7 September 1998

Airbus set to 'out show' Boeing

By Francesco Guerrera

Airbus and Boeing, the two aerospace giants locked in a bitter battle for control of the global aircraft market, are poised to unveil orders worth up to $8.7bn (5.4bn) at this week's Farnborough airshow.

Industry experts yesterday predicted that the two arch-rivals will try to upstage each other by announcing a raft of high-profile deals at the world's biggest air showcase.

News of the orders came as it emerged that the transformation of Airbus - the European consortium in which British Aerospace has a 20 per cent stake - into a standalone company will be delayed by up to nine months because of technical difficulties.

Airbus is expected to fire the first salvo in the fiercely fought publicity campaign with its US rival Boeing. The group is set to announce that it has won an order worth around $3bn (1.9bn) for up to 20 of its A340s large jets from UAE, the United Arab Emirates's flagship carrier. The contract for the A340s, which seat up to 360 people, will also include a large number of options for future purchases.

Bill White, a vice-president at aerospace consultant EDS, said that the deals will give rise to a "cascade of options and service agreements which will benefit other companies down the aerospace food chain".

Rolls-Royce, the aerospace engineering group, is widely tipped be one of the beneficiaries of the deals, and it is expected to win a $1bn deal for the engines contract for the UAE aircraft.

The European planemaker is also lining up a sale of up to 30 cargo jets - worth upwards of $2.7bn (1.6bn)- to United Parcel Services (UPS), the American mail delivery group.

Boeing, the US giant which was recently pipped by Airbus in the race to a $11bn jet order for British Airways, is set to respond with a number of orders worth up to $3bn.

It is expected to include a large contract for wide-body Boeing 777s with a leading US carrier. European airlines are also set to take options on Boeing's revamped 737s, the US manufacturer's best-selling aircraft.

Industry sources said that speculation was mounting that Boeing could also announce a deal for its 100-seat 717, while Airbus was expected to respond by setting out plans to develop its own 100-seater.

Experts said that the order battle between Airbus and Boeing was set to overshadow news that the European group will miss its 1 January 1999 deadline to transform itself into a single entity.

Yves Michot, chief executive of Aerospatiale, the French group which owns 37.9 per cent of Airbus, revealed yesterday that the four partners - BAe, Aerospatiale, Germany's Daimler Benz and Spain's Casa - were having troubled valuing their respective assets to form a single company.

"It will be accomplished in 1999, but whether it's six months or nine months into the year, I can't say," he added.