PREVIEW-Aviation gloom unlikely to lift at Singapore air show

* Analysts, executives expect few big commercial jet orders

* Ethiopian crash, JAL bankruptcy overshadow meet

* Airbus military carrier woes persist

* Low cost-carriers could grab limelight

By Harry Suhartono and Mariko Katsumura

SINGAPORE/TOKYO, Jan 29 (BestGrowthStock) – The aviation business,
badly hit by the economic crisis and the bankruptcy of Japan
Airlines (9205.T: ), is unlikely to find much to cheer about at
this year’s first major industry event, the Singapore Airshow.

Executives say early signs of a global economic recovery
could lead to some demand from low-cost carriers at the Feb 2-7
gathering, but there seems little sign of big-ticket orders.

Amid the roar of fast jet displays over the hospitality
chalets, investors and financiers are expected to remain pretty
much on the sidelines, awaiting proof of a sustained recovery.

“While we don’t expect any major announcements in terms of
orders, there’s renewed appetite,” said Shukor Yusof, an
analyst at Standard & Poor’s in Singapore, adding that he did
not expect big orders from large and premium carriers.

Until the global financial crisis pushed the airline sector
into its worst crisis in decades, the industry had grown used
to the annual ritual of an orders race between Boeing (BA.N: )
and Airbus, with customers spending $62 billion in 2008.

The show comes on the heels of a cautious outlook from
world airlines, who said air freight had jumped almost a
quarter in December in a positive end to the industry’s worst
year.

But while that suggests economic recovery is picking up
steam, IATA said the sector would face a tough year making up
for the lost demand in 2009 and handling new security demands.

Safety and security are expected to be high on the agenda.

The crash of an Ethiopian Airlines Boeing 737-800 off
Lebanon’s coast this week has cast a pall over the event, just
as the crash of an Air France (AIRF.PA: ) jetliner in the
Atlantic eclipsed the world’s largest air show in Paris last
June.

And the foiled Christmas Day bomb attack on a U.S. jetliner
heading for Detroit has led to plans for more full
body-scanners and other security measures, which could turn
people off flying.

Still, there are signs that the gloom could be lifted in
2010.

Virgin Blue (VBA.AX: ) said on Thursday that it may replace
some of its existing jets with new planes and was in talks with
several suppliers including Embraer (EMBR3.SA: ). [ID:nSGE60R036]

“I think there’s a feeling of greater optimism now, the
worst is over but in the road to recovery, no one knows how
long it will take. Airlines are always the first to go in (to
recession) and the last to go out,” said Alex Glock, Managing
Director at Embraer Asia Pacific.

FALL OF JAL, RISE OF CHEAP AIRLINES

Analysts said the $25 billion bankruptcy of national flag
carrier Japan Airlines could bring a new opportunity for
smaller aircraft makers like Embraer and Mitsubishi Heavy
(7011.T: ), and spur a further rise of budget airlines.

JAL, which filed for bankruptcy protection this month as
part of a state-led restructuring plans to retire all of its 37
Boeing 747-400 jumbos and all 16 McDonnell Douglas (now Boeing)
MD-90 planes and buy smaller aircraft. [ID:nSGE60I079]

JAL might also launch a low-cost carrier business under the
government-led rehabilitation plan.

Embraer, which makes private jets and smaller commercial
aircraft, has been trying to win more business from Asia’s
budget and regional carriers, many of which use single-aisle
jets from Boeing and Airbus, a unit of EADS (EAD.PA: ).

Asian budget airline demand helped propel plane orders to
their 2007 peak and production remains at record levels.

The Singapore show will also be a chance for arms exporters
to display their wares for growing Asian defence markets, as
nations across the region look to replenish their arsenals.

Demand is strong globally for fighters to renew Cold
war-era fleets and airlift transport to support rapid military
and humanitarian missions, highlighted by the Haiti earthquake.

Japan still covets Lockheed Martin’s (LMT.N: ) F-22 Raptor,
though the U.S. Congress has so far banned exports of the
world’s top-line fighter. Others such as Europe’s Eurofighter
consortium eye a potential market opening due to the stand-off.

In another sales clash, Indonesia has been in talks to buy
Lockheed’s C-130 Hercules transport planes, but European rival
Airbus is seen anxious to steal the deal with its A400M
airlifter and secure its future. [ID:nSIN476349]

Neighbouring Malaysia is the only export customer for the
plane, plagued by cost overruns and a four-year delay. Europe
plans a marketing push to ASEAN countries if it can end a cost
row over its top military project. Talks on the stalemate
resume on Feb. 2, coinciding with the show’s opening.
[ID:nLDE60R1P4]

Stock Market Research

(Additional reporting by Tim Hepher in PARIS; Editing by Raju
Gopalakrishnan and Lincoln Feast)

PREVIEW-Aviation gloom unlikely to lift at Singapore air show