Oil-hit planemakers brace as biggest air show looms

By Tim Hepher and Jim Wolf

LONDON (Reuters) - The world's biggest air show opens in Farnborough near London next week with jetliner manufacturers facing a drop in orders due to high oil prices and global defence firms bracing for slower spending growth.

Many analysts say dire warnings that aviation is threatened by a permanent switch to sky-high fuel prices seem overdone and note Boeing (BA.N) and Airbus (EAD.PA) have enough plane orders on their books to last about seven years.

New business will get done at the Farnborough event, but it may struggle to reach even half the record tally of 600 firm new orders seen the Paris air show just one year ago.

"There is a vague feeling that we are going straight off the edge of a waterfall, but I don't think it is that bad," said aerospace consultant Richard Aboulafia at the Teal Group.

Industry sources say there will be new orders this year for jets including the Airbus A380 superjumbo, and a major deal from leasing giant ILFC (AIG.N), which could be good news for Boeing.

Qatar Airways is expected to place an Airbus order and Abu Dhabi-based Etihad could help to sustain Middle East demand.

Still, the industry is feeling its worst chill since a recession worsened by the September 11 hijack attacks in 2001.

A year ago, the biennial Paris air show, which is held on alternative years from Farnborough, all but ran out of ink as aircraft salesmen celebrated a "longer and stronger" industry cycle following three years of bumper orders for Airbus and Boeing.