Planemakers kick off air show with billions of dollars of deals
* Boeing bags deals for 777 freighter and 737 MAX
* Airbus signs MoU with StarLux for A350s
* UK PM May to play down Brexit risk to supply chain
* UK to unveil model of new warplane, pledge funds - source
(Adds more deals, executive comments)
By Tim Hepher and Sarah Young
FARNBOROUGH, England, July 16 (Reuters) - Airbus and
Boeing announced more than $10 billion of combined deals
in the opening hours of the Farnborough Airshow on Monday,
suggesting demand for new jets remains in rude health despite
worries over trade tensions and Brexit.
Even before the first displays had taken to the skies over a
sun-baked southern England, U.S. planemaker Boeing said delivery
firm DHL had placed a $4.7 billion order for 14 777 freighters,
and purchase rights for seven additional freighters.
It followed that up with a $3.5 billion deal for 30 of its
hot-selling single-aisle 30 737 MAX 8 aircraft with U.S.
aircraft leasing firm Jackson Square Aviation.
Meanwhile, Airbus announced a memorandum of understanding
for Taiwanese start-up StarLux Airlines to buy 17 of its A350
wide-body planes worth around $6 billion at list prices.
The order contest is expected to stretch for days of the
July 16-22 air show, although analysts will be watching closely
to see how many of the deals are new, and how many involve
adjusting earlier business or switching models - something not
always easy to spot at first.
Higher oil prices and interest rates are seen as a warning
sign that the long-running aviation boom may be peaking, while
trade tensions between the United States and China and concerns
about disruptions to supply chains from Britain's departure from
the European Union are also worrying the industry.
The week is expected to confirm demand for narrowbody jets
from airlines such as Mexico's VivaAerobus, which is shopping
for some 40 Airbuses, and lessors like Goshawk, which is
interested in jets in the Boeing 737 MAX category. Major lessors
Air Lease and Avolon are also in town.
But both Airbus and Boeing are under pressure to increase
orders for some of their wide-body jets due to a recent slowdown
in that part of the market. One exception is the Boeing 787,
after a multi-year effort to end delays and cost overruns.
Speaking after the deal for wide-body A350s with StarLux,
Airbus chief commercial officer Eric Schulz said he was
confident the market for such planes would pick up.
"What I have said consistently is that I see the wide-body
market picking up within 18-24 months. I am quite confident."
"There are explanations as to why this wave is now coming.
We had a very massive wave 4-5 years ago with a lot of orders. I
think the market had to pause a little bit until we could
deliver consistently and get to ramp up and rate. I think this
is behind us now."
The Farnborough Airshow is the industry's biggest event this
year. It alternates with the Paris Airshow and collectively they
account for over a quarter of industry order intake each year.
British Prime Minister Theresa May will meanwhile seek to
reassure aviation bosses that her under-fire Brexit plan won't
disrupt their supply chains.
Boeing Chief Executive Dennis Muilenburg said on Sunday the
performance of global supply chains was always under watch.
May's words, to be delivered at the air show southwest of
London, come at a crunch time as pro-Brexit lawmakers in her
party oppose her EU exit strategy.
Britain is also expected to make a major announcement on
future combat air strategy, though Europe's fragmented fighter
industry is seen as far from ready to unify around one project.
A source familiar with the matter told Reuters on Monday
that defence minister Gavin Williamson would unveil a model of
the country's proposed new fighter jet at the show, and earmark
2 billion pounds ($2.7 billion) in funding for the project.
The aircraft, to eventually replace the Typhoon fighter jet,
would be developed and built by Britain's BAE Systems,
Rolls-Royce and Italy's Leonardo, the source
(Reporting by Tim Hepher, Eric M. Johnson, Sarah Young, Mike
Stone, Andrea Shalal and Vicki Bryan in Farnborough, and William
James in London; Editing by Daniel Wallis and Mark Potter)
First Published: 2018-07-16 01:00:01
Updated 2018-07-16 12:40:08
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