Indian Carriers Buy $7B Airbus, Boeing Jets

Indian airlines grabbed the spotlight on day two of the Paris Air Show (search) on Tuesday, committing to buy about $7 billion in jets from Europe's Airbus and U.S. arch-rival Boeing Co. (BA).

The orders highlighted growing demand for air travel in India, China and the Middle East, which aerospace executives hope will power a rebound in global aircraft manufacturing that began last year.

They also helped to keep Airbus ahead in the battle for customers at the air show after Qatar Airways' (search) whopping $10.6 billion plan to buy its planes on Monday. Airbus traditionally uses industry events to showcase deals, and Boeing remains poised to regain the lead in commercial jet orders this year.

"India is today one of the world's most promising markets," John Leahy, chief commercial officer at Airbus, said.

"More people in India travel by train in a day than travel by air in a year," he told a news conference.

Indian airlines have been modernising their fleets and expanding as their government has deregulated a sector once strait-jacketed by red tape. India's government said in May it expected airline industry growth to surge 20 percent a year.

India's largest domestic airline Jet Airways (search) told the Paris Air Show, the world's largest, it had committed to buy at least 20 Boeing planes worth over $2.8 billion at list prices, including 10 wide-bodied 777s that it will use to boost international service.

Jet said separately it would buy 10 Airbus aircraft with options to buy 10 more in a deal worth about $1.5 billion.

In addition, Jet's domestic rival Kingfisher Airlines (search) said it planned to spend about $2.5 billion for "multiple wide-bodied aircraft" from Airbus, including its mammoth 555-seat A380 model, the world's biggest airliner.

"China and India could be the drivers of growth in the future," said Airbus chief executive Noel Fogeard.

"In Europe the trend is good, it is excellent in the Middle East, and it's even better in Asia."

In a key battle ground between Airbus and Boeing, Kuwait-based leasing firm ALAFCO said would buy 12 of Airbus's planned A350 mid-sized model and would take options on 6 more.

The announcement comes as the planemaker seeks enough buyers to convince its board to approve production of the plane, which would begin deliveries in 2010.

But Boeing, on course to score more commercial jet orders than Airbus this year for the first time since 2000, hit back with a $2.9 billion deal for 28 of its planes with International Lease Finance Corp and a $1.1 billion deal with fellow aircraft lessor GE Commercial Aviation Services.

Airbus's A350 is aimed at countering Boeing's new 787 model, which has amassed more than 260 commitments from customers.

Boeing's success with the 787 in mid-sized market has prompted Airbus to modify the A350 design.

Airbus parent companies EADS and BAE Systems last week delayed giving final approval to build the A350 until September. The move coincided with reports that Airbus faces congestion on its other major projects including the A380, the world's biggest airliner.

Chief Executive Noel Forgeard denied this and — for the first time — linked the decision to delay a final go-ahead for the A350 to negotiations between European Union and the United States over aircraft subsidies at the World Trade organization.

He said the delay was a "contribution" by Airbus to help clear the atmosphere at talks over mutual allegations of illegal subsidies, but that Airbus would build the plane anyway if no progress were made. He said the EU had not asked for this.

Analysts say Airbus needs more time to finalize the 4.5 billion euro ($5.5 billion) project and may be anxious to cool the row with the United States for now to smooth efoirts to enter the U.S. military market.

Orders or commitments received for the A350 so far reached 102 by the second day of the Paris air show and Airbus said it expected to have 200 commitments this year.

But it has been kept mainly on the backfoot by Boeing which announced increased production for the 787 at the show.

Forgeard forecast 360 total Airbus plane deliveries in 2005 and "at least" 400 next year as the airline sector recovers from its worst recession that began in 2001 and ended around the middle of last year.

Forgeard said Airbus would post a double-digit percentage operating margin this year, though lower than its first-quarter margin of 12.6 percent.

($1=.8251 Euro)