The Farnborough airshow is insensitive to trade tensions

by Tim Hepher, Eric M. Johnson and Andrea Shalal

FARNBOROUGH, England (Reuters) – The aviation industry holds show at Farnborough, England, from Monday with the hope that the trade tensions will not deter airlines do their market, while geopolitical uncertainties are expected to foster the sales of weapons.

No more as the difficult negotiations on the Brexit, trade tensions between the United States on one side and China and the european Union on the other do not seem to threaten the boom for several years, the aerospace sector and the defence, which weighs some 800 billion ($685 billion).

“The global environment will continue to reflect the sector’s good health in spite of the dark clouds of Brexit and other threats on the front commercial,” says Richard Abulafia, an analyst at the Teal Group. “In fact, the trend of recent years is expected to continue, the aviation remaining in a bubble, protected in a turbulent world.”

Boeing (NYSE:BA) is expected to confirm the increase in demand for the air transport in the wake of Airbus (PA:AIR) has raised its forecasts of market on July 6.

The european company sees the global fleet of passenger aircraft will more than double to reach 48.000 devices in 20 years, with a growth in air traffic of 4.4% per year, leading to a need for 37.390 aircraft-passenger and cargo new.

The two big manufacturers will inflate their order books were already full for their single-aisle hoping to revive their sales of the long-haul.

According to sources, Boeing table on an order significant of saudi Arabia for its future 777X, the largest twin-engine aircraft.

Airbus for its part hopes to seal an order from AirAsia for its A330neo after difficult negotiations on the price.

Farnborough is the first of the grand salon of aeronautics since Airbus and Boeing have reshaped the sector by taking control of one of the CSeries program of the canadian Bombardier (TO:BBDb), and the other civil aircraft of the brazilian Glow.

It should result in a fierce competition in the segment of aircraft with 100-150 seats, even before that Boeing has finalised its agreement with Embraer.

Airbus already accounts for on the confirmation of a large order of Moxy, a new company, for ex-CSeries renamed Airbus A220.

Farnborough should also confirm the strong demand for cargo aircraft with a whiplash brought the carriage of goods by the development of e-commerce.

Last year, the show saw the announcement of some 900 orders or commitments. Analysts do not exclude a digit of the same order this year.

The rise in price of fuel, if it is a good sales argument for the new aircraft, which consume less energy, weigh on companies ‘ results and could delay some investment decisions.

Boeing also is expected to keep the interest for a potential future aircraft mid-market (220-270 seats), while giving itself until next year to make a decision.

The lucrative contracts for maintenance and services will also be at the forefront, and it will also be much question of the risk of Brexit, “hard”, in other words, a sudden reversal of the United Kingdom of the european Union in march 2019.

This aspect will concern particularly the defence, and the future strategy of the british government in the field of fighter aircraft.

The Farnborough international airshow, which is held every two years alternating with the paris air show in Paris, will close its doors on July 22.

(With contributions by Victoria Bryan, Sarah Young, Mike Stone, Véronique Tison for the French service)