Climate and Ukraine loom over supply-strained Paris Airshow
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[June 16, 2023]
By Tim Hepher, Valerie Insinna, Joanna Plucinska and
Allison Lampert
PARIS (Reuters) - Global aerospace and defence companies will tout the
cleaner transport and robotic weapons of the future as they also tackle
urgent supply bottlenecks at next week's Paris Airshow, taking place
under the shadow of climate fears and a war economy.
The world's largest aviation trade show, which alternates with
Farnborough in the UK, returns to Le Bourget for the first time in four
years after the pandemic forced the 2021 edition to be cancelled.
Aerospace companies go into the biennial event with growing demand
expectations as airlines rush for capacity to meet demand and help reach
industry goals of net zero emissions by 2050.
India's IndiGo is set to place a record order for 500 Airbus
narrowbodies, first reported by Reuters, hard on the heels of a
470-plane Airbus and Boeing order from Air India, which may also be
formalised in Paris.
"There were about 3,300 aircraft that simply were not produced during
the COVID years ... and that's about 15% of the global fleet," said Andy
Cronin, CEO of leasing firm Avolon.
Some forecasts predict as many as 2,000 orders but some buyers such as
Turkish Airlines have ruled out an immediate decision. Others remain
cautious.
"If it does happen we're getting into bubble territory," said Agency
Partners analyst Sash Tusa.
The event comes days after airlines meeting in Istanbul voiced interest
in buying jets up to a decade ahead to avoid being left behind as
traffic recovers from the pandemic. Gulf heavyweight Emirates said it is
in talks to buy large jets.
"It's a seller's market like we've rarely seen," a senior industry
source said, adding jet prices are up.
But there are even more pressing questions over the industry's ability
to deliver on orders after the pandemic left the industry's supply chain
in tatters.
And longer-term questions loom over the industry's ability to square
relentless growth with its environmental objectives.
A GE Aerospace survey on Thursday found the industry split over whether
it will meet objectives to reach net zero emissions by 2050, largely
through Sustainable Aviation Fuel (SAF).
INCENTIVES
Willie Walsh, director general for the International Air Transport
Association, said airlines were absolutely determined to reach the
target but acknowledged it would be "very tough".
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French President Emmanuel Macron visits
the Safran Aircraft Engines site in Villaroche, near Paris, to
tackle the decarbonization of the aviation industry ahead of the Le
Bourget Air Show, France, June 16, 2023. REUTERS/Gonzalo
Fuentes/Pool/File Photo
Environmentalists say the targets are unrealistic due to the low
level of SAF available and argue the only way to reach them is to
substantially reduce flying globally.
France will invest 200 million euros ($218.78 million) to boost SAF
supplies, President Emmanuel Macron said on Friday.
While commercial aviation usually grabs show headlines, the Ukraine
conflict has put pressure on Europe's fragmented arms industry to be
more nimble and hold more stocks.
Defence budgets have ballooned as the West rushes arms to Ukraine
and beefs up funding for future development programmes.
But some experts question whether funding can stay at levels high
enough to restock munitions while simultaneously developing a new
generation of fighters, drones and precision weapons.
"Even with all the funding in the U.S. budget, it's just not
possible to do everything," said Justin Bronk, an air power expert
with the Royal United Services Institute.
"European nations are all operating on a much smaller scale, fewer
fleets, and therefore where you're having to make hard choices and
trade-offs, those are significantly more binary."
Organisers say the show will also be the largest competitive stage
for air taxi projects seeking to revolutionise urban transport with
small battery-powered eVTOL aircraft.
Advances in materials, processing power and electric propulsion have
inspired business ideas in civil and defence.
But analysts warn only a fraction of the 200 or so startups may
survive, sparking a race to build up solid credentials.
"This is reality; this is not a comic book or a PowerPoint
presentation," Volocopter Chief Executive Dirk Hoke said.
(Reporting by Tim Hepher, Valerie Insinna, Joanna Plucinska, Allison
Lampert;Editing by Elaine Hardcastle)
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