Boeing cuts 747-8 production as air freight slows

Boeing said on Thursday (Jan 21) it would cut back production of its freight workhorse 747-8 aircraft by half as the air cargo industry slows.

Boeing said it could move from completing one 747-8 per month to one every two months from September.

The company said data in November showed air freight had contracted by 1.2 per cent over a year, even as air passenger volumes grew 5.9 per cent.

"We are closely monitoring the air cargo market as we work to win additional orders to support ongoing future production," said Boeing chief financial officer Greg Smith.

Boeing will take a US$569 million charge against after-tax earnings for the fourth quarter of 2015 for the production cut. Earnings will be reported on Jan 27.

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The jumbo jet faces a make or break year at Boeing, Airbus

The jumbo jet, for many years the workhorse of modern air travel, could be close to running out of runway.

Last year, there were zero orders placed by commercial airlines for new Boeing 747s or Airbus A380s, reflecting a fundamental shift in the industry toward smaller, twin-engine planes. Smaller planes cost less to fly than the stately, four-engine jumbos, which can carry as many as 525 passengers.

The slump in sales of the jets has raised questions over how long manufacturers can sustain production. It has also fueled internal debate in both companies over the future of the planes, sources said.

The outcome of those discussions will affect the value of existing fleets and thousands of production jobs at the plane makers and their many parts suppliers.

Sales forces at Airbus Group NV and Boeing Co are fighting for potential orders plane by plane as they seek to keep production going beyond the end of the decade, said other aviation market sources. The aircraft makers are offering discounts of at least 50 percent from catalog prices of around US$400 million for a jumbo jet, those sources said. Airbus has said it is also considering a revamp to make its 'superjumbo' more attractive to buyers.

Boeing in September plans to slow the pace of production of its latest 747-8 model to an average of 1.3 planes a month from 1.5 currently. At that rate the orders it already has in hand will only keep the production line going for 2 1/2 years.

The crunch, though, will come earlier because it can take up to two years from ordering the first part to finishing a jet, and no one wants to start the process if it is unclear whether the plane will be completed and delivered to a customer.

"I can see demand for the 747-8 in small numbers, but you have got to ask if they can keep the production line open if they don't get some new orders," said Tony Whitty, chief executive of UK-based aircraft re-marketing firm Cabot Aviation, which trades, manages and leases jets. "You also wonder at what price they are selling."



LONG DESCENT
Use of the 747 has dropped steadily over the last two decades, reflecting the rise of two-engine jets that have come close to matching its range. Over the same period production of large twin-engined jets like the Boeing 777 has risen seven-fold. Last year, Boeing booked 283 new orders for the 777 and now has a backlog of 547 orders.

Airbus is more upbeat than Boeing about the prospects for jumbo jets but both now agree it has become a niche category. Airlines still need jumbo jets but only for certain polar flights - where a two-engine jet may be less safe than a four-engine jumbo because of the lack of places for an emergency landing - and busy routes where landing slots are scarce.

The risk is most visible for Boeing, where investors could face a US$1 billion accounting charge if 747 production is shut down, according to company disclosures.

Boeing recently received a high-profile boost with a provisional order for two new jets to serve as Air Force One for the U.S. President but the 747's future depends a lot more on sales of the much-less glamorous windowless freight model. That has a unique hinged nose and can carry very large equipment, such as oil drilling rigs.

So far this year, Boeing has sold three. Atlas Air Worldwide recently said it plans to order more for its cargo fleet, but wouldn't say when or how many. The world's biggest 747 freight customer, Cargolux , also says it likes the plane, but has a pending order for only three.

A sustained upturn in air freight traffic could secure the 747 a longer future. International freight traffic rose 4.8 percent last year, but volume has only just recovered from a collapse in 2009 during the financial crisis.



CARGO HAULER
Boeing reckons some 143 older freighters will need to be replaced, stretching demand for the 747 through the 2020s, the program vice president, Bruce Dickinson, said in an interview.

"We know there is a long-term market for this airplane and some of the unique things it can do," Dickinson said from his office overlooking the 747 production line at the giant Everett plant near Seattle.

But Boeing’s effort to sell new 747s is overshadowed by the many older 747s available for lease, which have suddenly been made more attractive because of a big slide in fuel prices since the middle of last year. Leasing companies say there is scant interest in new 747-8s when 82 freighters are baking in desert parking lots.

The older planes can be leased for as little as US$400,000 a month, compared with up to US$1.4 million in monthly lease payments for a new 747-8 freighter, experts say.

"That's a pretty big difference," said Gueric Dechavanne, vice president at Collateral Verifications, a Connecticut-based aircraft appraisal firm.

Some companies have extended 747 leases for three to four years, said Aengus Kelly, chief executive of leasing company AerCap .

