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Boeing's Alan Mulally
"The airlines prefer the Boeing family"
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Sunday, 17 June, 2001, 15:02 GMT 16:02 UK
Boeing row over GE deal
GE's huge engines power the Boeing 777
GE's huge engines power the Boeing 777
A row between Boeing and its arch-rival Airbus is dominating the first days of the world's largest air show.

At the Paris Air Show, Boeing is accusing its rival of helping to scupper a multi-billion pound merger deal between GE - a key engine supplier to Boeing - and Honeywell.

The deal was blocked on competition grounds last week by the European Commission, and Boeing says that "it was not the airline companies that are opposed to the merger, it is Airbus."

But both GE and Airbus denied the charge.

GE President Jeffrey Immelt, speaking at the Air Show, said that customers like Airbus had been supportive.

And the co-chairman of EADS, Rainer Hertich, which owns a majority stake in Airbus, said that a merger "would create a strong supplier which would benefit Airbus and others. We do not oppose it."

The opening skirmish was a sign of the fierce rivalry between the two companies, who are increasingly struggling for dominance in an over-crowded market.

$2.5bn order

Meanwhile, there were signs of life in the smaller aircraft market after Dassault announced it had struck a deal with US airline to sell up to 100 business jets worth $2.5bn.

The deal between the French plane maker and United Airlines' parent company, UAL Corporation, was the first piece of business in what is expected to be a flurry of contracts unveiled at the eight-day Paris Air Show.

Exhibitors from 42 countries are displaying 242 civilian and military aircraft at Le Bourget airport north of the French capital.

Paris is the most important air show of the year and provides aerospace companies with the chance to showcase their products to customers, investors and the public.

Aerial displays

Dassault is supplying 40 of its Falcon business jets to United, which has an option to buy an additional 60.

Sukhoi-30: Russian military firepower on display
In addition to the order, Dassault has received 60 more requests for its Falcon series of business jets this year.

"This brings us up to an order book which is the equivalent of two years of production," said Dassault chairman Charles Edelstenne.

As aviation executives haggled on the ground, fighter jets took to the cloudy skies and flew over the airfield in aerial displays.

World War II Spitfire and Mustang fighters added a note of nostalgia, and a modern, helium-filled Zeppelin airship bobbed and dipped above the crowd.

Aside from the aerial displays, there are also plenty of side shows including the expected launch of the politically-fuelled Airbus A400M military transport, the return to the skies of the world's largest plane and a possible announcement of the future of Concorde.

Transatlantic rivalry

But the one issue expected to dominate is the rivalry between Airbus and Boeing.

Europe's Airbus Industries is presenting mock-ups of parts of its planned 555-seat jumbo airliner, the A380.

Airbus A380 super jumbo
Airbus secured enough orders to launch the A380
Boeing has derided Airbus' plans, saying there was no market for a plane of its size.

The American aircraft giant is planning to present its high-speed passenger plane concept - the Sonic Cruiser.

The plane is designed to fly just below the speed of sound, not as fast as Concorde, and will cut an hour off the regular flight time between London and New York.

But sceptics claim the figures do not add up and doubt the Cruiser will ever get off the ground.

Both Boeing and Airbus are expected to announce massive aircraft orders.

But analysts warn the levels this year will not match previous air shows, as falling profits and fears of over the global economic slowdown has made airlines more cautious.

Both Boeing and Airbus have healthy order backlogs, which will help offset the effects of a possible slowdown this year.

Orders are expected to be strong in the regional and executive jet market, which is considered the hot spot of the industry.

Whatever is unveiled or signed at the air show, it usually has a positive effect on company shares.

In recent months, aerospace and defence stocks have made gains as investors move out of technology shares.

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See also:

15 Jun 01 | Business
Bush fuels row over GE deal
30 Mar 01 | Business
Boeing dumps plans for super jumbo
19 Dec 00 | Business
Super-jumbo cleared for take-off
14 Jun 01 | Business
GE-Honeywell deal nears collapse
22 May 01 | UK
Concorde to fly 'by summer'
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