Downturn overshadows key air show

Aerospace and defence companies are gathering at the Paris air show this week in the midst of an economic crisis that is crippling the industry.

Airlines, which are set to suffer losses of $9bn (£5.5bn) this year, are reluctant to place new aircraft orders.

Hence, both plane and engine makers are dramatically scaling back expectations as orders are cancelled or deferred.

"All we need is a plague of locusts to complete the scenario," said Qantas Airways chief executive Alan Joyce.

Few cancellations

The biennial Paris air show, which alternates with the Farnborough air show in the UK, is one of the most important in the industry's calendar.

"Cancellations are not as much of an issue as deferrals"

Civil aircraft manufacturers join fighter jet makers and other defence groups at Le Bourget airport to show off their latest products.

Central to the show is the rivalry between Boeing's civil aircraft division and Airbus, the civil aerospace division of European Aeronautic Defence and Space Company (EADS).

Traditionally, the two manufacturers compete to announce the most aircraft orders from airlines, though this year their order books are unlikely to receive much of a boost - at least not until airlines recover.

"On passengers it's really not clear we've come to the end of the downturn yet," said Brian Pearce, chief economist of the International Air Transport Association (IATA).

However, airlines are not walking away from already agreed deals; they are merely negotiating later deliveries.

"Cancellations are not as much of an issue as deferrals," said Mr Pearce. "I don't think we'll have that many more cancellations."

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