Boeing, Airbus take battle to Paris Air Show

PARIS - The world's biggest air show is bigger than ever this year but the main story hasn't changed: trans-Atlantic rivalry between Boeing Co. and Airbus will again dominate the 47th Paris Air Show which opens Monday at Le Bourget, north of the French capital.

In contrast to the last Paris show in 2005 when Airbus shone, this year the European plane-maker will be struggling to regain ground from its U.S. rival.

"The show falls at a good point in the cycle for the airline industry," said Pierre Boucheny, an analyst with Kepler Equities in Paris. "Plane orders are increasing on the back of global economic growth. That might help Airbus catch up a little with Boeing."

After two years in the red, the commercial airline industry will make a profit of just over $5 billion this year, despite rising fuel costs, says the International Air Transport Association, whose 250 members claim to represent 94 percent of international air traffic.

Le Bourget's anticipated success shows the airline industry is in "globally good shape," said Charles Edelstenne, president of French aerospace industry group GIFAS at a presentation of the show earlier this month.

Airbus and Boeing will be fighting over high-profile orders. Airlines often reserve big announcements for the weeklong fair to ensure maximum attention.

At the 2005 show, Airbus announced orders worth $33.5 billion, double Boeing's $15 billion, based on list prices that are usually discounted for the deals.

"Since the last show, Boeing has got well back into the game," said Christophe Quarante, a Natexis Bleichroeder analyst in Paris.

Two years have made a huge difference to both companies' fortunes. Boeing reclaimed the top sales spot in 2006, winning more orders than Airbus for the first time since 2000 after the introduction of a hot new plane - the 787 Dreamliner - and a revamped sales team that was freed to offer discounts.

Confidence began returning to the American plane maker after upheavals in 2004 and 2005 which saw the removal of two top executives and defense contracting scandals that sent two other senior officials to prison.

Meanwhile, Airbus' management began to attract negative attention. A series of increasingly worrying announcements beginning June 2005 revealed missteps, technical setbacks, communication failures and a financial improprieties that tarnished the plane maker's image.

The result: an overhaul of top executives and a restructuring plan which foresees 10,000 job cuts over four years, not to mention billions of dollars in lost profit. The setbacks saddled Airbus with its first-ever loss last year and slashed net profit at parent group EADS.

Botched management of the flagship A380 superjumbo dashed Airbus hopes of dominating the market. The world's largest passenger plane - which made its first appearance at the 2005 Paris show - is two years late due to wiring difficulties and communication failures between Airbus plants in Germany and France.

The 525-seat plane will make a second appearance at this year's air show, with daily flying displays designed to wow visitors into forgetting about the last two years. Analysts say the plane's problems were largely managerial and technically it should be hailed a success.

Airbus has taken 160 orders and pledges for the A380, which it claims has the combined advantage of high capacity and long range. Airbus Chief Louis Gallois said he expects new orders after the first delivery to Singapore Airlines later this year.

"I'm not expecting a brand new customer right now because they are waiting," he told journalists at Airbus' headquarters earlier this month. "All the companies say they want to see the airplane in the hands of Singapore Airlines."

That statement doesn't rule out repeat orders from existing clients. Richard Carcaillet, director of product marketing for the A380, said in an interview that the plane's recent tour of Asia drew an encouraging response from Asian airlines seeking to ease airport congestion. Airbus is targeting long haul flights between Europe and Asia where slot availability is limited.

India's Kingfisher Airlines said in May it is negotiating the purchase of more Airbus planes along with the five A380s it has already ordered. The airline, which began flying between Indian cities two years ago, plans to operate international flights by 2010.

Airbus's main task, however, will be to convince the industry its revamped A350 XWB has a glittering future.

Airbus was forced last year to launch a costly redesign of the planned A350 after airlines scorned its earlier model, and is having to re-negotiate existing orders.

Airbus has only 13 firm orders for the midsize, long-range plane, compared with 584 orders for the Boeing's fast-selling Dreamliner, the first commercial jet made mostly of light, sturdy carbon-fiber composites instead of aluminum. Boeing hopes to put its first plane in the air around late August.

Sizzling sales of the 787 may allow Boeing to reclaim the title of the world's largest plane maker next year. The first 787 is scheduled to be shipped to All Nippon Airways Co. next May, giving Boeing a five-year lead over Airbus, whose A350 won't be delivered until 2013. But Boeing's books are so backed up that clients placing orders now can expect to wait as long as for the Airbus model.

Boeing is encountering its own production snags as it assembles its first 787, ranging from fuselage sections that didn't fit together perfectly on first try to an industrywide shortage of the fasteners that hold planes together. Company spokeswoman Mary Hanson said none of the problems encountered so far threatens to delay the plane.

Gallois said he expects to book more than 100 firm orders by the end of the air show for the A350 XWB. A preliminary announcement for 80 A350 jets by Qatar Airways could be firmed up at the show. Aer Lingus Group PLC announced an order of six A350 XWB aircraft last week as financial disclosure rules forced the Irish airline to pre-empt the June 18-24 show, which is open to the public for the last three days and industry professionals before that.