"It's a challenge to lease a freighter," Kelly told Reuters. "It's definitely a challenge to sell them."

Airbus’s A380 is a newer plane – its first flight was almost exactly 10 years ago - and has become a mainstay of Middle East carriers that offer opulent suites to first class passengers. But the drop in demand is prompting Airbus to weigh whether to revamp the plane with new engines, or carry on with the existing model.

Airbus has 161 orders for the planes in hand, or more than five years of production. But it acknowledges that not all of those jets will be delivered, leaving it with barely three years of guaranteed output. Given the long lead times, Airbus must bring in more orders soon to avoid having to taper production.

“We are always looking at product improvements, but there is so much untapped potential in the existing aircraft,” said Airbus marketing head Chris Emerson.

Airbus could announce an A380 revamp as early as the Dubai Airshow in November, but must first find a way to assure investors it can recover several billion dollars of development costs, sources said. Analysts say on option could be to apply for more European government loans, though that risk

s exacerbating trade tensions with the United States.

Top customer Emirates is offering to double its planned purchase of 140 A380s if Airbus carries out the improvements, which the Dubai carrier’s Chief Executive Tim Clark tells Reuters will be "extremely good for the (airline’s) bottom line."

But Airbus’s board is unlikely to back a new A380 model for just one customer.

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Scoot collects its first Boeing 787 Dreamliner from Seattle

Budget carrier Scoot marked a new chapter in its history, after it collected the first of its Boeing 787 jets on Sunday.

Scoot's chief executive Campbell Wilson and crew received the "keys" to the new Dreamliner from planemaker Boeing under foggy skies at its Everett factory north of Seattle.

At the Boeing delivery centre, close to 80 guests, including journalists and suppliers, were treated to a 10-minute light-and-sound show in a ceremony to unveil the aircraft that gleamed in Scoot's trademark yellow.

The Dreamliner will leave Seattle for its 18-hour flight across the Pacific Sea, making a stop at Osaka before arriving in Singapore on Monday morning at 9.45am.

The plane's first "passengers" will be Mr Campbell, journalists and 38 others, including Scoot staff who scored coveted seats on the delivery flight through a contest.

Scoot's 787s, which will have up to 375 seats in two classes, promise to be more roomy and comfortable. Passengers in all classes can look outside through larger windows and entertain themselves by surfing the internet with Wifi onboard or streaming movies on their tablets and smartphones.

Sunday's delivery of the first Dreamliner comes more than two years after Scoot first announced that it will acquire the 787s. The Dreamliners, which are primarily made of carbon-fibre composite material, are lighter and use a fifth less fuel than the current fleet does.

Scoot, a Singapore Airlines subsidiary, has ordered 20 Dreamliners. As more B787s start coming onboard by August, the carrier expects to phase out six of its ageing, hand-me-down B777 aircraft from SIA. That will mark Scoot's transition to operating an all-Dreamliner fleet, which will be made up of the 787-8s and longer-range 787-9 variants.

Mr Campbell told The Straits Times that the eventual cost savings "improves our bottomline and gives us more scope to offer even better airfares".

It took more than 30 computerised mock-ups over the last two-plus years to finalise the look and feel of Scoot's Boeing 787 cabins. Scoot's Dreamliner fleet will be made up of the 787-8 and longer-range 787-9 variants.

They will each have up to 375 seats in two classes that promise to be roomier and more comfortable. Those onboard will:

- enjoy better seat pitch of between 31 inches (economy) to 38 inches (ScootBiz) and more legroom;

- get better views when they look outside through larger windows;

- charge their laptops and mobile devices with AC power, surf the internet with onboard Wifi connection or stream movies on their tablets and smartphones, although economy passengers will have to pay for these services;

- suffer fewer headaches, dry eyes and nausea, that are typically caused by the lack of oxygen, because the humidity level in the 787 cabin will be higher.

The Dreamliners, which are primarily made of carbon-fibre composite material, are lighter and use a fifth less fuel than the current fleet does. Scoot is among 58 airlines that have either ordered or received 1071 Dreamliners. Among them, 30 have received 231 787 jets.

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Boeing profits up on higher commercial deliveries

US aerospace giant Boeing on Wednesday (Oct 22) reported higher quarterly earnings and raised its full-year profit forecast for the second quarter in a row on increased commercial aircraft deliveries. Earnings for the third quarter came in at US$1.36 billion, up 17.6 per cent from the year-ago period.

Key drivers included a jump to 186 commercial aircraft deliveries, up from 170 in the 2013 period. Boeing booked 501 net orders during the quarter, with Irish carrier Ryanair signing a deal for 100 Boeing 737 airplanes.

