PARIS, June 6 (Reuters) - This year's Paris Air Show was supposed to be a celebration of French-American cooperation in the 100 years since the first flight of the Wright brothers.
Instead, the world's largest and oldest aerospace industry gathering risks being tarnished by a nasty row between Paris and Washington.
Top U.S. military brass, congressional representatives and U.S. industry chiefs have descended on Paris in droves during past shows, providing valuable networking opportunities for deal-seeking arms makers.
This year, lingering U.S. resentment over France's staunch opposition to the war in Iraq has led the U.S. Defense Department to scale back sharply on its participation at the show, which dates back to 1909 and runs from June 15-22.
The Pentagon is sending only junior officers and is not allowing any U.S. aircraft to be used in the traditional daily fly-bys. Neither the U.S. Senate nor the House of Representatives are sending their traditional delegations.
Major U.S. defence contractors such as Boeing Co. (nyse: BA - news - people), Lockheed Martin (nyse: BA - news - people), Raytheon (nyse: BA - news - people) and Northrop Grumman (nyse: BA - news - people) are following the government's lead, slashing attendance levels and keeping top executives at home.
Of the four arms giants, only Lockheed is sending its chief executive. Heavyweight General Dynamics (nyse: GD - news - people) has scrapped its displays and plans to send only a dozen representatives.
"The major U.S. companies are reducing their delegations by about a third, with some cutting by as much as half and others not attending at all," said Joel Johnson, vice president for international affairs at the Aerospace Industries Association.
That will give European firms a chance to steal the spotlight from their transatlantic rivals. But it will also put a major damper on a show already coloured by an unprecedented downturn in the civil aerospace market.
The world of aerospace and defence has changed dramatically since the last Paris show, which occurred months before the September 11, 2001 plane attacks in the United States which, along with a weakened global economy, have led to a sharp drop in air travel.
More recently, the Iraq war and deadly SARS virus have compounded the airline industry's woes and prompted planemakers Boeing and Airbus to cut production.
PENTAGON PAYBACK
U.S. firms say the weak economy and sector downturn, which has forced both United Airlines and US Airways Group into bankruptcy, are behind their diminished presence. But the Pentagon's stance appears to be the deciding factor.
Although U.S. Defense Department officials deny they are punishing the French for their stand on Iraq, Washington insiders say U.S. companies have been told in private that a large presence in Paris will be frowned upon.
"The Pentagon has been actively discouraging contractors from attending the airshow," said Loren Thompson, director of the Arlington, Virginia-based Lexington Institute.
"From the administration's viewpoint this is a relatively harmless way of expressing dissatisfaction but I don't think U.S. industry sees it that way. They see marketing opportunities being lost, perhaps to the benefit of the French."
Show organisers say participation, based on reserved stand space, is expected to be down roughly five percent from 2001. About 201 aircraft will be on display versus 226 two years ago, and 51 of those will take part in fly-bys, down from 66.
U.S. companies are also scaling back on entertainment, shirking the usual glitzy receptions at high-price hotels that bring together industry heavyweights. Some show veterans see this as part of a broader trend and say the importance of air shows like Paris could diminish in coming years.
But others say the relationship-building that does occur is invaluable and lament what is happening at Paris this year.
"The U.S. stay-away will have a big impact," said Nick Cunningham, an analyst at Citigroup Smith Barney in London.
"The whole point of these shows is to get everyone in the industry together to talk. Things do come out of them and they do set the stage for deals down the line."
While U.S. firms stay away, European rivals like EADS <EAD.PA>, BAE Systems <BA.L> and Thales <TCFP.PA> will be out in force, hoping to steal the headlines.
The show will offer an opportunity for Airbus, which is aiming to deliver more planes this year than Boeing for the first time, to boast of its recent gains.
Due to the poor state of the market, Paris is expected to be far less of a jet-order extravaganza than it was in 2001, when $11.8 billion in new and intended orders were unveiled.
Still, Dubai-based airline Emirates [EMAIR.UL] is expected to announce a major order for planes from both Airbus and Boeing, including Airbus A380 superjumbos. And Qatar Airways has also said it will sign contracts during the show. (Additional reporting by Chelsea Emery in New York)
Copyright 2003, Reuters News Service |
