Skip to main contentSkip to navigationSkip to navigation
An Airbus A350
Virgin is likely to complete a deal for 12 Airbus A350s at Farnborough. Photograph: Pascal Pavani/AFP/Getty Images
Virgin is likely to complete a deal for 12 Airbus A350s at Farnborough. Photograph: Pascal Pavani/AFP/Getty Images

Cancellations and delays expected in airliner market at Farnborough

This article is more than 7 years old
Brexit and the low oil price will mean a quiet air show for manufacturers this week

Brexit looms over David Cameron’s visit to this week’s Farnborough air show, as airlines and plane manufacturers fasten their belts for a bumpy few years of economic turbulence. The prime minister is scheduled to visit the show on Monday, and assurances about Britain’s future trading links with the rest of the world, including the European Union, are sure to be near the top of the agenda.

The biennial aerospace jamboree is usually peppered with eyecatching orders for the latest jetliners, which provide a handy barometer of global economic confidence.

Sir Richard Branson’s Virgin Atlantic looks set to sign a $4.3bn deal to buy up to 12 A350 wide-bodied jets from Airbus, while the European plane maker’s American rival, Boeing, will confirm an order for around 10 747 jumbo jets with Russia’s largest air freight company, worth about $4bn.

These marquee deals will be trumpeted loudly. But, after several years of bumper plane orders, analysts reckon the atmosphere among captains of the aero industry and their sales executives will be relatively muted as worries grow about the state of the global economy in the wake of the UK’s vote to leave the EU.

One analyst said: “A sudden ripple has gone through the market after Brexit. We’ve got no idea about the impact of Brexit at the moment.”

Industry sources expect Branson to attend this week’s show to sign the Airbus deal. It is thought Virgin wants to buy eight A350-1000 jetliners and take purchase options on a further four to replace its remaining Boeing 747s. Craig Kreeger, chief executive of Virgin Atlantic, last month said that a decision on the new jets was “imminent”. The deal might enable Virgin to cancel its now-unwanted order for Airbus’s A380 superjumbo.

Several other airlines are in the final stages of choosing between the A350 and its rival, Boeing’s 787 Dreamliner, including Emirates and Oman Air.

European airlines are expected to have a quiet show. The uncertainty that has enveloped the EU since Britain voted to leave has already sparked profit warnings from British carriers such as easyJet and International Airlines Group, owner of British Airways. In addition, a low oil price has not only eased the financial burden on carriers, but has also curbed their need to buy new fuel-efficient planes to replace ageing fleets.

A Boeing 787 Dreamliner belonging to the Polish airline LOT. Photograph: East News/REX Shutterstock

Tom Enders, chief executive of Airbus, has warned the EU vote was “a lose-lose result” for Britain and Europe. His view matters because Airbus makes all of its wings at Broughton in north Wales.

“Britain will suffer, but I’m sure it will focus even more now on the competitiveness of its economy vis-a-vis the EU and the world at large,” Enders said, warning: “But of course we will review our UK investment strategy, like everybody else will.”

Airbus goes into this week’s show lagging behind its arch-rival, after ending the first half of the year with 227 aircraft orders, or 183 after deducting cancellations. Boeing sold 309 aircraft, or 276 after cancellations.

The figures clearly show demand for aircraft falling compared with the first half of last year, which included the Paris air show, held every other year in June. In 2015, Airbus booked 1,036 net commercial plane orders, down from 1,456 a year earlier, but it outsold Boeing, which booked 768 net orders last year.

Boeing has lost ground to its European rival in the giant market for short-haul planes. There is talk that the US company is honing designs for a mid-range plane seating between 200 and 270 people to whisk passengers from London to New York, Sydney to Shanghai or Dubai to Oslo. The mid-market jetliner would fill the gap between Boeing’s largest single-aisle model, the 737, and its smallest wide-body, the 787. It is a relatively untapped market but one where Airbus is starting to extend its reach.

Mike Delaney, general manager of aircraft development at Boeing, recently said it was a case of “when”, not “if”, regarding the prospects for a new plane. He is confident Boeing is on the verge of a breakthrough, following discussions with 36 carriers about a replacement for the out-of-production 757.

The aircraft would cost at least $10bn to produce and Boeing’s top brass want to ensure the economics stack up before giving it the green light. They are keen to avoid a repeat of the mistakes made with the Dreamliner, its last major new design. Boeing racked up nearly $30bn in deferred costs on the 787, which was plagued with production problems.

Comments (…)

Sign in or create your Guardian account to join the discussion

Most viewed

Most viewed