Commercial plane orders slow; jetmakers focus on backlog

Tue Jun 16, 2015 12:25pm EDT
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By Tim Hepher and Andrea Shalal

PARIS (Reuters) - The boom in commercial plane orders of recent years appears to be giving way to a more sustainable pace of demand at the 2015 Paris air show, with jetmakers increasingly focused on lifting production to meet their record backlog of sales.

U.S. planemaker Boeing (BA.N: Quote) and European rival Airbus (AIR.PA: Quote) unveiled a steady stream of deals on Tuesday, day two of the aerospace industry's main annual gathering.

Boeing announced the biggest firm order of the event so far, with Dutch aircraft leasing company AerCap (AER.N: Quote) buying 100 737 MAX 8 jets in a deal worth $10.7 billion at list prices, confirming a Reuters report.

Korean Airlines (003490.KS: Quote) split a $6.9 billion deal for 60 narrow-body jets between Boeing and Airbus, also confirming what sources close to the matter had told Reuters.

However, the number and size of the deals to date is below that of many recent trade shows, when cheap borrowing costs and strong growth in passenger numbers encouraged airlines to splash out on new, more fuel-efficient planes.

"The market is definitely slowing," said Sash Tusa, aerospace and defense analyst at UK's Agency Partners. "There are fewer orders this week than there have been at any air show in recent years. Manufacturers are going to have to fight much harder for what's available."

Some moderation in demand had been widely anticipated. Industry sources told Reuters on the eve of the show that, barring any last-minute surprises, Airbus and Boeing might struggle to announce 500 orders between them, compared with 697 at the Farnborough event last year, with which Paris takes turns.

There seems little prospect of a sharp deterioration in demand, however. Airbus raised its 20-year forecast for jet sales on Monday, citing the rapid expansion of airlines in Asia and the Middle East and echoing a similarly upbeat outlook from Boeing last week.   Continued...

Visitors walk at the static display area during the 51st Paris Air Show at Le Bourget airport near Paris June 16, 2015. REUTERS/Pascal Rossignol