In its government-oriented defence, space and security segment, Boeing scored higher profits in its military aircraft unit, in part due to increased deliveries of the P-8 vehicle developed for the US Navy. But revenues fell in the government satellite and global services businesses.

Boeing raised its full-year profit forecast to US$8.10-US$8.30 per share "core" earnings from the prior range of US$7.90-US$8.10.

"With three solid quarters behind us and confidence in our ongoing performance, we are increasing our earnings per share outlook for 2014," said chief executive Jim McNerney.

The third-quarter results translated core profits of US$2.14 per share, much above the US$1.98 forecast by analysts. Revenues rose 7.5 per cent to US$23.78 billion, more than the US$23.02 billion projected by analysts. Boeing shares dipped 0.1 per cent to US$127 in pre-market trade.

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Lone profit-maker IndiGo among India's big airlines

India's biggest carrier IndiGo, which announced on Wednesday (Oct 15) a deal to buy 250 Airbus aircraft, has consistently racked up profits as rivals have drowned in red ink from cut-throat fare wars.

No-frills IndiGo has posted six straight years of profits - even with India's high fuel taxes, ramshackle airport infrastructure and vicious fare fights - thanks to its zealous cost controls, analysts say.

Billionaire airline co-founder Rahul Bhatia is legendarily tight-fisted, telling Forbes magazine in 2010 his credo is "thinking before spending a single dollar" and asking himself, "Do I need to spend it? Can I get away without it?"

The New Delhi-based carrier, co-founded by Bhatia, who is group managing director, and former US Airways chief executive Rakesh Gangwal in 2006, is unlisted. But analysts say IndiGo, which depends a lot on word-of-mouth recommendations rather than advertising, could stage a debut share offer in mid-2015.

IndiGo's stylish flight attendants and spotless plane interiors give the budget airline a premium feel while its strong on-time performance has wooed business and other customers, giving it a one-third market share.

The purchase of the 250 single-aisle A320neo aircraft - Airbus;s single largest order by number of jets - marks Indigo's bet that air travel is only just taking off in the country of 1.25-billion people, analysts say.

The draft order "reaffirms IndiGo's commitment to the long-term development of affordable air transportation" in India, said airline president Aditya Ghosh. The planes' total list price is €20 billion (US$25.6 billion) but Airbus' discounts will likely cut the cost.

"The deal is a strong indicator of the long-term potential of the Indian civil aviation market," Amber Dubey, partner and India head of aerospace and defence at global consultancy KPMG, told AFP.

For decades, Indians depended on the nation's bone-jolting railway but cheap air fares have encouraged tens of millions of increasingly affluent Indians to fly.

Still, air travel is low per person compared with Americans who make over two flights a year. Indians, by contrast, take just 0.4 airplane trips annually, according to government figures.

The plane order is also part of Indigo's drive to keep its fleet young - it retires its aircraft after six years - to minimise maintenance and fuel costs.

Analysts say IndiGo has taken a leaf from budget US carrier Southwest Airlines in containing costs by keeping operations simple.

It flies to fewer destinations than rivals but offers more flights on those busy routes to maximise plane-capacity and uses just one make - Airbus. Just three years ago, IndiGo ordered 100 A320ceo and 180 A-320neos.

IndiGo, which operates over 500 daily flights with a current 83-plane fleet, has also pared costs by keeping planes aloft longer, fast landing-and-takeoff turnarounds and maintaining a lean staff-aircraft ratio.

Still IndiGo has not been immune to India's sharp economic slowdown, reporting profit last year nosedived by 60 percent to 3.17 billion rupees (US$51.6 million).

But IndiGo outperformed other big carriers. Budget SpiceJet, for instance, posted a record 10.03-billion-rupee (US$162.6 million) loss last year while full-service Jet Airways lost 36.67-billion rupees (US$594.5 million).

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Indonesia's Garuda makes US$5b plane order: Boeing

Indonesian flag carrier Garuda has placed an order for 50 planes worth almost US$5 billion, US plane giant Boeing said, as competition heats up for passengers in Asia's increasingly crowded skies.

Garuda ordered 46 of Boeing's new 737 MAX 8 jets and is converting existing orders for four 737-800s to 737 MAX 8s, the plane manufacturer said. The purchase is worth US$4.9 billion at current list prices, although airlines typically receive large discounts for big orders. "This order helps continue our commitment to offer the people of Indonesia and Southeast Asia the most comfortable, most efficient air travel in the region," said Emirsyah Satar, Garuda chief executive officer.

The aviation sector in Indonesia, the world's fourth most populous country with 250 million people, has grown rapidly in recent years as an economic boom creates a new class of consumers. Garuda, a state-owned, full-service airline, is facing stiff competition from budget carriers in the region, such as fellow Indonesian outfit Lion Air - which has expanded rapidly - and Malaysia's Air Asia.

