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Boeing wins FlyDubai deal as air show opens

Boeing Co struck first in its biennial battle with archrival Airbus by securing an order for 50 single-aisle 737 airliners as the world’s biggest air show opened on Monday in Farnborough near London.

The deal from upstart FlyDubai is worth $4 billion including an additional four aircraft to be sourced from lessor Babcock & Brown. Analysts expect this year’s show to be slower than past events as record high fuel prices, tight credit and slowing economies squeeze airlines and hurt ticket demand.

One major deal expected this week is from Abu Dhabi’s Etihad Airways, which is seen splitting it between Airbus and Boeing. Etihad, which is following in the path of other fast-expanding Gulf airlines like carrier Emirates of Dubai, said before the show that it would soon order 50-100 planes, with the industry betting on the higher number.

Qatar Airways is also expected to buy Airbus jets this week. High oil prices have opened a schism in aircraft demand between dozens of western airlines struggling to avoid bankruptcy and a new breed of majors from the Gulf, which are investing in large fleets backed by oil wealth and driven by a concerted push to develop the region as a crossroads for globalization. Industry sources say one could include some business for the Airbus A380 superjumbo, whose production problems have pushed deliveries of the world’s largest jetliner two years behind schedule. Airbus is promoting the plane’s fuel efficiency to appeal to airlines worried about soaring fuel bills, but Boeing says the industry needs few 525-seat planes.

International Lease Finance Corp, one of the world’s largest leasing companies, is also seen lining up large orders. It is looking to scoop up competitively priced planes to lend to airlines unwilling or unable to cough up for airliners outright as the industry enters a downturn, executives said.

 
UNNAMED ORDERS

The aviation jamboree, held on alternate years in Farnborough and Paris, has been overshadowed by a US-led slowdown and the global credit crisis, hitting cash-starved airlines just as oil prices soar above $140 a barrel. Boeing has 248 orders from undisclosed airlines on its books, including 180 single-aisle aircraft that could appeal to lessors, and analysts expect some of those names to come forward Farnborough.

Europe’s Airbus unexpectedly cancelled its main conference for the first day, preferring to wind up the event on Thursday when most executives and journalists have gone home. Airbus and Boeing had their dominance of the market for planes with over 100 seats challenged on Sunday when Canada’s Bombardier launched a 110-130 seat jet, the C-series.

A small artificial town of purpose-built hospitality chalets and pavilions has sprung up overlooking the runway at Farnborough, which is celebrating its 60th air show anniversary. In a reminder of tensions overshadowing this year’s event, a business jet in Israeli Air Force colors maneuvered onto the tarmac on Sunday packed with eavesdropping equipment in long, bulbous side panels. The converted Gulfstream jet is only on display but it could play a part in any Israeli attack on Iran following that country’s missile tests in the Gulf last week.

The usual deafening flying displays usually barely distract from deal-making in the first half of the week-long event, but Farnborough will come to a halt on Monday for the Lockheed Martin F22 Raptor, making its international show debut. If the weather is good, its one-off display will include a maneuver called a “tail-slide” in which the pilot shoots nearly straight up, then lets the sleek plane drop without stalling.

Fighter jets were also the focus of an announcement from Raytheon, which said on Monday it would challenge rival Northrop Grumman Corp by offering a smaller version of its Active Electronically Scanned Array aimed at fighters such as the F-16, including a vast market for upgrades. (Reuters)