive.
Mulally argued that airlines will need aircraft to make longer and more frequent flights and will prefer flying point-to-point between final destinations rather than via congested hubs.
Chicago-based Boeing is developing its new medium-size 7E7 aircraft to meet this hoped-for demand.
About 24 airlines have paid deposits for more than 200 7E7s, and Boeing expects to convert some of these down payments into firm orders "through the end of this year," Mulally said.
The 217-seat 7E7 "Dreamliner" is to be launched in 2008.
Boeing's deal with Emirates Airline consists of a firm sale of four 777-300ER with options on nine more, for a total contract value of $2.96 billion. The four planes are to be delivered in 2006, with the optional sales to be completed by 2012.
Airbus chief executive Noel Forgeard estimated that air traffic grew by 7 percent last year and would rise by 10 percent this year, even though aviation fuel prices also have increased. Airbus, based in Toulouse, France, has received 104 firm orders so far this year and claims more than half of the airline market.
"I can now confirm that we plan to deliver more aircraft than last year, and even more than the 305 aircraft that were the plan," Forgeard said.
In contrast to Boeing, Airbus is betting that future growth will come from super-size planes flying large numbers of passengers between specific cities. It is developing the A380, which will seat about 550 passengers, to fill this niche. The jumbo aircraft is on track to make its test flight during the first three months of next year, Forgeard said.
"You could never make a business case for an aircraft that large," said Boeing's Mulally.