The announcement marks the latest phase in an impressive turnaround for the airline. In the 1990s and early 2000s the airline was plagued by problems, including heavy debts and a poor safety record, but Satar has successfully turned it around since his appointment in 2005. It was the first Indonesian firm to be allowed back into European Union airspace in 2009 after a ban was imposed across the country's airline industry.

The 737 MAX family of aircraft are single-aisle jets that carry around 200 passengers. Boeing says they are the most fuel-efficient 737s to date, a key selling point as airlines struggle with high fuel prices. Garuda currently operates 77 Boeing 737s, Boeing said in a statement announcing the purchases on Sunday. It did not say when Garuda would start to take delivery.

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Airbus says China to buy 70 A320 planes worth $6.6b

Airbus said on Friday (Oct 10) that China Aviation Supplies Holding Company (CAS) has signed an agreement to buy 70 A320 family aircraft, an order worth US$6.6 billion at list prices.

The order reflects the strong demand from Chinese carriers for single-aisle aircraft for domestic, low cost, regional and international operations, the European aircraft manufacturer said.

"We are grateful to China for its strong vote of confidence in our leading A320 family aircraft, and are happy to see them assembled at our Chinese facilities," Airbus chief executive Fabrice Bregier said in a statement.

Airbus has already assembled and delivered 190 A320 aircraft from a facility in China's Tianjin Free Trade Zone. It said it had also signed a letter of intent with its Chinese partners to build a similar facility for A330 family aircraft, wide-body planes that can carry over 400 passengers.

"In its 30 years history the Airbus partnership with China keeps on growing and expanding," Bregier said.

The letter of intent was signed Friday in Berlin with the heads of the Tianjin Free Trade Zone and the Aviation Industry Corporation of China in a ceremony witnessed by German Chancellor Angela Merkel and visiting Chinese Premier Li Keqiang.

"The intended establishment of an A330 Completion and Delivery Centre will add a new exciting chapter to our longstanding track record of mutual achievements," added Brieger.

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Japan's Skymark surges on possible Airbus 'penalty deal'

Shares in Japan's Skymark Airlines soared Friday (Oct 3) after the company said it was negotiating with Airbus to reduce a breach-of-contract penalty tied to the collapse of a US$2.2 billion jet order.

The carrier's Tokyo-listed shares closed 8.37 per cent higher at ¥220, after jumping as much as 15 per cent earlier in the day on reports that a deal was imminent. "Our company is negotiating with Airbus, and we're aiming to reach an accord by the end of October," Skymark said in a statement.

But the firm declined to comment on a report in the Asahi newspaper which said Airbus had agreed to cut the penalty to about ¥20 billion (US$183 million), well below its original ¥70 billion demand - which some feared would put Skymark out of business.

The struggling airline was sideswiped when Airbus in July said it had cancelled its US$2.2-billion jet order, apparently over concerns about getting paid. Skymark shares had lost more than 40 per cent at one stage following the collapsed deal.

At the time the carrier said Airbus had threatened it with "overpriced" penalties and called on it to merge with a bigger airline, a proposal which Skymark's top executive flatly rejected. The deal for six Airbus A-380 jets was signed in 2011, but Skymark missed a payment deadline earlier this year.

The carrier was born out of deregulation measures in the 1990s which were aimed at challenging All Nippon Airways and rival Japan Airlines' control of the market. However Skymark has been reporting ballooning losses as new entrants into the budget sector hurt its business.

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Air Berlin cancels Boeing aircraft orders valued at US$5b

Air Berlin, Germany's second-biggest airline, said on Friday (Sep 26) it had cancelled orders with Boeing for 33 aircraft with a list price of about US$5 billion (S$6.4 billion).

The airline, which last month reported a return to profit in the second quarter, said in a statement that the cancellation would "significantly reduce the future capital expenditure" of the company. It said that under the cancellation agreement with Boeing, it would not have to pay compensation to the US company.

The two firms agreed that the "orders relating to the 18 B737 and 15 B787 aircraft not yet delivered shall be cancelled", it said. "The cancellation agreement does not provide for any obligation of the Air Berlin group to make any compensation payments to Boeing", it added.

The German group will "adapt" its existing fleet by the "acquisition or leasing of suitable aircraft", although a lower number of aircraft than first planned, it said.

Boeing, confirming the cancellation in a separate statement, said its customers "operate in a dynamic environment and their overall fleet needs evolve and change".

"It is our objective to support their needs and to adapt as necessary," it said. "Air Berlin is a long standing and valued Boeing customer and operator of a large fleet of Boeing Next-Generation 737 airplanes."

Air Berlin is due to unveil full details of a restructuring programme this month.

