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Airbus Thursday raised its outlook for the global market for large commercial airliners over the next 20 years, with demand driven by emerging economies, expanding airline networks, growing low-cost carriers and the need to replace inefficient aircraft. The Toulouse, France-based company said it now estimates demand at some 25,000 aircraft worth $3.1 trillion through 2028. That’s an increase of 2.9% compared to its projection in February, 2008, of a potential market of 24,300 planes worth $2.8 trillion.

With households and companies trying to preserve cash amid the global economic slowdown, Airbus expects airline passenger traffic to contract 2% this year but to expand 4.6% in 2010. Longer term, airline passenger traffic will remain resilient to the cyclical effects of the airline sector and should grow at an average annual rate of 4.7% through 2029, requiring 24,100 new aircraft worth $2.9 trillion, Airbus said. That figure includes 10,000 jets to replace aging aircraft. Cargo traffic, currently depressed due to weak economic activity, is expected to grow by 5.2% annually on average over the forecast period, Airbus said. This will require 3,440 additional freighters, of which 850 will be new aircraft, with the remainder conversions from passenger jets.

In its 2008 long-term market outlook, Airbus had projected average annual passenger traffic growth of 4.9% and cargo traffic rising by 5.8% over 20 years.

Federal safety officials are ordering the replacement of Airbus airspeed sensors of the kind suspected of playing a role in loss of Air France Flight 447 and all 228 aboard in June. The Federal Aviation Administration said in a notice published Thursday that U.S. airlines operating Airbus A330s and A340s must replace at least two of three sensors on the plane made by European electronics giant Thales Corp. Approved replacements are made by North Carolina-based Goodrich Corp. The order affects 43 planes operated by Northwest Airlines and US Airways. FAA said the sensors can become blocked by ice crystals at high altitudes. The European aviation safety agency finalized a similar order on Aug. 31.

On at least a dozen recent flights by U.S. jetliners, malfunctioning equipment made it impossible for pilots to know how fast they were flying, federal investigators have discovered. A similar breakdown is believed to have played a role in the Air France crash into the Atlantic that killed all 228 people aboard in June.

The equipment failures, all involving Northwest Airlines Airbus A330s, were brief and were noticed only after safety officials began investigating the Air France crash — on a Rio de Janeiro to Paris flight — and two other recent in-flight malfunctions.

The discovery suggests the equipment problems are more widespread than previously believed. And it gives new urgency to airlines already scrambling to replace air sensors and figure out how the errors went undetected despite safety systems.

The first China-assembled Airbus A320 made a smooth landing at Tianjin Binhai International Airport Monday afternoon, becoming the first A320 assembled outside the Europe to make a successful test flight. The goal of Airbus (Tianjin) final assembly line is to deliver a total of 11 aircraft by the end of 2009 to China’s Hainan Airlines, China Eastern Airlines, and Shenzhen Airlines. The line is planning to produce 2 aircraft per month by the end of this year and reach the maximum production capacity of 4 aircraft per month by the end of 2011.

Airbus said Wednesday that it cut its planned production of A380 superjumbo jetliners this year to 14 planes from 18, blaming the global economic crisis and its impact on airlines. Airbus said it plans to deliver “more than 20″ A380s next year. The A380, the world’s largest passenger plane, carries a catalog price of $327 million, but early customers received significant discounts, airline officials have said.

Emirates Airline, the largest buyer of the Airbus A380 superjumbo, has detailed 46 pages of complaints with its initial aircraft, according to a German news magazine Der Spiegel. Emirates has 58 of the huge jets on order but has experienced technical and reliability issues on the four aircraft already in its fleet. Der Spiegel said the two companies held a “crisis meeting” to discuss Emirates’ concerns, though the airline says it has a “good relationship” with Airbus and the meeting was “routine.”

Airbus denied a report that says the company didn’t expect to sell 150 jets to China this year due to the dampening expansion plans of Chinese airlines, sources reported. Airbus told sources that the company is still in steady talks with Chinese firms and the report was untrue. China agreed to buy 110 A320s and 40 A330s under a deal signed on November 2007 during the French President Nicolas Sarkozy’s state visit to China. China’s aviation sector watchdog last year said it encouraged domestic airlines to cancel or delay aircraft delivery this year as the sector is facing more challenges amid the global financial crisis.

