Planemakers put on brave face

Aviation manufacturers sought to lift the gloom hanging over the recession-hit airline industry, foreseeing better days ahead and announcing new orders at the Paris Air Show.

"It feels to me that we may have reached the bottom," Scott Carson, head of commercial airline business at US jetmaker Boeing, told reporters at the show.

"There is no certainty. But it does feel to us that there are reasons to hope that the recovery will begin next year," he added.

Pier Francesco Guarguaglini, chief executive officer at Italian aerospace giant Finmeccanica, also said he saw "signs of recovery" in economic activity and added: "If the crisis does not last, the negative impact will be limited."

The biennial Paris Air Show, first held in 1909, got under way in driving rain and a downbeat mood, with world airlines grappling with crumbling demand, higher oil prices and a wave of order cancellations that presage huge financial losses this year.

The industry must also confront disturbing new safety questions following the still-unexplained crash June 1 over the Atlantic of an Air France A330 that took the lives of all 228 aboard.

Airbus executives have defended the A330 as one of the safest planes ever made and have appealed for patience during the accident probe. Airbus, a consortium of the French, British, Spanish and German aircraft industries, did have some reason to celebrate Monday as it announced a 1.9-billion-dollar order from Qatar Airways for 24 medium-haul A320 airliners.

Vietnam Airlines later said it was planning to buy two long-haul Airbus A350 jets and 16 medium-haul A321s. The catalogue price for the jets is €1.4 billion.

"We are going to sign a memorandum of understanding this week during the air show," said Nguyen Sy Hung, chairman of Vietnam Airlines.

Excluding the Qatar Airways announcement, Airbus so far this year has received a net total of 11 orders after 21 cancellations. US rival Boeing has seven net orders after 66 cancellations.

Airbus head Thomas Enders said that while Airbus still hoped to receive about 300 orders this year the final tally "could be considerably lower."

At the 2007 edition of the Paris show, well before the global recession and a spike in oil prices, Airbus and Boeing won 800 orders worth more than €71 billion.

The companies are long-standing rivals and their competition in dominating the world market for airliners in previous years had been one of the main features at Le Bourget.

In addition to questions raised by the loss of the Air France jet, Airbus must also contend with major delays and potential funding problems for its A400M military transport plane.

Clients signed up so far for the A400M are Belgium, Britain, France, Germany, Luxembourg, Spain, Turkey, some of whom have threatened to abandon the €20-billion deal, forcing EADS to renegotiate delivery schedules.

Airbus in addition is trying to complete the development of its long-haul A350, with consortium partners hoping to reach a decision on reimbursable government funding to the project by the end of the month.

France is considering aid of €1.4 billion and German up €1.1 billion, officials from both countries said.

Britain has declined to put a figure on its contribution while Spain, the fourth member of the alliance, did not attend the session.

France argued that advance state financing for the A350 did not violate EU competition rules.

"France will defend the principle of the refundable advance, which is a system that has shown its efficiency," France's junior transport minister Dominique Bussereau told reporters.

The funds are "acceptable to the EU because they are not subsidies but advances," said Mr Bussereau, adding however that the positions of the four European states involved in the project were "rather far apart."

French business daily La Tribune reported this month that total advance payments for the A350 could range up to €3.5 billion.