Airbus and Boeing aircraft orders dry up

Airbus and Boeing racked up their lowest tally of aircraft orders in six years at the aviation industry’s annual showcase, as a slowing global economy and concern about the impact of Britain’s decision to quit the EU curbed demand.

At the Farnborough Air Show this week, deals for about 400 jets were worth $50bn (€45bn), less than half the value of the contracts unveiled at last year’s marquee event in Paris.

Orders were propped up by aggressive buying from Asian upstarts, while major American, European and Gulf carriers were all but absent.

“Let’s be real, there are not too many orders going around”, Tony Fernandes, chief executive of AirAsia who pulled off the biggest deal of the week with a 100-plane Airbus order valued at $12.6bn, said.

“It has been a dry-up period for aircraft manufacturers after a boom period. We capitalised on Brexit and the fact there was a lack of orders and took a punt. We are very happy with what we got,” he said.

While Airbus and Boeing sit on huge order backlogs, that cushion could provide little protection if headwinds continue and airlines start to feel the pinch from lower fares.

A spate of deferrals would pose a dilemma to the manufacturers as they embark on the industry’s biggest-ever production ramp up.

New business was skewed toward a handful of mainly eastern markets, with 116 of 127 aircraft sold by Boeing destined for Chinese customers, and Airbus reliant on two south Asian discounters, which bought 172 planes, and a deal from the parent of Brazil’s Avianca to outsell its rival by more than two to one.

With no major new programmes starting up, the 2016 show had never been expected to deliver dozens of deals. Yet high-profile planes including the Boeing 777, Airbus A330neo and Bombardier C Series drew a blank and the A380 superjumbo took a step toward extinction with production rates slashed.

“It’s not the kind of order activity we saw two and three years ago, but you can’t sustain that growth”, John Wojick, Boeing’s chief salesman, said, saying that the goal is to roughly match orders with deliveries this year.

“We are on track to get there,” but there is “work to do” in securing deals for wide-body jets, particularly the 777, he said.

Boeing so far this year has sold eight 777s against an annual target of 40.