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Lufthansa says ordering 25 new Airbus A320 planes

Germany's Lufthansa group said on Wednesday (Sep 17) that it was ordering 25 new Airbus A320 aircraft at a cost of about €2.5 billion (US$3.2 billion) at list prices.

The order comprises 15 Airbus A320neo aircraft for Lufthansa's subsidiary SWISS to be delivered from 2019, and 10 new A320ceo planes destined for its low-cost Eurowings subsidiary in 2016 and 2017, the European air transport giant said in a statement.

"This order for modern, fuel-efficient and quiet aircraft takes the Lufthansa Group a major step closer towards maintaining and expanding its market position by reducing its unit costs," it said.

"The A320neo, in particular, stands out for its improved aerodynamics and new engines. As a result the aircraft use around 15 per cent less fuel than comparable models today," it added.

The orders were approved by the supervisory board at its meeting Wednesday, it added.

Lufthansa unveiled plans in July to beef up its presence in the low-cost sector.

The group currently has 265 new aircraft on order with a list value of €30 billion to be delivered by 2025.

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Ryanair orders 100 Boeing 737 planes for US$11b

Irish budget airline Ryanair agreed to buy 100 aircraft from Boeing for US$11 billion, with an option to purchase another 100 planes from the aerospace giant, the companies announced on Monday (Sep 8).

The order covers the 737 Boeing MAX 200, which Boeing touts as a fuel-efficient vehicle for the important single-aisle civilian market. The planes will accommodate up to 200 seats, up from the 160 in other single-aisle planes.

Ryanair said the giant order will enable it to meet its growth targets, which calls for it to expand from 82 million customers in 2014 to more than 150 million in 2024, which marks the end of the delivery stream of the planes under Monday's order.

"It's going to change the game for low-fare air travel," Ryanair chief executive Michael O'Leary said at a news conference. "It's also going to change the game in Europe."

O'Leary said Ryanair plans to use the jets to enter new markets in Europe and challenge incumbent carriers. "I hope it will hasten a new era of price wars in Europe over the next 10 years," he said.

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China's BOC orders 82 Boeing planes worth US$8.8b

Aircraft leasing firm BOC Aviation said Monday it has ordered 80 Boeing 737 planes and two B777-300ERs worth a total $8.8 billion at list prices, to meet expanding client needs as travel booms in Asia.

The Singapore-based company, owned by the Bank of China, said the bulk of the orders was for 50 B737 MAX 8 planes and 30 next-generation B737-800s. The 80 planes have a value of US$8.14 billion based on 2014 catalogue prices published on Boeing's website. The orders will allow BOC Aviation to build on its fleet for the next seven years, the company said in a statement.

The firm said it has also ordered two B777-300ER aircraft, worth a total US$660 million at catalogue prices. Both planes have already been placed with an existing customer, it added. US aircraft maker Boeing said in a separate statement that the order is the "largest in BOC Aviation's 20-year history" and is part of the leasing firm's effort "to grow its portfolio of fuel-efficient airplanes".

Robert Martin, BOC Aviation's managing director and chief executive, said the fresh B737 orders followed a similar purchase made in 2006 for 50 B737 next-generation aircraft. "This is a continuation of our commitment to be responsive to airline customers which are expanding or replacing older fleets," he said. "The 737 is known for its operational and fuel efficiency, and BOC Aviation expects healthy demand for the next generation 737 and 737 MAX in the next seven years."

As of Jun 30, BOC Aviation said its fleet of 251 delivered aircraft included 118 Boeing aircraft operated by 27 airlines. At the Farnborough airshow in July, BOC Aviation also ordered 43 Airbus single-aisle A320 passenger jets worth US$4.4 billion at list prices.

Boeing has projected a travel boom in the Asia Pacific region over the next 20 years from 2013, fuelled by a rising middle class and strong regional economic growth. "As income levels rise, Asia Pacific is set to become the largest air travel market in the world. In 2033, approximately 48 per cent of global traffic will be to, from, or within the region," Boeing said in its latest regional forecast.

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Cathay Pacific profits soar but competition hurts yields

Cathay Pacific said on Wednesday (Aug 130 its first-half net profit soared to HK$347 million (S$56 million) on higher passenger demand, but the Hong Kong flag carrier warned of a "challenging" outlook as surging competition held down fares.

The figure for the six months ending June 30 compared with a net profit of HK$24 million in the same period last year. Its first half revenue rose 4.6 per cent to HK$50.84 billion. But despite its upbeat performance, the blue-chip airline faces several challenges including persistently high jet fuel prices.

"The operating environment for the Cathay Pacific Group - and the aviation industry as a whole - remains challenging," group chairman John Slosar said in a filing to the Hong Kong stock exchange. "On the plus side, we continue to strengthen our passenger network and the connections available through Hong Kong," he said.

