Boeing racks up air-show orders as leasing firms return

Airbus SAS and Boeing Co. announced 189 orders on the first day of the Farnborough Air Show, more than double the total in the whole of last year's Paris event, as leasing companies returned to the market after the recession.

Airbus won contracts for 122 aircraft worth $11.6 billion at list prices, while Boeing revealed 67 orders valued at $7.5 billion. The Chicago-based manufacturer secured commitments for nine planes at the Paris show, which alternates with Farnborough each year, compared with 69 for its European rival.

Leasing companies led by General Electric Co.'s GECAS unit accounted for 151 of today's contracts, their comeback eclipsing business done by commercial airlines, among which Dubai-based Emirates placed the biggest order for 12 Boeing 777-300ERs worth $3.3 billion. At the Paris show manufacturers focused on holding onto orders as demand for new planes waned during the slump.

"Much was written about the leasing companies' demise, but not only have they survived, their portfolios have performed remarkably well," Mike Cave, president of Boeing's finance unit, said in an interview. "You're also seeing private equity come in and start up new leasing companies, so the aggregate appetite to be in the leasing business is as large as ever."

Air Lease ContractsGECAS ordered 40 Boeing 737-800s and 60 Airbus A320s in Farnborough with a value of about $8 billion, while Steven Udvar-Hazy's Air Lease Corp. bought 51 Airbus single-aisle jets worth about $4.4 billion. Hazy said more will follow tomorrow."You're not going to see the leverage from these financing or leasing companies that we saw in the past, but we've also seen a number of new people enter the marketplace," Boeing's commercial-plane chief, Jim Albaugh, said in London yesterday, without elaborating.Air Lease will buy about 50 additional planes from Boeing, according to two people, who spoke on condition of anonymity because the agreement has not been made public.Royal Bank of Scotland Group Plc is also set to buy planes, two people familiar with the negotiations said yesterday. RBS spokesman Nigel Meffen said he had no immediate comment on order prospects for his company."You'll be surprised by some of the announcements we'll make," John Leahy, chief operating officer at Toulouse, France- based Airbus, said at a press conference in London on July 17. "The world economy is turning around."Ownership IssuesLeasing companies are signaling that they can spend again with the economy recovering and questions about their ownership resolved. That's a boost for planemakers, because lessors are historically their biggest customers, and purchases reflect airline demand for replacement planes as well as for expansion.GECAS, with the world's largest fleet of owned and managed aircraft, is an area GE Chief Executive Officer Jeffrey Immelt is seeking to grow as he shrinks other parts of the financing business such as real estate and consumer lending after the financial crisis.Air Lease, the company Udvar-Hazy founded this year, said last week it plans to have more than 100 jets by early 2011. RBS Aviation Capital was no longer considered a unit central to its parent's business in 2009, and the bank explored options including a potential sale, a plan RBS has since dropped.Aeroflot, Norwegian AirLeahy said Airbus can double the 131 orders it won in the first half of 2010 during the Farnborough show. The company's orders so far include a commitment for 11 A330-300 wide-bodies worth $2.3 billion from OAO Aeroflot, Russia's largest carrier.Albaugh said Boeing has raised its internal order forecast twice this year. The manufacturer's commitments today included 15 737-800s valued at about $1.2 billion from Norwegian Air Shuttle, a discount airline that is building its fleet to compete with unprofitable Scandinavian carrier SAS AB."I would have told you four, five months ago that maybe we wouldn't have announced many orders, if any, at the air show," Albaugh said. "Now we're going to announce quite a number."Investors in Boeing and Airbus parent European Aeronautic Defence Space Co. are reflecting renewed optimism compared with a year earlier. Boeing has gained 16 percent this year through July 19, and rose as much as 2 percent to $63.15 in New York. EADS advanced as much as 2.5 percent to 16.83 euros before closing up 0.8 percent.American International Group Inc.'s plane-leasing unit, International Lease Finance Corp., also is in talks to buy jets for the first time since 2007 as the company stabilizes after AIG's federal bailout, according to new CEO Henri Courpron.ILFC was founded in 1973 by Udvar-Hazy, who sold it to AIG in 1990. He built it into the world's largest plane lessor and Boeing and Airbus's biggest customer before resigning in February. Courpron said in a July 2 interview that it was possible ILFC would announce orders at the Farnborough show.Smaller PlanesIn the market for smaller aircraft, Sukhoi Civil Aircraft Co., the maker of Russia's first post-Soviet passenger airplane, concluded a deal to sell 30 of its new SuperJets with a book value of $951 million to Indonesian carrier Kartika Airlines.Qatar Airways Ltd. placed an order for two Global 5000 business jets from Bombardier Inc., the third-biggest planemaker after Boeing and Airbus, plus a single Challenger 605.Empresa Brasileira de Aeronautica SA, the No. 4 aircraft maker, won a $211 million order for five 120-seat 195 regional jets from Azul Linhas Aereas Brasileiras, and one worth $80 million for two 100-seat 190s from Trip Linhas Aereas. Both carriers operate in Brazil, where Embraer is also based.False30002000Boeing made an early bid to keep the limelight on Sunday with the international debut of its fuel-efficient 787.Associated PressFalse