January 29, 2010 / 10:40 AM / 9 years ago

PREVIEW-Aviation gloom unlikely to lift at Singapore air show

* Analysts, executives expect few big commercial jet orders

* Ethiopian crash, JAL bankruptcy overshadow meet

* Airbus military carrier woes persist

* Low cost-carriers could grab limelight

By Harry Suhartono and Mariko Katsumura

SINGAPORE/TOKYO, Jan 29 (Reuters) - The aviation business, badly hit by the economic crisis and the bankruptcy of Japan Airlines 9205.T, is unlikely to find much to cheer about at this year’s first major industry event, the Singapore Airshow.

Executives say early signs of a global economic recovery could lead to some demand from low-cost carriers at the Feb 2-7 gathering, but there seems little sign of big-ticket orders.

Amid the roar of fast jet displays over the hospitality chalets, investors and financiers are expected to remain pretty much on the sidelines, awaiting proof of a sustained recovery.

“While we don’t expect any major announcements in terms of orders, there’s renewed appetite,” said Shukor Yusof, an analyst at Standard & Poor’s in Singapore, adding that he did not expect big orders from large and premium carriers.

Until the global financial crisis pushed the airline sector into its worst crisis in decades, the industry had grown used to the annual ritual of an orders race between Boeing (BA.N) and Airbus, with customers spending $62 billion in 2008.

The show comes on the heels of a cautious outlook from world airlines, who said air freight had jumped almost a quarter in December in a positive end to the industry’s worst year.

But while that suggests economic recovery is picking up steam, IATA said the sector would face a tough year making up for the lost demand in 2009 and handling new security demands.

Safety and security are expected to be high on the agenda.

The crash of an Ethiopian Airlines Boeing 737-800 off Lebanon’s coast this week has cast a pall over the event, just as the crash of an Air France (AIRF.PA) jetliner in the Atlantic eclipsed the world’s largest air show in Paris last June.

And the foiled Christmas Day bomb attack on a U.S. jetliner heading for Detroit has led to plans for more full body-scanners and other security measures, which could turn people off flying.

Still, there are signs that the gloom could be lifted in 2010.

Virgin Blue VBA.AX said on Thursday that it may replace some of its existing jets with new planes and was in talks with several suppliers including Embraer (EMBR3.SA). [ID:nSGE60R036]

“I think there’s a feeling of greater optimism now, the worst is over but in the road to recovery, no one knows how long it will take. Airlines are always the first to go in (to recession) and the last to go out,” said Alex Glock, Managing Director at Embraer Asia Pacific.


Analysts said the $25 billion bankruptcy of national flag carrier Japan Airlines could bring a new opportunity for smaller aircraft makers like Embraer and Mitsubishi Heavy (7011.T), and spur a further rise of budget airlines.

JAL, which filed for bankruptcy protection this month as part of a state-led restructuring plans to retire all of its 37 Boeing 747-400 jumbos and all 16 McDonnell Douglas (now Boeing) MD-90 planes and buy smaller aircraft. [ID:nSGE60I079]

JAL might also launch a low-cost carrier business under the government-led rehabilitation plan.

Embraer, which makes private jets and smaller commercial aircraft, has been trying to win more business from Asia’s budget and regional carriers, many of which use single-aisle jets from Boeing and Airbus, a unit of EADS EAD.PA.

Asian budget airline demand helped propel plane orders to their 2007 peak and production remains at record levels.

The Singapore show will also be a chance for arms exporters to display their wares for growing Asian defence markets, as nations across the region look to replenish their arsenals.

Demand is strong globally for fighters to renew Cold war-era fleets and airlift transport to support rapid military and humanitarian missions, highlighted by the Haiti earthquake.

Japan still covets Lockheed Martin’s (LMT.N) F-22 Raptor, though the U.S. Congress has so far banned exports of the world’s top-line fighter. Others such as Europe’s Eurofighter consortium eye a potential market opening due to the stand-off.

In another sales clash, Indonesia has been in talks to buy Lockheed’s C-130 Hercules transport planes, but European rival Airbus is seen anxious to steal the deal with its A400M airlifter and secure its future. [ID:nSIN476349]

Neighbouring Malaysia is the only export customer for the plane, plagued by cost overruns and a four-year delay. Europe plans a marketing push to ASEAN countries if it can end a cost row over its top military project. Talks on the stalemate resume on Feb. 2, coinciding with the show’s opening. [ID:nLDE60R1P4] (Additional reporting by Tim Hepher in PARIS; Editing by Raju Gopalakrishnan and Lincoln Feast)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below