In big week for air expos, defense jets outlook rosy as civil aviation fragile

Mon Oct 31, 2016 5:37am EDT
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By Tim Hepher and Brenda Goh

ZHUHAI, China (Reuters) - From Zhuhai in southern China to Florida, hawkers of civil and military aircraft - and the money to finance them - will try to drum up new business at aerospace expos this week, conscious their high-risk industry is approaching a turning point.

After U.S. weapons makers beat profit forecasts, analysts say tensions in eastern Europe and Asia are reversing a post-Cold War slump in defense spending that until recently weighed on arms firms. At the same time, commercial aviation is faltering after a decade-long winning streak.

"Civil is weakening and turning very spotty in places, whereas defense is growing in U.S. and world markets," said Teal Group consultant Richard Aboulafia. "It's a combination of a re-armament cycle coupled with something of a ramp-up based on regional tensions and fears."

China's biggest aviation event - Airshow China, starting in Zhuhai on Tuesday - underlines the trend in what is a banner week for the industry. A defense trade show takes place in Jakarta and an air finance conference in Hong Kong, as well as the annual U.S. business jet jamboree in Orlando, Florida.

Topping Airshow China's agenda is the last-minute public debut of the J-20 stealth fighter - a warplane China hopes will narrow a military gap with the United States. Ability to project air power is key for China as it flexes muscles on territorial disputes in the East China and South China seas.

It's the second successive edition of the biennial Zhuhai show at which China has pulled the covers off a classified stealth jet, after displaying the export-oriented Shenyang J-31 in 2014. 

Western analysts say the J-20 moves up a gear in terms of China's ability to punch beyond its territory, though it may lack the clout of its lookalike, the U.S. F-22 Raptor. The Xian Y-20 strategic cargo carrier, similar to the U.S. C-17 aircraft, will also be present.


People take pictures and videos as the first C919 passenger jet made by the Commercial Aircraft Corp of China (Comac) is pulled out during a news conference at the company's factory in Shanghai, November 2, 2015. REUTERS/Stringer