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Wednesday, December 24, 2014
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Published: Monday, 7/14/2014

Airbus $21B jet-sales blitz tops Boeing as air show opens

BLOOMBERG NEWS

Airbus Group NV dominated the first day of the Farnborough Air Show with a $21 billion sales blitz to grab an early lead over Boeing Co. at the aviation industry’s biggest annual expo.

Boeing’s tally came to about $7.7 billion, according to data compiled by Bloomberg Industries. The Chicago-based planemaker may punch back today: It’s close to announcing jet purchases valued at as much as $9.2 billion by Air Lease Corp. and BOC Aviation Ltd., people familiar with the talks said.

Airbus’s fast start at the event outside London offered welcome news to a company that amassed only 290 net aircraft orders after cancellations during the first half, trailing Boeing’s 499. Toulouse, France-based Airbus also used the show’s opening day to offer an upgraded version of the A330 wide-body, reaping a $6.9 billion deal. “Airbus has a fondness for air-show fireworks,” Richard Aboulafia, an aerospace analyst with Fairfax, Virginia-based Teal Group, said in a phone interview.

The annual forum, which alternates between Paris and Farnborough, spotlights the competition between Airbus and Boeing for global sales supremacy. The event brings together manufacturers, airlines, lessors, suppliers and inventors for a flurry of meetings and dealmaking.

Lessors’ Role

Airbus owed part of its first-day show bounce to lessors, whose support is important because they place jets with multiple airlines -- a step toward ensuring wider customer acceptance of planemakers’ offerings.

The A330neo’s first operator will be Los Angeles-based Air Lease, whose chief executive officer, Steven Udvar-Hazy, had urged Airbus to offer a version of the 20-year-old A330 with upgraded, more-efficient engines. Air Lease also booked an order for 60 of Airbus’s single-aisle A321 model.

AerCap Holdings NV said it would buy 50 A321neos worth $5.14 billion, the first jet purchase since the world’s biggest independent aircraft lessor bought Hazy’s former company, International Lease Finance Corp., for $7.6 billion in May.

The early results don’t fully reflect customer discussions that could yield more sales later in the year, John Wojick, Boeing’s chief commercial aircraft salesman, said in an interview. “Sales ebb and flow,” he said.

Opening Day

Boeing’s opening-day order book included five sales of its single-aisle 737 Max and six orders for the 787-9 Dreamliner, the newest version of the carbon-fiber plane, to lessor Avolon Holdings Ltd. The Bloomberg Industries tally for Boeing and Airbus included orders and options.

According to the people familiar with Boeing’s order discussions, Air Lease may buy 20 of the planemaker’s 737 Max single-aisle jet and six 777 wide-bodies, while BOC Aviation is set to commit to at least 50 of the Max jets. The people asked not to be identified because the details are private.

Jet buyers typically negotiate discounted rates, so list- price aircraft valuations don’t translate directly into revenue. Planemakers also draw a distinction between firm orders, such as Air Lease’s agreement yesterday for A321neos, and commitments, such as the planned purchase of the A330neo.

For Airbus, keeping all of yesterday’s firm orders -- and confirming the preliminary agreements -- will be especially important after a first half marked by 225 cancellations. That compares with 54 for Boeing.

Sales of long-haul jets, a market where Boeing and Airbus share a duopoly, have cooled this year. Boeing announced just nine new wide-body orders in the first half of the year, while Airbus’s twin-aisle jet order book shrank by 21 jets.

Planemakers and customers are absorbing a record backlog of almost 11,500 commercial aircraft orders placed in recent years with a collective retail value of more than $1 trillion, according to data compiled by Bloomberg Industries.

“The persistent comment from commercial aerospace managements is that nothing has changed -- they are still seeing a strong outlook,” Robert Stallard, an RBC Capital Markets analyst, said in a note to clients that cited meetings with company executives.

To contact the reporters on this story: Julie Johnsson in Farnborough, England, at jjohnsson@bloomberg.net; Andrea Rothman in Farnborough, England, at aerothman@bloomberg.net; Richard Clough in Farnborough, England, at rclough9@bloomberg.net To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net; Ed Dufner at edufner@bloomberg.net Ed Dufner, John Lear



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