At Farnborough, little military business

FARNBOROUGH, England, July 22 (UPI) -- A number of civil aviation deals were struck at Farnborough Air Show in southern England but there is less optimism for big business in the military sector.

Bitter rivals Boeing and Airbus have both racked up impressive sales at Farnborough, with order volumes totaling nearly $30 billion as of Thursday.

European plane maker Airbus managed to win 130 contracts for a total of $13 billion, slightly ahead of U.S. rival Boeing, which racked up 103 orders worth $10 billion. Demand from Russia, Asia and the Middle East is growing, observers say.

"Air travel demand is continuing to rise in the Middle East and it is becoming clear that international demand is returning as the global economy shows signs of recovery," said Qatar Airways Chief Executive Officer Akbar Al Baker after his company's order of two additional Boeing 777 jets and an earlier delivery of the 30 ordered Boeing 787 Dreamliner jets was announced.

The 787 Dreamliner made its debut at Farnborough after having been delayed due to production issues. The first 787 is due to leave the hangar later this year, nearly two years behind schedule.

While no one expects this year's Farnborough to play in the range of its 2008 installment, when a record-breaking $89 billion worth of planes was sold, companies in the civil aviation sector say they are feeling the economic upswing after a difficult year. At the 2009 Le Bourget Air Show near Paris, commercial plane sales fell to $7 billion. Dire records like this are a thing of the past: The International Air Transport Association, which had to battle the ash cloud in Europe, recently said it estimates to make $2.5 billion in profit this year, after a $9.4 billion loss in 2009.

Of the more than 1,000 exhibitors at Farnborough, a smaller percentage is active in the military sector and for them the numbers don't look as positive.

The mounting budget deficits have caused leaders in Washington, London, Paris, Berlin and Rome to remind their armed forces that they will have to cut back on personnel and procurements.

In France, the Defense Ministry last week declined to rule out budget cuts of up to $6 billion. The Defense Ministry has already signed up to cut more than 50,000 military and civilian personnel over the next three years. Additional monetary cuts to the French military budget, which in 2009 stood at more than $40 billion, are widely expected. This would hurt large French companies, including Dassault, Nexter, Safran and Thales, and the many mid-sized and smaller suppliers, many of which produce almost exclusively for the French forces.

In Britain, the government is divided on military spending but it's almost certain that a major strategic defense review due to be unveiled this year will propose budget cuts and the review of individual military purchases.

Germany's defense budget, $38.5 billion for 2010, will likely be cut by around $1.3 billion per year.

Italy's defense budget will be plagued with a 10 percent cut for 2011. The measure is part of a $30 billion emergency debt reduction package launched by the Italian government in May.

Italy this week announced it would cut its planned purchase of Eurofighter jets by 25 planes due to budget pressures. Italy will try to save $2.6 billion by buying 96, and not 121, models of the European multirole aircraft, Italian Defense Minister Ignazio La Russa said this week at Farnborough.

The Eurofighter Typhoon is a twin-engine canard-delta wing multirole aircraft, designed and built by a consortium formed in 1986 that apart from Finmeccanica includes German-Spanish European Aeronautic Defense and Space Co. and Britain's BAE Systems.