Sales seen lower at air show

DUBAI, United Arab Emirates | Organizers of the Dubai Airshow are putting on a brave face ahead of this year’s event - the economic meltdown and a bleak commercial aviation backdrop aside.

Exhibitor numbers are up, they say, as are advance bookings and the size of the exhibition hall for the biennial event, which starts Sunday. Regional first-time flights by aircraft such as the F-22 Raptor and Eurofighter Typhoon are another draw.

What no one is talking about, however, is matching the last show’s record-breaking order total of $155 billion - a figure that spotlighted the Middle East as an important growing source of business for aerospace and defense manufacturers.

The theme among airplane and weapons makers this time around: lowered expectations.

“We’re not expecting a lot of orders,” said Habib Fekih, president of Airbus’ Middle East operations. “Deals will not be the main driver of the show.”

The last Dubai Airshow saw jaw-dropping orders from the region’s fast-growing carriers, such as hometown favorite Emirates and Qatar Airways.

Gulf carriers signed up for some 140 planes from both Airbus and Boeing Co. worth nearly $40 billion at list prices on the first day of the 2007 event alone. Included in that haul was an order from Emirates that it boasted was the world’s biggest ever.

Two years later, Middle East carriers are still growing fast. But they are also struggling with falling fares from a slump in travel demand - particularly in their plush front-of-plane sections - that is ravaging the industry worldwide.

The head of the International Air Transport Association warned last month that regional airlines have yet to turn growth into profitability. The trade group expects Middle East carriers to lose a combined $500 million this year.

An outlook like that, combined with economic uncertainty and the massive order backlog from past air shows, is unlikely to translate into the eye-popping orders of previous years, analysts say.

That’s not to say there won’t be any deals.

“My gut feeling is there’ll be a few surprises both on the military and civilian side,” said Charles Wald, a retired U.S. Air Force general who is now senior adviser to professional services firm Deloitte LLP’s aerospace and defense industry division. “There’s a sense things are getting better here.”

Airbus predicts air traffic will grow faster in the Middle East than anywhere else in the world in the coming years, forcing the region to nearly triple its passenger fleet over the next two decades. The plane maker estimates the value of that demand is worth $243 billion.

While commercial-aviation deals have dominated headlines out of previous shows, fresh defense contacts could feature high on the agenda this time around.

American defense contractor Raytheon Co. said it is planning to finalize a number of missile and air traffic control deals at the show.

Story Continues →