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Tuesday, 23 July, 2002, 08:23 GMT 09:23 UK
Air show business grounded
Airbus A340-600
Airbus A340-600 makes its air show debut
The global economic slowdown and 11 September attacks have cast a gloomy shadow over the Farnborough Air Show.

The usual torrent of equipment orders and product launches is almost totally absent.


All of our (aircraft) production is based on the economy coming back, travel coming back and the airlines getting help

Alan Mulally
Boeing
Dutch airline KLM offered one of the few bright spots with a diplomatic order for 6 planes from Airbus and 2 from Boeing, both with a book value of about $700m.

But overall, this year's show is in stark contrast to the last one two years ago when a record $52bn worth of deals was announced.

Big increases in military spending announced by the US government and others around the world have also not translated into defence orders, which often take years to negotiate.

Civil slowdown

Rival Boeing and Airbus again engaged in their ritual backbiting, but the rhetoric smacks of desperation.

The largest plane maker in the world kicked-off by accusing the European title contender of oversupplying the market by not cutting commercial jet production.

Boeing Chief Phil Condit
Boeing head Phil Condit expects tough times
Alan Mulally, Boeing's senior vice president in charge of commercial aircraft operations, added the recovery in the civil aviation industry may take longer than expected.

"All of our (aircraft) production is based on the economy coming back, travel coming back and the airlines getting help," said Mr Mulally.

"We still think that the low point in production to support the airlines will be 2003 but that can easily move to 2004 the way it is going," he said.

Airbus was less pessimistic, predicting orders would bottom out in 2003.

"We see the market starting to ramp up in 2004," said John Leahy, chief commercial officer at Airbus.

Defence boom

With a slump on the commercial side of the aerospace industry, many companies have been looking to their military units to maintain profitability.

Northrop Grumman, which came to the show as the new defence giant on the block after acquiring defence and auto group TRW, expects boom times and double digit profit growth.

"We are going to see 8% to 9% compound annual growth rate in defence expenditure over the coming years and we'll do at least double digit earnings growth," said chief operating officer Ron Sugar.

BAE Systems, Europe's largest defence contractor, had some good news after Bahrain announced its intention to buy the ageing Hawk trainer jet, which will keep dwindling production alive.

The size of the order is still subject to negotiations.

Singapore also announced it was looking to upgrade its air force with a new generation fighter jets to replace its ageing A4-Skyhawks.

The deal is expected to involve about 20 planes.

Farnborough, just south of London, alternates with the Paris Air Show every year and opens to the public on 27 July.

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 ON THIS STORY
Phil Condit, chief executive, Boeing
"We have cut the production rate of our commercial airplanes in half."

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