Planemakers shrug off economy worries as travel demand grows

By Sarah Young and Conor Humphries

FARNBOROUGH, England (Reuters) - Top planemakers shrugged off worries about a faltering global economy on the opening day of the Farnborough Airshow on Monday, with Airbus announcing a $4.4 billion order and Boeing raising its 20-year forecast for jet demand.

Airbus said it had struck a deal to sell 12 of its biggest twin-engined plane, the A350-1000, to Virgin Atlantic.

Boeing forecast the world's airlines would need 39,620 new aircraft worth $5.9 trillion over the next 20 years to meet rising air travel, particularly in Asia, and demand for more fuel-efficient planes.

That is up 4.1 percent from its estimate last year and would mark a doubling in size of the global commercial aircraft fleet.

Planemakers have enjoyed years of strong demand, with the industry's order backlog standing at a record 13,500 planes at the end of 2015, or 9.6 years of production at current rates.

But analysts are worried economic risks - from slowing growth in China to Britain's move to leave the European Union - could see orders dry up and some even cancelled, particularly for larger twin-aisle jets.

David Joyce, chief executive of aero engines maker GE Aviation, said at the airshow that he did not see any need for further increases in planned jetliner production, which Airbus and Boeing are both considering to meet their order backlogs.

Nonetheless, planemakers remained upbeat, with Boeing forecasting airline passenger traffic would increase by 4.8 percent a year over the next two decades.

"Despite recent events that have impacted the financial markets, the aviation sector will continue to see long-term growth with the commercial fleet doubling in size," said Randy Tinseth, vice president of marketing at Boeing Commercial Airplanes.

NARROWBODY OR WIDEBODY?

Opening the airshow, British Prime Minister David Cameron finalised multi-billion dollar deals with Boeing to buy nine P-8A Poseidon maritime patrol planes and to upgrade 50 Apache helicopters.

Airbus's deal for the A350-1000 with Virgin Atlantic is a shot in the arm for the 366-seat model whose sales have slowed as Boeing develops a larger version of its 777.

Virgin Atlantic said still had options to buy six of Airbus's A380 superjumbos, although industry sources have told Reuters that long-deferred deal is likely to be cancelled.

Boeing said it expected demand for large widebody planes, such as its four-engined 747-8 and the A380, to account for just 530 deliveries over the next 20 years.

But it increased its demand forecast for single-aisle airplanes such as its 737 and Airbus's A320 to 28,140, up 5 percent on its estimate last year.

In a sign of mounting competition in single-aisle planes, Boeing said it would redesign the smallest member of its 737 MAX jet family, increasing the number of seats by 12 to 150.

The U.S. group also said China's Donghai Airlines had signed a memorandum of understanding to buy 25 737 MAX 8 jets and five 787 9s in a deal valued at more than $4 billion at list prices.

Bloomberg reported on Monday that Malaysia's AirAsia was close to a $12.6 billion deal for Airbus A321 jets, citing sources. Industry sources told Reuters on Sunday that AirAsia was lining up a deal with Airbus.

(Additional reporting by Tim Hepher and Andrea Shalal; writing by Mark Potter; editing by Jason Neely)