France has ordered its banks to lend five billion euros (US$9.74 billion) to airlines and transport firms to help them pay for European-built planes, the finance ministry announced on Monday. European manufacturer Airbus is facing a revenue shortfall as the world economic crisis undermines the ability of its customers to pay for a huge back-log of airliners ordered from the Toulouse-based firm. World demand for new aircraft could plunge 50 to 60 percent in 2009 due to the global economic crunch and tight credit, Airbus chief executive Thomas Enders said Sunday.

Airbus expects aircraft orders to drop sharply in 2009, and suspects that deliveries may have peaked in 2008. Along the way, the aircraft maker also is scaling back expectations on its flagship A380. Only 18 deliveries are now forecast for the year–down from 21–which was already a revision from an earlier plan for 26. Total order intake for 2009 is estimated at around 300 to 400 units, with Airbus COO for customers, John Leahy, noting that the low end is more likely. “This is clearly going to be a slow year for all aircraft orders,” he notes.

Investigators trying to determine why an Airbus A320 on a maintenance flight crashed into the Mediterranean last November got some good news this week: usable data finally was retrieved from the plane’s voice and data recorders. The Airbus A320, which had been leased to a German charter carrier and was being checked before returning to service with Air New Zealand, plummeted into the Mediterranean approaching the airport in Perpignan, France in good weather, without any emergency radio call from the pilots. All seven aboard were killed.

Photo: A320-232 D-AXLA (cn 2500) was the aircraft involved in the crash. It is seen here in May, 2008 operating for XL Airways Germany. (Photo Copyright Florian G.)

Airbus topped rival Boeing Co.’s sales tally at the Farnborough International Air Show, where plane orders from Middle Eastern and Asian airlines shored up an industry besieged by high oil prices. The world’s two largest airliner manufacturers announced $64 billion in orders, with more than 60 percent of the total going to Toulouse, France-based Airbus. That fell short of the $69.7 billion in purchases at the most recent comparable event, November’s Dubai Air Show.

Photo: An aerial overview of the 2006 Farnborough Air Show (Photo Copyright Thomas Brackx)

Airbus announced that it has won an order for eight of its A330 wide-bodied jets from Saudi Arabian Airlines. Airbus said the Middle Eastern airline had signed a firm contract for the A330-300s, although it did not disclose the value of the deal, nor delivery dates. The contract follows one for 22 Airbus A320s signed by Saudi Arabian Airlines at the end of 2007.

Air Canada has cancelled an outstanding agreement to take three Airbus A340-600 aircraft, 10 years after placing its order for the type. The Canadian flag-carrier had been among the first to sign for the A340-600 having committed to the aircraft ahead of its industrial launch in late 1997. It also signed for a pair of A340-500s at the time. Airbus has disclosed the Air Canada A340-600 cancellation in its latest order figures, covering the first half of 2008.

Airbus is expected to sell five of their A380 superjumbo aircraft to All Nippon Airways Co (ANA)(Tokyo). If completed, it would be Airbus’ first sale of the world’s largest passenger plane to a Japanese airline. A sale in Japan would be a big breakthrough for the European plane maker as it has controls about 4% of Japan’s market, compared with a half share elsewhere. Japanese airlines have traditionally purchased almost all of their aircraft from the Boeing company as part of a wider effort to mend trade relations between Japan and the United States after a period of friction in the late 1980s.

A spokesman for ANA said that the carrier had established a committee earlier this week to select a new fleet of large aircraft, but that no decisions have been made at this time. The committee is reportidly examining three options for a new fleet; the Airbus A380, Boeing’s new 747-8, or not acquiring a new fleet at all. There is no information on when the final decision will be made.