Aviation analyst Daniel Tsang told AFP the huge increase in net profits was on account of the airline's improving passenger operations, which contributed to a sharp jump in revenues. The airline's passenger revenue in the reported period was up 4.4 per cent to HK$36.52 billion compared to the previous year, helped by the introduction of new long-haul routes to destinations such as Doha and Newark.

FALLING PASSENGER YIELDS

However, Tsang said the airline will need to improve its passenger yields, a key measure of airlines' profitability, to maintain this earnings trend. Passenger yield, the measure of the average fare paid by a passenger per mile, fell 3.5 per cent to HK66.6 cents, reflecting weaker ticket prices in the face of surging competition.

"For this upward trend to be sustained, arresting this yield decline is paramount and a prerequisite," he said. Revenue for its air cargo business, which took a toll for more than two years due to the weak economy and demand for shipments, rose 3.4 per cent compared to the first half of last year, at HK$11.66 billion.

But over-capacity in the air cargo market created downward pressure on rates, with the airline seeing cargo yield falling by 6.9 per cent. "We expect our cargo business to be better in the second half of 2014 than it was in the first half. We are well placed to take advantage of any increase in demand," the airline said. Cathay also indicated that high fuel prices were partly mitigated by operating more fuel-efficient aircraft.

Five new aircraft, including two Boeing 777-300ERs, were delivered to Cathay during the reported period, as it retired two Boeing 747-400 passenger aircraft. Eleven new aircraft will be delivered in the second half of 2014, as it continues to modernise its fleet. "Cathay is pretty aggressive in renewing its fleet. By end of 2014, it will only have seven gas-guzzling 747-400s," analyst Tsang said.

The International Air Transport Association in June said airline profits are improving and that it expects airline companies to record combined net profits of $18 billion for 2014, down from its earlier forecast of $18.7 billion made in March.

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Skymark shares sink deeper on quarterly loss

Shares in Skymark Airlines tumbled more than eight per cent early Friday (August 1) after the budget airline embroiled in a row with Airbus said its quarterly loss had ballooned.

Skymark Airlines fell 8.61 per cent to 191.0 yen, on top of a string of sharp drops this week. The stock has lost more than one third of its value, or 8.86 billion yen ($86 million), since the row with Airbus came to light.

Airbus said on Tuesday it had cancelled a $2.2-billion jet order from Skymark, even as the airline said it was negotiating with Airbus to "revise" the multi-plane order. The low-cost carrier said that Airbus threatened it with "overpriced" fees to cancel -- or slim down -- the order.

Skymark said late Thursday its loss in the three months to June expanded to 5.80 billion yen ($56 million), four times higher than its shortfall the previous year. The company said in a financial statement that it would consider suspending service on unprofitable routes and borrowing money from banks as there were doubts over whether the company would be able to remain as a going concern.

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Airbus confirms decision to cancel jet order from Skymark Airlines

Airbus on Thursday (July 31) said its decision to cancel a $2.2 billion jet order from Skymark Airlines was final, rejecting the Japanese carrier's suggestion that talks were still ongoing.

The European aircraft maker said this week it had informed Skymark that its purchase of six A380 superjumbos "has been terminated", just hours after the airline said it was still locked in tough negotiations over the order. Skymark's Tokyo-listed shares plunged in the wake of Airbus announcement, wiping out a quarter of its market value in just two sessions.

"We will not talk about the issue of the shipment anymore, as we have cancelled the order," a spokesman for the European firm's Tokyo unit told AFP on Thursday. He added that Airbus would now be working on a compensation deal over the failed deal, which was inked three years ago.

The carrier's shares were down another 1.85 per cent to 212 yen in Tokyo morning trade. Skymark, which reports its latest financial results later on Thursday, had on Tuesday (July 29) acknowledged that the deal was in trouble as a sharp decline in the yen since late 2012 jacked up the cost of purchasing the jets, while it faced increasingly fierce competition.

The carrier said Airbus had threatened it with "overpriced" fees to cancel -- or slim down -- the order as it suggested the small airline be merged into a bigger carrier, which it flatly rejected.

Skymark has posted its first net loss in five years as stiff competition in the domestic market dented its books. The company, which was launched in 1998 in a bid to offer more choice in a market long controlled by Japan Airlines and All Nippon Airways, flies dozens of domestic routes with a fleet of thirty aircraft.

However, the emergence of a handful of low-cost carriers in recent years has offered up stiff competition to the major carriers, and dented Skymark's finances. The airline posted a net loss of 1.85 billion yen ($18 million) in its last fiscal year, after seeing profits drop by more than half in the prior year.

