June 19, 2017 / 8:28 AM / 2 months ago

Boeing launches new jet with flurry of orders

A Boeing 737 Max takes part in a flyng display at the first day of the 52nd Paris Air Show at Le Bourget airport near Paris, France June 19, 2017.Pascal Rossignol

PARIS (Reuters) - Boeing (BA.N) unveiled a new version of its bestselling 737 aircraft on Monday, injecting life into a faltering civil aviation market as French President Emmanuel Macron flew in to open the world's biggest air show in Paris.

After years of booming orders driven by increased air travel and more fuel-efficient planes, passenger jet manufacturers are bracing for a slowdown in demand while they focus on meeting tight delivery schedules and ambitious production targets.

In a sign of their more modest expectations, some companies have cut back on staffing and catering at this year's Paris show and made less space available for the media.

But Boeing generated a burst of activity on the opening day by launching the 737 MAX 10 to plug a gap in its portfolio at the top end of the market for single-aisle jets, following runaway sales of the rival Airbus (AIR.PA) A321neo.

The U.S. planemaker said it had more than 240 orders and commitments from at least 10 customers for the new 737, which can carry up to 230 people in a single-class configuration.

"Many airports are running out of capacity and for those airports this is a perfect aircraft," said Ajay Singh, the chairman of low-cost Indian airline SpiceJet (SPJT.BO), as his company signed a provisional deal to buy 40 MAX 10s.

However, Airbus immediately hit back with an order for 100 of its popular A320neo planes from leasing company GECAS, as well as a deal for 12 A321neos with Air Lease Corporation.

Airbus sales chief John Leahy brushed off the latest Boeing challenge, saying that much of the interest in the MAX 10 was from existing Boeing customers switching orders from other models.

"We think the 737 MAX 10 is a competitor to the (MAX) 9 and that's why a lot of people are converting," he said.

Twenty of SpiceJet's provisional order for 40 MAX 10s were conversions from an existing order for other 737 models.

GECAS also converted an existing 737 order for 20 planes to the new model and Europe's largest tour operator TUI Group (TUIGn.DE) did likewise for 18 aircraft.

Boeing did announce provisional new orders for 90 MAX 10s including 50 from Indonesia's Lion Air.

It also won a boost from leasing giant AerCap (AER.N) for its 787 Dreamliner long-range jet, which sits in a category for which demand has been fragile over the past year.

Industry sources said that Airbus would soon announce an order for 10 of its A350-900 wide-body jets from Ethiopian Airways, while it also looked set to clinch a $5 billion deal with low-cost carrier Viva Air Peru.

Providing reassurance for planemakers, Qatar Airways said it was sticking with plans to increase its fleet and routes despite a diplomatic rift with four Arab nations that have closed their airspace to the company.

"We have had a lot of cancellations, especially to the four countries that did this illegal blockade, but we have found new markets and this is our growth strategy," Chief Executive Akbar al Baker told Reuters.

F-35 DEBUT

While demand for passenger jets may be ebbing, there are signs that interest in military aircraft is picking up after years in the doldrums because of government budget cuts and weak economic growth.

Lockheed Martin (LMT.N) is in the final stages of negotiating a $37 billion-plus deal to sell 440 F-35 fighter jets to a group of 11 nations including the United States, two people familiar with the matter told Reuters.

That would be the biggest deal yet for the stealth warplane, which is making its Paris debut this week.

President Macron flew into the show aboard an Airbus A400M military transporter in his first official engagement since winning a parliamentary majority in elections on Sunday.

His arrival was followed by a flypast by the world's largest passenger plane, the Airbus A380, with France's aerobatic team.

The ceremony lent high-level support to two ambitious European aerospace projects tarnished by difficulties: the A400M because of chronic cost overruns and delays and the A380 because of weak sales that threaten its future.

Airbus said on Sunday that it was working on an A380 upgrade -- dubbed A380plus -- with fuel-saving wingtips, confirming plans reported by Reuters in March.

Airbus chief Fabrice Bregier said on Monday that the company was in talks with several potential customers for the upgraded plane. But it would only be put into production if it received "a large order", he said, without elaborating.

Four-engined, double-decker superjumbos such as the A380 and Boeing's 747 were once viewed as the future of air travel between international hubs, but interest has waned as airlines have preferred cheaper, more nimble aircraft.

Additional reporting by Mike Stone, Matthias Blamont, Andrea Shalal and Giulia Segreti; Writing by Mark Potter; Editing by David Clarke and David Goodman

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