Summer sale on in global jet industry - Reuters
BEIJING |
BEIJING (Reuters) - A summer battle for orders is underway in the global jet industry, which gathers in Beijing on Sunday for the first of two crucial events in two months, pitting the world's largest planemakers against each other in a race for deals worth $50 billion at catalogue prices.
The potential deals span all continents and every pattern of powered flight from the largest airliners to warplanes and luxury business jets, shielding aerospace workers from the worst effects of a slowdown spreading from Europe's debt crisis.
But analysts say Airbus (EAD.PA) and Boeing (BA.N) are having to offer sporadically hefty discounts to ride out economic uncertainty, especially for maturing models or early batches of new ones like the 787 Dreamliner.
Boeing is expected to win the fiercely contested annual order race for the first time since 2006 as it catches up with a decision by Airbus to revamp medium-haul jets, resulting in big fuel savings for airlines on the Airbus A320 and Boeing 737.
The dominant civil planemakers are also positioning themselves early ahead of next month's Farnborough air show, with deals worth $14 billion announced in the past 72 hours.
Both companies have accused each other of waging a price war to win hundreds of orders for the revamped A320neo and 737 MAX respectively, and deny cutting corners themselves. Several industry analysts say pricing is under pressure this year.
"Both sides are heavily discounting," said Richard Aboulafia, aerospace analyst at U.S.-based Teal Group.
Although the madeover medium-haul jets offer airlines a reduction of 15 percent in fuel, the industry's highest cost, most carriers remain under financial pressure and some are delaying deliveries to shore up their cash positions.
Airlines meeting in Beijing are expected to hear that their industry body, the International Air Transport Association (IATA), has left its forecast for 2012 sector profit unchanged at $3 billion, but unease is growing as Europe discusses a new bailout and China's economy slows.
Major characters in the aerospace industry are in the Chinese capital negotiating on the sidelines of IATA's Beijing summit, which comes weeks before another showcase, the July 9-15 Farnborough air show in Britain.
Chicago-based Boeing was relegated to the background during most of last year's equivalent event as Airbus broke records with sales of the A320neo, but later opted for a similar upgrade.
This year will be different.
Boeing is preparing to hit back with a spree that could soon include an order from United Continental (UAL.N) for 100 narrowbody jets plus some 70 options, industry sources said.
It will want to persuade the top five aircraft leasing companies led by AIG (AIG.N) unit ILFC to put firm signatures on undisclosed draft orders that U.S. aerospace analyst Scott Hamilton estimates at 300-400 jets. These will include an order from GECAS, whose General Electric GE.LN makes 737 engines.
SUMMER SHOWDOWN
If all goes as some in the industry expect, Boeing could double the number of firm orders for its revamped 737 MAX to as high as 1,000 by the end of Farnborough. It may be European Airbus's turn to be overshadowed, though possibly not without surprises such as a new order for its A380 superjumbo.
Airbus on Friday reached 1,425 sales of the revamped A320neo since it was introduced, giving it a share of 76 percent in medium-haul, the market's hottest segment. Over time the balance of power is expected to be roughly equal as the duopoly recovers.
Boeing has 451 firm MAX sales and its data suggests it has at least 549 draft orders including 414 yet to be identified.
The industry's arch-rivals are also facing off indirectly in the global arms market this summer with a competition to supply dozens of fighters to South Korea.
Bids are due on June 18 and industry sources believe a decision may come as early as September in an $8 billion contest between Boeing's F-15, the Eurofighter made by a group including Airbus parent EADS (EAD.PA), and the Lockheed Martin (LMT.N) F-35.
Asia, the Middle East and Latin America are re-arming to replace ageing equipment or in the face of regional threats, and Western suppliers are wooing them aggressively to try to offset domestic budget cuts.
The global fighter market is pegged at $15-20 billion a year excluding lucrative parts and upgrade deals. The share of exports within this total hovered around 30 percent for the past decade but is moving towards 50 percent, Aboulafia said.
Manufacturers are also seeing a steady rise in demand for top-line business jets from China as the number of millionaires in the world's second largest economy rapidly expands.
China accounts for a quarter of global consumption of luxury goods despite a recent cooling of its economy, and suppliers like Brazil's Embraer (EMBR3.SA) say China's super-rich are jumping straight into buying the biggest business jets.
The key unknown is to what extent the crisis in Europe will escalate, and throw fast-growing new economies off course.