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Boeing boosts 2014 profit forecast after strong Q2

US aerospace giant Boeing on Wednesday raised its full-year profit forecast after earnings soared 52 per cent in the second quarter, lifted by increased jetliner deliveries.

Boeing posted net profit of US$1.65 billion for the April-June quarter, up from US$1.09 billion in the year-ago quarter.

Core earnings per share rose 45 per cent to US$2.42, widely topping the US$2.01 expected by analysts.

The company delivered 181 commercial aircraft in the second quarter, a solid 7.1 per cent increase from 169 planes a year earlier amid robust demand from airlines.

Boeing raised its 2014 full-year forecast to core earnings per share between US$7.90 and US$8.10, from US$7.15 to US$7.35, citing in part its "positive market outlook."

The improved earnings outlook, with a midpoint of US$8.00, beat market estimates of US$7.67. The Chicago-based company had also raised its profit forecast at the end of the first quarter.

"Strong operating performance across our production programs and services businesses drove revenue and earnings-per-share growth and healthy operating cash flow," Boeing's chairman and chief executive Jim McNerney said in a statement.

"With 783 new commercial airplane orders to date this year and significant contracts in the quarter for military aircraft and satellites, our backlog remains large and diverse."

The second-quarter results included a total of US$524 million in tax benefits.

They also included an unexpected US$272 million after-tax charge to reflect additional work on the huge KC-46A Tanker programme for the US Air Force.

Boeing explained the charge was due to higher spending to resolve engineering and systems installation issues on its tanker test aircraft to keep the programme on schedule.

McNerney said "the issues are well understood" and the company remains on track to begin flight testing fully provisioned tankers in the first part of next year.

In 2011, Boeing won the US$30 billion contract to supply 18 tankers by 2017, beating a bid by European rival Airbus, and plans to deliver the first tanker in early 2016.

Boeing expects to build 179 tankers by 2027 if the US Air Force exercises all options under the contract.

Despite beating profit expectations, shares in Dow component Boeing tumbled 2.3 per cent to US$126.71 as the tanker charge raised concerns.

"It is worrying that Boeing is booking a charge of this magnitude at a relatively early stage in this long-term programme, particularly given recent assurances from management that everything was going to plan," said Robert Stallard, an analyst at RBC Capital Markets.

During the second quarter, Boeing's commercial aircraft division booked 264 net orders, bringing the orders backlog to 5,200 airplanes, valued at a record US$377 billion.

Boeing had a net 499 new orders for the first half of the year, outpacing European rival Airbus's 290 orders. Boeing also was ahead in deliveries, at 342, compared with 303 for Airbus.

Leading Boeing's second-quarter deliveries was the best-selling single-aisle 737 aircraft, with 124 deliveries. Next were 30 deliveries of the new 787 Dreamliner, the high-tech plane that was grounded globally for more than three months last year due to lithium-ion battery problems.

Boeing reiterated that it expected to deliver between 715 and 725 jetliners this year, after a record 648 deliveries in 2013.

Boeing, in early July, raised its 20-year forecast for global jetliner demand by 12.5 per cent, to US$4.5 trillion, assuming that airline traffic would grow by five percent each year.

During the month Emirates Airline and Qatar Airways finalised orders totalling 200 777X airplanes, and British low-cost carrier Monarch Airlines committed to buy 30 737 MAX planes.

Second-quarter revenues at the world's largest aerospace company rose one per cent to US$22.05 billion, missing estimates of US$22.23 billion.

The commercial aircraft division scored a 5.0 per cent rise in revenues, to US$14.30 billion.

Revenues at the smaller defence, space and security division fell 5.4 per cent to US$7.75 billion, reflecting lower US defence spending in the wake of budget cuts.

Boeing said it repurchased 11.4 million shares for US$1.5 billion during the second quarter and raised its dividend payments by about 50 percent.

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Airbus tails Boeing thanks to "best" Farnborough orders

Airbus has enjoyed its best ever Farnborough show in terms of orders, the head of the European planemaker said on Thursday, helping it close the gap on US rival Boeing.

Airbus said it had won commitments and firm orders for 496 planes worth more than $75 billion (55 billion euros) at the key industry sales event that alternates annually with the Paris airshow.

Boeing said it had clinched deals for 201 aircraft worth more than $40 billion.

"This is the best Farnborough airshow in Airbus history and this is the third biggest if we include the Paris airshow," chief executive Fabrice Bregier told a press conference at the event near London, which opens its doors to the public over the weekend for flypasts.

The latest deals confirmed on Thursday saw leasing company Hong Kong Aviation Capital sign a firm order for 70 single-aisle A320neo passenger planes from Airbus.

The fuel-efficient jets are valued at $7.72 billion at list prices but customers tend to receive significant discounts on such purchases.

