Farnborough: Plane manufacturers, airlines, government ministers and military top brass gathered on Sunday for the Farnborough International Airshow amid hopes that the two-year downturn in the aviation and defence industry is nearing a bottom.

The arrival of Boeing's long-awaited and long-delayed 787 jet at Farnborough's airfield helped generate a buzz for the start of the industry's premier event

"This is the way planes are going to be built for the next 80 years," Boeing Chief Executive Jim McNerney told reporters after the jet landed. But he acknowledged that delivery of the aircraft already more than two years overdue because of production problems could slip into 2011.

"End of the year is the plan," he said. "There could be some paperwork that pushes it into next year."

Concerns remain about the slow global economic recovery and sharp cuts to national defence budgets.

New orders for commercial aircraft are likely to be restrained and restricted to buyers from strong emerging markets in the Middle East and Asia, while activity on the defence side of the show is expected to be muted.

Boeing and its arch-rival Airbus, meanwhile, head into the event facing growing challenges to their duopoly in the mid-sized civilian jet market from smaller manufacturers, including Canada's Bombardier and Brazil's Embraer.

Analysts, who are looking to Farnborough to take the pulse of the industry's health, expect the event to be more upbeat than last year's sister show in Le Bourget outside Paris, but they aren't holding their breath for commercial plane orders anywhere near the record-breaking $88.7 billion worth announced in Farnborough in 2008.

"A lot depends on if the economic recovery continues, if there is a double dip in the recession, then all bets are off," Forecast International analyst Raymond Jaworowski. "We should start to see orders accelerate late this year."

The Geneva-based International Air Transport Association has forecast that global industry profits will reach $2.5 billion this year, an upturn from the huge $9.4 billion loss in 2009.

Expectations

Analysts expect Asia and North America to lead the recovery, with Europe lagging behind. Strikes at some airlines, the debt crisis and the volcanic ash cloud that caused major disruptions this spring are all hurting Europe's recovery.

More than 1,000 exhibitors from 38 countries have signed up for Farnborough with delegations from Egypt, Taiwan and Morocco will be attending for the first time. Organisers also cited stronger interest from major players China and Russia.

Among likely buyers at Farnborough are Emirates and Qatar Airways, which is looking to equip a new low-cost carrier in the region. ATR, an Italian-French aircraft manufacturer based in Toulouse and owned by EADS parent Airbus and Finmeccanica, may announce some turboprop orders.

Boeing last week downplayed the likelihood of big deals at Farnborough, stressing it didn't save up orders for international shows a dig at Airbus' tendency in recent years to announce a block of attention-grabbing announcements at Farnborough and Le Bourget.

"At the end of the day, what matters is where we are at the end of the year, or over the longer term," said Randy Tinseth, Commercial Airplanes vice president for marketing.

Airbus chief salesman John Leahy was more upbeat about the show, which runs July 19-25 at an airfield about 50 km west of central London. He said on Saturday that he had bet EADS head Louis Gallois "that we'll more than double" the 131 gross orders that Airbus has made to the end of June.

Potentially of more interest to industry watchers are the emerging signs that the old duopoly of Chicago-based Boeing and EADS-owned Airbus in the commercial plane making market is on the wane, particularly in the lucrative single-aisle, narrow-body sector.

Boeing and Airbus currently account for more than two thirds of output and 40 per cent of sales in the sector, but smaller rivals are stepping up Canada's Bombardier Inc. picked up a strong 80-plane order earlier this year from Republic Airways Holding Inc. for its C-Series.

"We have new competitors now," Gallois acknowledged, while adding that Bombardier and China's state-owned Comac are still years from making a dent in the markets for the Airbus A320 and Boeing 737.