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Airbus, Boeing Both Collect Major Orders

Aerospace: Rival jetliner makers sign deals for hundreds of millions of dollars at Britain's Farnborough air show.

September 09, 1998| From Associated Press

FARNBOROUGH, England — Overcoming fears about a slump in commercial aviation, plane makers Boeing Co. and Airbus Industrie sold billions of dollars worth of new jets Tuesday to airlines that see their long-term outlook as bullish.

Many executives at the Farnborough International 98 air show acknowledge that the aerospace market is about to peak and could suffer a cyclical decline beginning around 2000.

But even if some carriers have bought more airplanes than they will need over the next few years, the longer term looks bright, particularly after Asia recovers from its economic crisis and demand for air travel in the region bounces back, industry bosses say.

"The industry has reached a crescendo now, a peak," said John Plueger, chief operating officer at International Lease Finance Corp., which purchased Airbus jets with a list price of about $1.8 billion on Tuesday. "The period 2002-2006 will be quite robust." ILFC, based in Los Angeles, specializes in buying aircraft to lease to carriers that don't own their fleets.

Airbus executives may have thought they had taken the lead away from Boeing after the consortium's chief executive, Noel Forgeard, announced the ILFC deal and a separate $900-million order for wide-body jets from Dubai-based carrier Emirates.

Emirates' chairman, Sheik Ahmed bin Saeed Al Maktoum, said he plans to use the new Airbus A340-500 jets to launch nonstop flights from the Persian Gulf to points as far away as North America and Australia.

But Seattle-based Boeing soon bounced back with a $1.8-billion order of its own from Brazilian carrier Varig.

"We have not left the field of battle in terms of selling airliners," Boeing President Harry Stonecipher told reporters--just a day after he had offered a blunt assessment of Boeing's serious production problems and a recent management shake-up in its Commercial Airplane Group.

Varig President Fernando Pinto said he would probably use the first Boeing 777s to be purchased by a Latin American carrier on long-haul routes between Brazil and Europe.

Boeing's 24 firm orders from Varig bring its total new business in the first two days of the Farnborough show, the aerospace industry's top event of the year, to a list price of about $3 billion. That compares with $2.7 billion in orders for Airbus, the consortium of companies from France, Britain, Germany and Spain.

Both Boeing and Airbus claimed the value of their new deals could go higher--some of their customers have taken out purchase options on aircraft worth hundreds of millions of dollars more.

Although air shows give the manufacturers an opportunity to hype their orders and talk about building bigger and better aircraft, it has become clear this week that they now see a growing market for smaller jets.

Bombardier of Canada announced Tuesday it wants to build a new 90-seat regional jet, dubbed the BRJ-X series. Airbus outlined plans for a 100-seat A318 model that it hopes to build to compete with Boeing's recently launched small 717 jetliner.

The Brazilian jet maker Empresa Brasileira de Aeronautica said it sold a big batch of its small regional aircraft to American Eagle, the commuter carrier of American Airlines, in a deal potentially worth $2 billion.

American Eagle ordered 75 of the 37-seat ERJ-135 jets, with an option on 75 more as it moves to replace turboprop airplanes that have proved unpopular with many passengers.

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