Paris Air Show Highlights Transatlantic Tug of War

The 45th Paris Air Show may have opened on Saturday under clear blue French skies, but metaphorically there was more than the odd dark cloud hanging over the aviation industry’s most prestigious event. The glorious weather at Le Bourget airport at the weekend belied the fact that the industry is facing the worst crisis in aviation history and that political power struggles connected to the fallout of the Iraq war are doing nothing to help.

As small aircraft rolled in roaring acrobatics overhead, signs that the Paris Air Show would be a manifestation of economic and political turmoil began to make themselves painfully obvious. Exhibit space is down some 5 percent this year from the last show in 2001, and the number of planes on display has fallen to 206 from 226. Officials are blaming the current industry climate for the low turn out while the U.S. military's decision to keep its aircraft and top brass at home -- a move widely interpreted as retaliation for French opposition to the war in Iraq -- has also dampened spirits.

"(The Paris Air Show) opens its doors in an atmosphere full of uncertainties and questions," said Dassault Aviation chief executive Charles Edelstenne during the subdued opening rounds of press conferences on Saturday, a series of events traditionally full of euphoria.

World crises weigh heavy

This year, however, the shadows over the industry and the world caused by the wars in Afghanistan and Iraq, the SARS illness in Asia and a slow economy that has cut demand for business and pleasure travel have all combined to give the air show an undercurrent of gloom.

Show organizers have acknowledged that the scope of this year's show pales in comparison with the record-setting 2001 event. Not a single order was announced at the media preview on Saturday, usually the forum where boasting executives start the bidding ball rolling.

However, things began to look up at Sunday’s public opening when U.S. giant Boeing and its European rival Airbus SAS went head to head in an attempt to allay fears of further collapse in the industry. Airbus led the way with executives claiming that it will probably surpass Boeing as the world's largest planemaker this year by delivering more aircraft than its U.S. rival for the first time and beating Boeing on orders for new aircraft.

"Things are going pretty well for us this year,"' Airbus Chief Executive Officer Noel Forgeard told reporters. "The market is a bit better than we'd expected and our market share is considerably better than we'd forecast." When asked whether he saw signs of a recovery, Forgeard said that there "appeared to be signs in the month of May of a traffic rebound. Things are looking a bit better, especially in the U.S."

Airbus orders ahead of estimates

Estimates show that the France-based planemaker expects to win orders for about 250 planes this year, 40 percent more than it predicted in January, while taking business from its Chicago-based rival. Forgeard told reporters that the company expects to deliver 300 planes this year, topping Boeing's 280. He had forecast earlier this year that Airbus and Boeing would win a total of about 350 orders in 2003, which would be roughly split between the two planemakers. Airbus got orders for 274 planes last year compared with 251 for Boeing.

Airbus also announced that it has won an order from the Middle East-based airline, Emirates, for 21 A380 planes and other aircraft in a deal worth more than €5.48 billion ($6.5 billion), according to a statement on Bloomberg News television by Philippe Camus, co-chief executive of European Aeronautic, Defense and Space Co., which owns 80 percent of Airbus.

There are indications that the European company will consolidate its position as number one with a deal with TUI AG, Europe's largest travel company, which is considering the purchase of as many as 60 single-aisle planes. The company is also in discussion with AirTran Airways, a low-fare carrier that flies mainly along the U.S. East Coast, for an order of at least 50 planes. Camus added that the airline, the fastest-growing in the region, would also announce orders for its A340-500s and A340-600s jets, though didn't provide details.

New A380 on schedule

The company also added that it remains on track for delivering the first of its 550-seat double-decker A380s by the first half of 2006, with the aircraft entering service first with Singapore Airlines Ltd. The double-decked A380 will become the world's biggest passenger jet when it begins flying, about 35 percent bigger than the Boeing 747, which seats 420. Parts of the first aircraft are already in production and Airbus plans to begin test flights in early 2005.

"All that is to say that attempts on the part of some people to say that the A380 is having difficulties is not only pathetic, but in vain," said Foregeard. Airbus has 97 firm orders for the plane and has additional commitments for a total of 103 aircraft. The company expects to have 125 orders for the A380.

Meanwhile, Boeing’s announcements on Sunday were rather subdued. The American company expects air traffic to recover to 2000 levels by the end of the year, but when pressed on possible sales, Boeing officials declined to forecast new orders for 2003 but hinted that Boeing is likely to win an Emirates order for 25 777s worth €4.2 billion at the show.

U.S. presence scaled back amid rows

Boeing’s sedated foray into the expected rivallry at the event was indicative of the scaled down American presence at the 45th Paris Air Show. U.S. participation this year has been sharply reduced and, for the first time, no U.S. military plane will perform in the sky. The Pentagon has banned the traditional aerial displays by its military pilots in what is widely seen as a deliberate snub to the French with only 6 planes from the United States making an appearance on the ground at Le Bourget. Relations between the countries have been at an all-time low since the U.S.-led war in Iraq, a military invasion France condemned.

To make matters worse between the two nations, French Defence Minister Michele Alliot-Marie announced on Saturday in the French newspaper Le Monde that she had asked for "a study of the risks" that U.S. investments could represent in companies linked to European defense. In her interview, timed to coincide with the the air show, Alliot-Marie urged European firms to stand together to resist what she called the United States’ "true preoccupation" to take over European defense concerns. "American industrialists are pursuing a logic of economic war," she said.

"The French defense minister is entitled to her own opinion," said U.S. defense department spokesperson Jim Turner in response. "However, her opinion does not accurately characterize the policy or position of the secretary of defense, or the position of the U.S. government."