Air China (Beijing) has announced that it will be purchasing 20 Airbus A330 aircraft from the manufacturer. At current list prices, the deal will be valued at $3.82 billion USD. The airline said it will use cash, bank loans and debt instruments to pay for the aircraft, which will boost capacity by 16.5%. The additions will also allow it to increase flight frequencies from Beijing. Airbus has yet to confirm the order, nor have they given any indication of likely delivery dates.

International Lease Finance Corp. (ILFC), the world’s biggest aircraft lessor, said it may soon be ordering 300 jetliners from Boeing and Airbus to meet demand from airlines that can no longer afford to buy their own planes. The orders will likely materialise at the upcoming Farnborough International Air Show in the UK. Executives also indicated that the leasing firm may also wait six months to a year to place orders if prices of aircraft seemed likely to decline further.

ILFC may purchase 150 single-aisle aircraft from each manufacturer, chief operating officer, John Plueger, said in an interview. The order could likely be worth about $22 billion USD at current list prices, though the lessor said it’s seeking major discounts. Executives said that a marketplace in disarray could provide a “lot of opportunities” as airlines are increasingly looking at deferring, or even cancelling, orders placed by them in better times.

The US Government Accountability Office (GAO) this week sustained Boeing’s protest of the USAF’s award of a contract to Northrop Grumman Systems Corporation for KC-X aerial refueling tankers. Boeing challenged the Air Force’s technical and cost evaluations, conduct of discussions, and source selection decision.

“Our review of the record led us to conclude that the Air Force had made a number of significant errors that could have affected the outcome of what was a close competition between Boeing and Northrop Grumman. We therefore sustained Boeing’s protest,” said Michael R. Golden, the GAO’s managing associate general counsel for procurement law. “We also denied a number of Boeing’s challenges to the award to Northrop Grumman, because we found that the record did not provide us with a basis to conclude that the agency had violated the legal requirements with respect to those challenges.”

The GAO recommended that the Air Force reopen discussions with the offerors, obtain revised proposals, re-evaluate the revised proposals, and make a new source selection decision, consistent with the GAO’s decision. The agency also made a number of other recommendations including that, if the Air Force believed that the solicitation, as reasonably interpreted, does not adequately state its needs, the Air Force should amend the solicitation prior to conducting further discussions with the offerors; that if Boeing’s proposal is ultimately selected for award, the Air Force should terminate the contract awarded to Northrop Grumman; and that the Air Force reimburse Boeing the costs of filing and pursuing the protest, including reasonable attorneys’ fees. By statute, the Air Force is given 60 days to inform the GAO of the Air Force’s actions in response to GAO’s recommendations.

The GAO decision should not be read to reflect a view as to the merits of the firms’ respective aircraft. Judgments about which offeror will most successfully meet governmental needs are largely reserved for the procuring agencies, subject only to such statutory and regulatory requirements as full and open competition and fairness to potential offerors. The GAO bid protest process examines whether procuring agencies have complied with those requirements.

Specifically, GAO sustained the protest for the following reasons:

1. The Air Force, in making the award decision, did not assess the relative merits of the proposals in accordance with the evaluation criteria identified in the solicitation, which provided for a relative order of importance for the various technical requirements. The agency also did not take into account the fact that Boeing offered to satisfy more non-mandatory technical “requirements” than Northrop Grumman, even though the solicitation expressly requested offerors to satisfy as many of these technical “requirements” as possible.

2. The Air Force’s use as a key discriminator that Northrop Grumman proposed to exceed a key performance parameter objective relating to aerial refueling to a greater degree than Boeing violated the solicitation’s evaluation provision that “no consideration will be provided for exceeding [key performance parameter] objectives.”

3. The protest record did not demonstrate the reasonableness of the Air Force’s determination that Northrop Grumman’s proposed aerial refueling tanker could refuel all current Air Force fixed-wing tanker-compatible receiver aircraft in accordance with current Air Force procedures, as required by the solicitation.

4. The Air Force conducted misleading and unequal discussions with Boeing, by informing Boeing that it had fully satisfied a key performance parameter objective relating to operational utility, but later determined that Boeing had only partially met this objective, without advising Boeing of this change in the agency’s assessment and while continuing to conduct discussions with Northrop Grumman relating to its satisfaction of the same key performance parameter objective.

