Big orders of airliners "reflecting optimism" about global air-travel?

At the Paris Air show, Airbus and Boeing are jockeying to announce
bigger orders than the other.* Airbus is announcing orders for the A350,
which they haven't even started designing yet.

All of the orders announced come from non-US carriers.* US airlines lost
$9 billion last year while all other airlines earned $5 billion
combined.* It also appears the greatest growth will come outside the
US.* A lot of orders come from Indian airlines, before it sounds like
there are established routes or even infrastructure to support the level
of spending.* Can you say offshoring?

Of course, airlines have to do long range planning so these orders are
not necessarily proof that travel and the economy in general will pick
up over the coming years.* Often a lot of these orders are never
completed.

Still, the aggressiveness of these airlines in developing countries is a
stark contrast to the plight of American carriers.* In the last year,
there has been some belief that the airline business just isn't
economically viable.

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Airbus, Boeing Rack Up Orders
From Growing Non-U.S. Carriers

By DANIEL MICHAELS

Staff Reporter of THE WALL STREET JOURNAL
June*15,*2005*3:29*p.m.

PARIS -- Airlines outside the U.S. continued to spend most freely at the
Paris Air Show, reflecting optimism about the global air-travel market.
The most dramatic evidence was an order Wednesday from Indian start-up
Kingfisher Airlines for $3 billion of Airbus planes at catalog value,
including five Airbus A380 superjumbos. The order came one day after
Indian rival Jet Airways ordered 30 planes from Airbus and rival Boeing
Co.

Airbus and Boeing have received more than 200 orders or commitments for
airplane orders this week at the Paris Air Show -- all of which have
come from carriers outside the U.S. or from leasing companies that are
likely to place the planes with carriers outside the U.S.
According to recent analysis from the International Air Transport
Association, a global trade group based in Geneva, the U.S. airline
industry lost roughly $9 billion last year while the rest of the world's
airlines made a combined profit of nearly $5 billion. The group expects
the airline industry world-wide to suffer a net loss of $6 billion this
year.

In India, air travel is growing at around 25% annually, said Vijay
Mallya, chairman of Kingfisher parent company UB Group. "It should be a
no-brainer to fill a plane this size," Mr. Mallya said of the Indian
conglomerate's purchase of A380s, which the airline plans to outfit with
490 seats in three classes.

Kingfisher only began operations on May 9 and flies a handful of Airbus
A320 single-aisle jetliners that carry 174 passengers apiece. The
two-deck A380, now in production, is the largest passenger plane ever
built and can carry 555 passengers in three classes.

Kingfisher also plans to buy five of Airbus's proposed two-aisle,
long-range A350 model and five of its A330 model, from which the A350 is
being derived.

Mr. Mallya said Kingfisher plans to use the A380s to take advantage of
India's rush to liberalize its aviation market. India has recently
allowed competition on domestic routes and earlier this year signed an
aviation treaty with the U.S. that would allow any Indian or U.S.
airline to fly without restriction to the other country. India has also
recently signed similar treaties with other countries around the world.
Kingfisher plans to fly the A380s from Mumbai to New York when it starts
receiving the planes in 2010. It plans to use the A350s to fly to other
U.S. cities starting in 2012 and use the A330s for regional and
long-haul flights starting in 2007.

Mr. Mallya said UB Group is accustomed to double-digit growth in its
businesses, which include Kingfisher beer and other brands, so he isn't
worried about handling fast growth in his airline. He acknowledged that
India faces infrastructure problems in its fast-growing airline market
but said he is confident the Indian government is tackling the issue.
He said UB Group will probably do an initial public offering of shares
in Kingfisher next year to help finance the aircraft acquisitions. "We
have fundamental faith in the Indian economy," he said. "Spending power
and aspirations have arrived."

Separately, Airbus received a commitment for 10 of its proposed A350,
with a catalog value of roughly $1.7 billion, from General Electric
Commercial Aviation Services, the aircraft-leasing arm of General
Electric Co. and one of the world's largest airplane-leasing companies.
GE's engine division is currently the only supplier of jet engines for
the proposed two-engine, twin-aisle jetliner.

The two A350 announcements bring to 117 the number of planned purchases
of the plane, which Airbus is offering to compete with Boeing's planned
787 Dreamliner. The A350, which Airbus hasn't yet formally decided to
build, is slated to enter service in 2010. Airbus hopes to officially
begin the project later this year.

Among a handful of smaller deals, Airbus said Singapore's low-cost Tiger
Airways agreed to buy eight Airbus A320 aircraft valued at around $500
million at list prices. The planes will be added to Tiger's fleet of
four leased A320s, with the first scheduled for delivery in March 2006.
Egyptian low-cost carrier Air Cairo is also buying six A318 planes, the
smallest plane in the Airbus fleet, to become its first operator in the
Middle East, Airbus Chief Executive Noel Forgeard told reporters.
Meanwhile, Boeing said Spanish low-cost airline Air Europa has agreed to
place firm orders for 18 of Boeing's next-generation 737s, plus options
for 12 more. Air Europa was the first customer for the proposed Airbus
A350 but decided to stay with Boeing for its single-aisle planes. The
deal is valued at up to $1.9 billion if the options are converted into
firm orders, according to a Boeing official. Air Europa currently
operates 29 Boeing 737s.

Alcoa Will Supply Airbus

Separately, Alcoa Inc., the world's largest aluminum maker, announced a
long- term agreement to supply nearly $2 billion of aluminum on Airbus
planes.

The agreement runs through 2011 and affects Airbus planes including the
A380 freight plane and the A350. Executives from both companies sealed
the agreement Tuesday with champagne and a signing at the Paris Air
Show. It is the largest agreement to date between the two companies.
Alcoa says it will supply sheet and plate as well as extrusions to the
European aerospace giant. "We have supplied extrusions to Airbus before
but not at this level," says Kevin Lowery, a spokesman for Alcoa. Bill
Christopher, an executive vice president at Alcoa who oversees
aerospace, said the agreement also involves new products Alcoa has
developed in a quest to reduce the weight and cost of aluminum aerospace
materials as the company faces more competition from plastic and
composite aerospace materials.