=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SFGate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2004/07/19/f= inancial1335EDT0116.DTL --------------------------------------------------------------------- Monday, July 19, 2004 (AP) Aircraft makers see gradual recovery in sales; Boeing announces $3 billion = deal while Airbus expects to exceed annual sales target BRUCE STANLEY, AP Business Writer (07-19) 11:53 PDT FARNBOROUGH, England (AP) -- Demand for new passenger and freight aircraft is rebounding after an unprecedented global downturn and in spite of chronically high fuel costs, U.S. manufacturer Boeing Co. and its European rival Airbus said Monday at Britain's Farnborough International Air Show. Boeing announced a $2.96 billion sale of 777-300ER planes to Emirates Airline, while Airbus predicted it would exceed its planned delivery of new planes this year. In a sign of their intense competition, executives for these two titans of civil aviation defended their respective strategies for future growth and traded accusations about government subsidies. Embraer, a Brazilian maker of regional jets, announced three sales of its own. More than 300,000 people were to attend the air show this week where more than 1,300 exhibitors from 32 countries will show off the latest in aviation technology, including flight simulators and a space pavilion run by the British National Space Center. A miniature town complete with traffic circles and avenues has sprung up on the 66-acre Farnborough Aerodrome site in southeastern England for the large temporary exhibition. Boeing foresees 5.2 percent annual growth in global passenger traffic and 6.2 percent growth in air cargo business, after nearly three years of lost production due to the terror attacks of Sept. 11, 2001, the SARS epidemic in Asia, the bursting of the Dot.com bubble and the war in Iraq. The company estimates that airlines will buy some 25,000 new planes worth $2 trillion over the next two decades, Boeing Commerical Airplanes chief executive Alan Mulally, said at a news conference. Mulally argued that airlines will need aircraft to make longer and more frequent flights and will prefer flying point-to-point between final destinations rather than via congested hubs. Boeing, headquartered in Chicago, is developing its new medium-sized 7E7 aircraft to meet this hoped-for demand. About 24 airlines already have paid deposits for more than 200 7E7s, and Boeing expects to convert some of these down payments into firm orders "through the end of this year," Mulally said. "These are negotiations we are doing now that will lead to definitive contracts," he said. The 217-seat 7E7 "Dreamliner" is to be launched in 2008. Boeing's deal with Emirates Airline consists of a firm sale of four 777-300ER with options on nine more, for a total contract value of $2.96 billion. The four planes are to be delivered in 2006, with the optional sales to be completed by 2012. Emirates chairman Sheikh Ahmed bin Saeed Al Maktoum also expressed interest in the 7E7, calling it "a fantastic aircraft" but hinting that his airline would prefer if it were larger. "We are in discussions to see if they can build this aircraft to carry more people or go further," he said as he exchanged contracts on the 777-300ERs with Mulally. "From the Emirates point of view, we always believed the smallest aircraft in our fleet would be 300 seats or above." Airbus chief executive Noel Forgeard estimated that air traffic grew by 7 percent last year and would rise by 10 percent this year, even though aviation fuel prices also have increased. Airbus, based in Toulouse, France, has received 104 firm orders so far this year and claims more than half of the airline market. "I can now confirm that we plan to deliver more aircraft than last year, and even more than the 305 aircraft that were the plan," he said. In contrast to Boeing, Airbus is betting that future growth will come fr= om super-size planes flying large numbers of passengers between specific cities. It is developing the A380, which will seat about 550 passengers, to fill this niche. The jumbo aircraft is on track to make its test flight during the first three months of next year, Forgeard said. "You could never make a business case for an aircraft that large," said Boeing's Mulally, insisting that his company could satisfy any future demand for larger airplanes by modifying its existing 747. Forgeard countered that Boeing's 7E7 was itself a response to the A380. "It's probably a project that is something real this time," he added, in an unflattering reference to the U.S. company's earlier, ill-fated plan for a long-haul plane dubbed the Sonic Cruiser. Airbus foresees global sales of 16,000 aircraft over the next 20 years, = at least 1,500 of them to China. For its part, Embraer announced that U.S. airline Trans States has agreed to exercise options to buy seven ERJ145 jets, to be delivered later this year, and to retain the option to purchase 10 more. Republic Airways Holdings, owner of American carriers Chautauqua Airlines and Republic Airlines, has confirmed it will exercise options for two Embraer 170s. Embraer said it expects to begin delivering the planes in the third quarter. Luxair of Luxembourg has agreed to exercise options on two ERJ135s and to reserve an option for another. Embraer expects to complete that deal in coming weeks. Embraer executive vice-president Frederico Fleury Curado said the company is confident of exploiting a gap it perceives in the 100-seater market -- planes carrying around 70 to 120 passengers -- despite increased competition from Bombardier of Canada. Associated Press Writer Jane Wardell contributed to this report from Farnborough. ---------------------------------------------------------------------- Copyright 2004 AP