5. The Air Force unreasonably determined that Northrop Grumman’s refusal to agree to a specific solicitation requirement that it plan and support the agency to achieve initial organic depot-level maintenance within two years after delivery of the first full-rate production aircraft was an “administrative oversight,” and improperly made award, despite this clear exception to a material solicitation requirement.

6. The Air Force’s evaluation of military construction costs in calculating the offerors’ most probable life cycle costs for their proposed aircraft was unreasonable, where the agency during the protest conceded that it made a number of errors in evaluation that, when corrected, result in Boeing displacing Northrop Grumman as the offeror with the lowest most probable life cycle cost; where the evaluation did not account for the offerors’ specific proposals; and where the calculation of military construction costs based on a notional (hypothetical) plan was not reasonably supported.

7. The Air Force improperly increased Boeing’s estimated non-recurring engineering costs in calculating that firm’s most probable life cycle costs to account for risk associated with Boeing’s failure to satisfactorily explain the basis for how it priced this cost element, where the agency had not found that the proposed costs for that element were unrealistically low. In addition, the Air Force’s use of a simulation model to determine Boeing’s probable non-recurring engineering costs was unreasonable, because the Air Force used as data inputs in the model the percentage of cost growth associated with weapons systems at an overall program level and there was no indication that these inputs would be a reliable predictor of anticipated growth in Boeing’s non-recurring engineering costs.

The 69-page decision was issued under a protective order, because it contains proprietary and source selection sensitive information. The GAO has directed counsel for the parties to promptly identify information that cannot be publicly released so that GAO can expeditiously prepare and release, as soon as possible, a public version of the decision.

Although the Air Force intends to ultimately procure up to 179 KC-X aircraft, the solicitation (No. FA8625-07-R-6470) provided for an initial contract for system development and demonstration of the KC-X aircraft and procurement of up to 80 aircraft. The solicitation provided that award of the contract would be on a “best value” basis, and stated a detailed evaluation scheme that identified technical and cost factors and their relative weights. With respect to the cost factor, the solicitation provided that the Air Force would calculate a “most probable life cycle cost” estimate for each offeror, including military construction costs. In addition, the solicitation provided a detailed system requirements document that identified minimum requirements (called key performance parameter thresholds) that offerors must satisfy to receive award. The solicitation also identified desired features and performance characteristics of the aircraft (which the solicitation identified as “requirements,” or in certain cases, as objectives) that offerors were encouraged, but were not required, to provide.

The agency received proposals and conducted numerous rounds of negotiations with Boeing and Northrop Grumman. The Air Force selected Northrop Grumman’s proposal for award on February 29, 2008, and Boeing filed its protest with the GAO on March 11, supplementing it numerous times thereafter. In accordance with GAO’s Bid Protest Regulations, GAO obtained a report from the agency and comments on that report from Boeing and Northrop Grumman. The documentary record produced by the Air Force in this protest is voluminous and complex. The GAO also conducted a hearing, at which testimony was received from a number of Air Force witnesses to complete and explain the record. Following the hearing, GAO received further comments from the parties, addressing the hearing testimony as well as other aspects of the record.

In response to the ruling, Boeing released the following statement from Mark McGraw, vice president, Tanker Programs:

“We welcome and support today’s ruling by the GAO fully sustaining the grounds of our protest. We appreciate the professionalism and diligence the GAO showed in its review of the KC-X acquisition process. We look forward to working with the Air Force on next steps in this critical procurement for our warfighters.”

Information about GAO’s bid protest process can be found at http://www.gao.gov/legal/aboutbid.html

Air Astana (Almaty), the flag carrier of Kazakhstan, has signed a firm contract for the purchase of six A320s, as part of its expansion programme on domestic and medium-haul routes. The contract, which is the airline’s first with Airbus, confirms the Memorandum of Understanding which was announced in December 2007.