"The green credentials of the neo is one of the key factors for us to choose the aircraft," said HKAC chief executive Donal Boylan.

Transaero, Russia's second-biggest airline, meanwhile said it is committed to buy 20 A330 aircraft, including a dozen new fuel-efficient neos, worth $5.3 billion.

"The clear winner of the show was Airbus," noted Deutsche bank analyst Myles Walton.

Airbus had dominated the start of the week-long Farnborough event, securing a host of commitments for its new long-haul A330neo passenger plane -- from air leasing companies and the airline AirAsia X -- but no firm orders.

- Boeing orders top $40b -

Boeing's big moment at Farnborough came on Wednesday, when it concluded a deal with Qatar Airways for 50 of its revamped long-haul passenger jets along with a potential order for 50 more.

"Customers demonstrated their strong confidence in the family of Boeing commercial products, announcing orders and commitments for 201 Boeing airplanes valued at more than $40.2 billion at list prices," the group said in a statement on Thursday.

Ahead of the show, Airbus had lagged Boeing with 290 net plane orders versus 499 for the US group since the start of the year, when deliveries and cancellations were also taken into account.

The gap now stands at 648 versus 783 in favour of Boeing.

Launched at Farnborough on Monday, the Airbus A330neo airliner is a revamped version of the A330, sporting latest generation Rolls-Royce Trent 7000 engines to provide more economical long-haul travel.

Airbus said it had secured 121 commitments for the A330neo at Farnborough.

Bregier on Thursday said Airbus had no plans in the short term to upgrade the engines on the A380 superjumbo, on display at Farnborough but which won no new orders.

Boeing is meanwhile changing the engines on its long-haul 777 model, helping it to secure new sales as economic recovery picks up around the globe.

Production of the 777X is set to begin in 2017, with the first delivery targeted for 2020.

First deliveries of the Airbus 330neo are scheduled for the end of 2017.

Brazilian group Embraer, the world's third-largest commercial planemaker, also won orders worth billions of dollars for its regional jets at Farnborough, including its new single-aisle E195-E2 jet.

- Furtive F-35 -

Missing from the show however was a much-anticipated appearance of the F-35 fighter jet.

The US military said on Tuesday that it would not send the plane to Farnborough after an engine fire grounded the entire fleet, in another embarrassing setback for the Pentagon's most expensive programme ever.

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Airbus says Transaero Airlines plans US$5.3b planes deal

European planemaker Airbus said on Thursday that Transaero, Russia's second-biggest airline, intends to buy 20 of its long-haul A330 aircraft, including a dozen new fuel-efficient neo jets.

Airbus said at the Farnborough airshow that Transaero had committed to buy 20 A330 planes, comprising eight A330ceo (current engine option) and 12 A330neo (new engine option) jets worth a combined $5.3 billion (3.9 billion euros) at list prices.

"This agreement makes Transaero an important launch customer and the first European airline to commit to the A330neo," Airbus said in a statement.

"The A330s will allow Transaero to continue the massive fleet modernization program and to boost its medium and long-haul domestic and international network."

Launched at Farnborough on Monday, the neo plane is a revamped version of the A330 and sports engine upgrades to provide more economical long-haul travel.

Airbus has won 121 commitments for the neo at Farnborough but no firm orders.

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Hong Kong company orders 70 Airbus A320neos for US$7.72b

Leasing company Hong Kong Aviation Capital has signed a firm order for 70 single-aisle A320neo passenger planes from European aircraft manufacturer Airbus, the pair announced on Thursday.

The fuel-efficient jets are valued at US$7.72 billion (5.7 billion euros) at list prices, Airbus said at the Farnborough airshow.

"We are pleased to have finalised the order for 70 A320neo family aircraft with Airbus," said HKAC chief executive Donal Boylan.

"The green credentials of the neo is one of the key factors for us to choose the aircraft and through reduced fuel burn and emissions, HKAC will enable its airline clients to reduce operating cost while improving their environment impact."

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Hainan Airlines commits to 50 Boeing 737 MAX jets

China's Hainan Airlines is finalising a deal to buy 50 fuel-efficient 737 MAX passenger planes from US aircraft maker Boeing, the two companies announced on Wednesday.

The commitment for the single-aisle 737 MAX 8s, worth a total of more than $5.1 billion at catalogue prices, is subject to approval by the Chinese government, the companies said at the Farnborough airshow.

"The new 737 MAX will help our airline grow, become more efficient and offer five-star service for our passengers," said Hainan Group chairman Adam Tan.

Boeing said Hainan was "finalising terms and working toward a purchase agreement for 50 737 MAX 8s".

"The commitment, valued at more than $5.1 billion at current list prices, will be subject to the approval of the Chinese government," a statement added.

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