Boeing and Airbus vie over big upcoming aircraft orders. Safran reports tough nine months

2009 has been a very ordinary year for aircraft orders, with Boeing and Airbus sitting on just 70 and 123 net new orders (after cancellations) so far this year, respectively. But there could be a flourish in new orders in the 11 weeks remaining in 2009. Ryanair, Russia’s new state-run carrier Rosavia, Qatar Airways and Turkish Airlines, are in the market for new aircraft.

Ryanair announced at the beginning of this month that it could place an order for up to 200 aircraft, with either Boeing or Airbus, by the end of the year, for delivery after 2012. A deal will be done before the end of the year - or not at all - according to Ryanair CEO, Michael O’Leary.

In addition, Russia’s new state-owned carrier, Rosavia, announced late last week that it has received bids for its tender for 50 firm narrowbody orders (and 15 options) from Airbus and Boeing, as well as Russia’s state-owned aircraft manufacturing conglomerate, UAC. A decision on the order is due on 20-Dec-2009.

Meanwhile, fast-growing Turkish Airlines is also negotiations with Airbus and Boeing for a major order for 70 aircraft, up to a list price of USD5 billion, according to a report in La Tribune. It is unknown if the deal will go to a single manufacturer, or be split between them. A timeframe for the order has not been disclosed.

Qatar Airways is also reportedly expected to announce a number of new aircraft deals at the Dubai Air Show, commencing on 15-Nov-2009.

If either Airbus or Boeing were to garner big shares of these orders, it would bring an otherwise tepid year to a satisfactory close, and deliver bragging rights in the annual battle for orders. The orders - if they materialise - would also provide a positive sign for the manufacturing and aerospace sector leading into the new year.

Boeing has lagged Airbus this year due to large numbers of aircraft cancellations (111 cancellations vs 181 orders for the year-to-13-Oct-2009). The European manufacturer is actually behind its US rival in terms of raw new orders, but has been significantly less affected by cancellations (23 cancellations plus three non-commercial cancellations vs 149 orders for the year to 30-Sep-2009).

Boeing was up 2.8% at the close of Friday trading, while EADS, parent of Airbus, was down 1.8%. Brazilian aircraft manufacturer, Embraer, closed down 1.3%.

Safran reports tough nine months for commercial engine and parts units

French aerospace company Safran (one half of the world’s largest engine manufacturer, CFM, along with General Electric), released its revenue results for the nine months to 30-Sep-2009, reporting growth of 1.7%, on the sale of business units, favourable currency exchange and the benefit from acquisitions. Putting these aside, the company reported total revenue shrank 3.5% on an organic basis in the first nine months of 2009.

Group CEO, Jean-Paul Herteman noted that the performance was “solid”, given the uncertain operating environment. The company’s two main operating units, Aerospace Propulsion and Aircraft Equipment, have both been most strongly affected by the global financial downturn, while organic growth at its Defence unit has been almost flat (+0.5%). The Security unit had a very strong nine months, with revenue up 43.7% due to acquisitions, and +15.7% on a organic basis.

Orders at the Aerospace Propulsion unit have remained “satisfactory”, with revenue down 6.2% year-on-year on an organic basis. The service growth for recent engine programmes partly offset more rapid than anticipated erosion of services for older generation engines. Aircraft Equipment reported organic revenue fell 4.4% for the nine month period, due to “depressed market conditions in the business aircraft segment”, although this was partly mitigated by the ramp up in A380 production levels and a “solid performance” in services, particularly in Asia.

Safran declined to provide an outlook for 2010, only noting it would be “challenging”, without elaborating. 

Safran’s share price was down 5.6% in trading on Friday. Other engine manufacturers also traded down, with MTU Aero Engines dropping 2.3% and Rolls-Royce easing 0.7%.

Selected Aviation suppliers’ daily share price movements (% change): 16-Oct-09