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Private Orders Create Farnborough Buzz

Farnborough got its buzz back. In fact, it's as if the downturn never happened.

The Airbus A380 takes to the skies for a demonstration flight at the Farnborough Airshow in the UK.
Sharon Lorimer
The Airbus A380 takes to the skies for a demonstration flight at the Farnborough Airshow in the UK.

Day one delivered a raft of billion-dollar orders that will be making the headlines Tuesday and, as ever, the company hogging the limelight has been Emirates.

The Gulf carrier is stealing a march on its rivals by following up its recent massive order for more Airbus A380s with an equally impressive announcement that it would be taking 30 of Boeing's 777s.

The carrier's CEO, Tim Clark, told me that his business weathered the downturn well and has decided to come out fighting.

By placing such a big order, Clark is taking a risk. But by being both Boeing and EADS' Airbus' biggest customer brings some big advantages. That's because Emirates can and does dictate to the manufacturers what kind on planes they build.

But Emirates wasn't the only show in town. Also of huge significance were some big orders from the leasing companies. This is a good lead indicator for the health of the airline sector and shows real confidence.

Farnborough International Air Show 2010 - A CNBC Special Report
Farnborough International Air Show 2010 - A CNBC Special Report

But while the commercial teams have had a good day, the same can't be said for the defense side of the business. Here the story is really grim.

The UK's Business Secretary was on hand to make it clear that spending will be cut and it's a similar story from around the world.

This raises some interesting questions about what happens next. Many defense contractors might be seeing growth slow dramatically but they still have big ongoing projects that throw off lots and lots of cash. This could make them interesting targets for the world of private equity.

  • Video of Guy Johnson's Farnborough First-Day Wrap Up
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