British Prime Minister David Cameron talks with aircrew Monday at the Farnborough International Airshow in England. Among the many deals already announced, the British government will purchase nine new marine patrol planes from Boeing for 3 billion pounds, about $3.89 billion.

Boeing, Airbus Get Lift From Asian Airline Deals

July 11, 2016
Asian carriers are reportedly spending considerable cash in Farnborough as economic growth spurs demand for new routes and extra frequencies — a trend that is prompting low-cost operators that have already amassed large order backlogs to add even more planes.

Asian airlines are set to provide the biggest boost to Boeing Co. and Airbus Group SE at the Farnborough Air Show as carriers from China and India stock up on revamped versions of workhorse single-aisle models.

Xiamen Airlines kicked off the action on the first day of the expo Monday with an outline deal for 30 Boeing 737 Max 200 jets worth $3.39 billion at list price, while Malaysian discount giant AirAsia Bhd. is set to order as many as 100 Airbus A321neos valued at $12.6 billion, people familiar with the plan said.

Go Airlines India Pvt. is meanwhile examining the purchase of about 70 smaller A320neos worth around $7.5 billion that could also come at 2016’s biggest aviation event southwest of London, according to other people, who asked not to be identified because negotiations with Airbus are ongoing.

In the wide-body sector, Virgin Atlantic Airways Ltd. is closing in on a deal for Airbus’s largest A350 model and could make an announcement soon.

Asian carriers are making the running in Farnborough as economic growth spurs demand for new routes and extra frequencies. The trend is prompting low-cost operators that have already amassed large order backlogs to add even more planes, with India’s SpiceJet Ltd. also weighing on order for as many as 100 737s or A320s, though not certain to reach a decision this week.

Last year’s Paris expo, with which the U.K. event in Farnborough alternates, ran up new business worth more than $100 billion. Analysts aren’t expecting a rush of orders this week since neither Boeing nor Airbus has recently brought new planes to market.

Top-up deals for the upgraded narrow-bodies and the latest A350 and Boeing 777X and 787 wide-bodies should, however, further swell backlogs that have already reached record levels and pose a major manufacturing challenge.

The AirAsia deal could be announced as early as Tuesday, with at least some of the A321s set to provide a stepped-up service to India, one of the people said. The world’s fastest-growing major aviation market posted 20% growth last year, according to the International Air Transport Association, versus 10% in China and less than 5% in the U.S.

AirAsia is the largest Airbus customer by number of aircraft, and at the last Farnborough show said it would buy 50 A330-900neos in one of that year’s biggest deals.

GoAir, among eight budget airlines operating in India, is one of only three carriers worldwide that have begun operating the Neo upgrade of the A320, so that a follow-on order would provide a vote of confidence in a model dogged by issues with its Pratt & Whitney turbines since last year.

Xiamen’s memorandum of understanding envisages the supply of Max 200s to its low-cost Jiangxi Airlines and Hebei Airlines units, according to a statement issued at the show. The airline, a subsidiary of state-backed China Southern Airlines Co., already had 737 Maxs on order an operates an all-Boeing fleet.

Virgin Atlantic had previously indicated it might buy 12 Airbus A350-1000s with a list price of $4.4 billion as part of a plan to replace aging Boeing 747s in its London Gatwick-based leisure fleet. The U.S. manufacturer’s 777 had also been in the running.

Los Angeles-based Air Lease Corp. separately announced firm orders for three A350-900s and an A321 at the show.

By Andrea Rothman, Julie Johnsson and Christopher Jasper, with assistance from Benjamin Katz.

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