Air Astana’s A320s will feature the brand-new cabin recently introduced on all members of the A320 Family, which provides more comfort and space for passengers in a modern and quiet environment. The aircraft on order will accommodate up to 148 passengers in a two-class cabin layout. The choice of engines has not yet been made. The aircraft will join Air Astana’s existing fleet which already includes some A320 Family aircraft, which are currently being operated on its domestic and international network.

Peter Foster, President of Air Astana said, “This order is consistent with our strategic business plan aimed at expanding our fleet, and continuously improving the service to our passengers. The A320, which combines operational efficiency with unprecedented cabin comfort, fits perfectly in with our long-term strategy of providing modern and productive aircraft.”

“We are delighted Air Astana has decided to expand its Airbus fleet. Air Astana will benefit from the aircraft’s advanced technology and high fuel efficiency, while its passengers will undoubtedly like the new cabin, which has become even more spacious, lighter and quieter. We are happy to contribute to the success of this fast-growing airline with our market leading A320 Family,” highlighted Airbus Chief Operating Officer, Customers John Leahy.

The A320 Family, which includes the A318, A319, A320 and A321, is recognised as the benchmark single-aisle aircraft family. The A320 Family’s optimised cabin cross-section - the widest single-aisle fuselage on the market - sets the standards for passenger cabin adaptability in this segment allowing for top-of-the-range comfort with wider seats and aisles. Each aircraft features fly by wire controls and all share unique cockpit commonality across the range. This allows pilots to fly the whole family, and enables the same team of mechanics to maintain the aircraft, generating valuable savings in training and operational efficiency. With proven reliability and extended servicing periods, the A320 Family has the lowest operating costs of any single aisle aircraft. In addition, the A320 Family is an environmentally responsible neighbour, offering the lowest fuel burn, emissions and noise footprints in its class.

With over 6,100 Airbus single-aisle aircraft ordered and more than 3,500 delivered to date, the A320 Family is without doubt the most successful airliner programme. The A320 Family has more than 275 customers and operators to its credit. Twelve carriers from CIS currently operate more than 100 Airbus aircraft.

Photo: Still seen with its test registration, this aircraft (msn 3484) will be registered P4-WAS. (Photo Copyright Amaury)

(Story Copyright Airbus Media Service)

Airlines worldwide are scrambling to cut costs in the wake of soaring fuel prices, but Boeing and Airbus are both still expecting a solid year for jetliner orders. Neither airplane maker will come close to matching the record-setting order pace of the past three years that saw them combine for more than 6,000 jetliner sales, but 2008 won’t be nearly as bad as the industry’s recent gloom-and-doom developments might suggest, according to senior executives with both companies.

“This crisis is a bit of a two-edge sword,” said John Leahy, chief operating officer for Airbus, “Airlines are grounding older, gas-guzzling jets, but they continue to buy new and more fuel-efficient ones.” Heading into 2008, Leahy believed Airbus would likely win 700 to 800 orders, which would be a better-than-average year for either airplane maker. Boeing’s Scott Carson, chief executive of the company’s jetliner business, also said in an interview in Istanbul that Boeing’s orders are still likely to be in that range, or about half what they were in 2007 when Boeing won a record 1,413 orders. “It’s a very challenging market but we are still seeing good response,” Carson said.

Through May, Airbus had won net orders for 435 jets this year, and Boeing had won 418 net orders through June 3. The net figure includes cancellations.

Emirates Airline (Dubai), the largest customer of the Airbus A380 Superjumbo, will receive its first delivery of the aircraft on July 28, 2008, after a two-year wait caused by production delays. The long-awaited unveiling of the Emirates A380 interior, rumoured to include lavish features such as onboard showers, will be revealed during a ceremony at Airbus’s Hamburg factory.

“The A380, with its large capacity and excellent operating economics, will be one of the pillars of Emirates’s future growth,” said Sheikh Ahmed bin Saeed, the chairman and chief executive of the Emirates Group. Emirates has 58 of the aircraft on order, worth an estimated $18.8 billion USD at list prices. Airbus has promised to deliver the first five A380s to Emirates in the airline’s fiscal year ending in March 2009. The aircraft will all be outfitted in a three-class configuration of 489 seats, with 14 seats in first class, 76 in business, and 399 in economy.