FARNBOROUGH, England - Airlines from oil-rich Middle Eastern countries saved the world´s largest air show from an otherwise lackluster start Monday, booking orders for about 150 planes from Boeing and Airbus worth more than $ 25 billion.
Many European and U.S. airlines are expected to refrain from signing any big deals at the Farnborough International Airshow as they cope with rocketing fuel prices and flagging passenger demand because of the global credit crunch.
In contrast, several Middle Eastern carriers with the benefit of oil-backed sovereign wealth funds are banking on huge investments and greater tourism in the Gulf region to justify spending for aircraft at a time when there is talk in the industry of cancellations and delays on existing orders.
"The Middle Eastern airlines have less constraints, particularly in terms of finance," said Kepler Equities analyst Pierre Boucheny.
Escalating energy costs have eaten into airlines profits, and 25 carriers have ceased operations in the past six months. The International Air Transport Association forecasts industrywide losses of .3 billion this year.
Fuel now accounts for around 40 percent of airline costs, up from 13 percent five years ago, the IATA said.
The biggest deal Monday came from Etihad Airways, which split an order for 100 aircraft between Airbus and Boeing worth billion at list prices.
"The size of our order... mirrors the rising prominence of the Middle East and its increasing emergence as a new focal point of global aviation," Etihad CEO James Hogan said.
The order slightly favored Airbus, which won an $ 11 billion firm order for 55 planes including 20 single-aisle A320s, 25 midsize A350s and 10 of the superjumbo A380.
Etihad also announced a firm order worth billion at list prices for 35 Boeing 787 aircraft and 10 Boeing 777-300ER.
In addition Etihad placed options for 25 more Boeing 787s and 10 Boeing 777s and has purchase rights for an additional 10 Boeing 787s and five Boeing 777s.
Deliveries of the Boeing aircraft will start in 2011 and should be completed in 2020, while the Airbus jets will be delivered from 2011 to 2017.
The recently launched low-cost airline FlyDubai also used the show to announce an order for 50 next-generation 737-800s, worth around $ 3.74 billion at current list prices.
In a smaller deal, Saudi Arabian Airlines signed a contract with Airbus for eight A330-300 wide body aircraft, worth .6 billion at list prices.
More deals are expected throughout the five days of the trade show, starting today with Middle Eastern carrier Qatar Airways.
Despite the gloom surrounding the sector, aerospace executives have been quick to strike a reassuring stance at Farnborough, suggesting the difficult economic outlook could in fact prompt more efficiency in the industry with the introduction of cleaner planes.
"I think the opportunities that are presented by the crisis we find ourselves in will drive manufacturers to produce products that allow our customers to be more efficient and be profitable," said Scott Carson, president and chief executive of Boeing´s commercial airplanes unit.
Carson said that Boeing had not received any cancellations, although "a handful" of customers had asked to delay their purchase.