For now, emerging market growth in transport rolls on.
On Friday, Boeing confirmed that Indonesia's Lion Air had placed a draft order for model 787 Dreamliners after a record order for over 200 smaller 737s. Finance for the purchase has been heavily supported by U.S.-backed export loan guarantees.
The 787-8s are part of an early batch that had to be reworked at significant cost and are expected by analysts to be sold for less than half the $194 million price tag, driven down by competition from Airbus's older A330. Boeing aims to focus its efforts on improving pricing for the more popular 787-9 model.
(Editing by Daniel Magnowski)
Mitch Albom: Paying a price once the cheering stops - Detroit Free Press
Rob Rubick used to play pro football. He took a lot of hits. He is 51 now, and says he has a hard time focusing. "If I head to the refrigerator and somebody stops me to talk for 10 seconds," he says, "I end up sitting back on the couch. I forget what I was up for."
Like a lot of former NFL players, Rubick wonders what the payback will be for years of head-jarring contact. He forgets phone numbers before he finishes dialing. At least twice a day he finds himself blanking out on what he was doing. He sees an elderly father who is starting to misremember things, "but he's in his 80s. I'm too young for this."
Last week, a lawsuit was filed consolidating scores of complaints from former players who claim the NFL didn't warn them enough of the potential dangers of concussions.
Rubick, who says he was not part of the suit, understands their issues. He played tight end for seven seasons with the Lions, from 1982-88, and remembers at least six documented concussions he suffered in his career. Today, if a player has six concussions, he almost certainly is retired.
Rubick played on.
"It was always memory loss," he says. "I would lose 36 hours of my life. I'd come off the field and see my parents, and I'd say, 'Hey, when did you guys get here?' And they'd say, 'Rob, we've been staying at your apartment for the last day and a half.' "
We learn more about concussions
The brain is an amazing, awe-inspiring thing. It is also delicate. Slamming it into the turf -- even protected by a helmet and a cranium -- cannot be healthy.
But the damage caused is a matter of debate. We still are learning about how truly dangerous concussions are. Most new evidence suggests we never took them seriously enough. This is why you see tighter rules on helmet-to-helmet hits, and more caution before a player returns to action.
But that is now. What about back then? Does the league have a responsibility to former players who were pushed back out after the birdies stopped chirping?
The players' lawsuit says, in part: "The NFL, like the sport of boxing, was aware of the health risks associated with repetitive blows producing sub-concussive and concussive results. ...
"Despite its knowledge ... the NFL turned a blind eye to the risk."
The league, of course, denies culpability and says it does all it can to keep the sport safe. But more and more players are discovering stumbles in their day-to-day life that may well be traced to the pounding they took. Headaches. Dementia.
"One preseason game, I was on punt coverage," Rubick recalls, "and I take five steps and I don't see this guy and he earholes me, side of my head. Just flattens me. I'm dizzy. I walk to the sidelines. And Darryl Rogers was the coach. He said, 'Are you all right?' I said, 'I think so.' And he said, 'Well, get off the field; the game is starting.' I had no idea where the time went. I was just standing out there in front of him, like a deer in the headlights."
Health care costs for retired players
Rubick, who was born in Newberry and who attended Grand Valley State University, teaches at Lapeer West High School. He also does a little broadcasting for TV and radio. Lest anyone think playing in the NFL is some golden ticket, Rubick says his entire income for seven years in the league was $750,000.
He is not alone. Plenty of players from the '80s, '70s and earlier never made enough money to live off of once football was over. And many now cannot afford the medical coverage required for issues that are popping up.
Rubick and others feel the NFL should at least make concessions for the health care costs of retired players. The dispute is certain to land in the courts.
Meanwhile, when you talk to guys like Rubick, you hear fear. They wonder what lies ahead. "I try and joke with my kids about it, but they don't think it's funny," Rubick says.
They are gladiators in their 20s, veterans in their 30s, retired in their 40s -- and worried in their 50s.
I ask Rubick if he had it to do all over again, would he play in the NFL?
"Ask me in 20 years," he says. "If I'm still here, I'd say yes. If not ..."
You know what they call that?
The other side of glory.
Contact Mitch Albom: 313-223-4581 or malbom@freepress.com. Catch "The Mitch Albom Show" 5-7 p.m. weekdays on WJR-AM (760). Also catch "Monday Sports Albom" 7-8 p.m. Mondays on WJR. To read his recent columns, go to freep.com/mitch.
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