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Boeing aims at US defense market as Airbus trumpets plane orders
LE BOURGET, France (AFP) Jun 20, 2003
The US aerospace group Boeing is unruffled despite successive civilian aircraft orders announced at the Paris Air Show by European rival Airbus, focusing instead on lucrative domestic defense contracts.

Boeing's defense unit, set to celebrate its first anniversary, already contributes almost as much to the group's bottom line as passenger jets, a sector in which Airbus may have surpassed the perennial giant from Chicago.

At the bi-annual air show staged at this airport north of Paris, the order match between the world's two biggest makers of civilian aircraft was clearly in Airbus' favor, with the score standing at 64 to nine on Thursday.

But Boeing, which has partially backed a general US snub of the French event with a reduced presence, has also said it does not make a policy of putting orders on hold so that they can be signed at salons.

The head of Boeing's commercial aircraft division Alan Mulally nonetheless refused to say early in the week how many orders his group expected to receive this year.

But Jim Albaugh, in charge of the US company's defense activities, readily forecast that Boeing would in time catch up with the world's biggest defense contractor, Maryland-based Lockheed Martin.

The US armed forces and governmental organisations account for 90 percent of Boeing's defense sales, he told the economic daily Les Echos here.

"Our pole will post sales of 27 billion dollars in 2003 and show a pre-tax margin of seven-eight percent," the French-language newspaper quoted him as saying.

Boeing's goal is to "attain two-digit profitability in within five years" and sales of more than 40 billion dollars by 2007, Albaugh added.

That will depend on continued heavy defense spending by the US government on programs such as replacing Boeing KC-135E aerial tankers with 100 leased KC-767s for at least 16 billion dollars (13.7 billion euros).

The civilian version of Boeing's 767 is not attracting many buyers.

Yet the company insists it is not getting out of the commercial aircraft business.

"We are not on a path to get out of commercial airplanes," chairman Phil Condit told the Financial Times.

A study by two US universities published in part by Business Week in April nonetheless said Boeing could halt commercial plane production within 10 years to focus on military aircraft.

The defense and high technology sectors provided greater profits than those made in the civil aviation sector, the study found.

The European Aeronautic Defence and Space Company -- which owns 80 percent of Airbus -- would also like to increase its defense activities, now responsible for 20 percent of EADS's total.

Defense sales at the group are expected to increase by 60 percent between now and 2005, EADS co-president Philippe Camus said here.

He may be overly optimistic however, since the group is shut out of the US arms market while combined European defense spending falls far short of the 355 billion dollars spent each year by the Pentagon.

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