By Tim Hepher, Allison Lampert and Valerie Insinna

PARIS (Reuters) -Airbus announced a record 500-plane deal with Indian airline IndiGo on day one of the Paris Airshow on Monday, as strong demand for jets and air defences vied for attention with the industry’s supply chain problems.

The multibillion-dollar deal for single-aisle planes – the largest ever by number of aircraft – confirmed a Reuters report earlier this month, and eclipsed Air India’s provisional purchase of 470 Airbus and Boeing jets earlier this year.

The world’s largest air show, which alternates with Farnborough in Britain, is at Le Bourget for the first time in four years after the 2021 edition fell victim to the pandemic.

French President Emmanuel Macron flew in to the packed aerospace bazaar by helicopter and watched a flying demonstration including Airbus’s latest jet development, the A321XLR, and air power including the French Rafale fighter.

On the civilian side, planemakers arrived with growing demand expectations as airlines rush for capacity to meet demand and help reach industry goals of net zero emissions by 2050.

But they also face a challenge to meet that demand as suppliers struggle with rising costs, parts shortages and a scarcity of skilled labour in the wake of the pandemic.

Industry executives say as many as 2,000 jet orders are up for grabs worldwide in a resurgent commercial jet market, on top of those provisionally announced already, as airlines try to fill a void left by sharp falls in activity in the COVID crisis.

But only a portion of these potential fresh deals will be ready in time for this week’s air show, which could see a mixture of new and repeat announcements, they said.

“It is only when these appear in the year-end backlog that we have any idea of the strength of the market and the quality of the orders,” said Agency Partners analyst Sash Tusa.

UKRAINE ARMS TALKS

IndiGo’s deal highlights the growing importance of India, the world’s fastest-growing aviation market, serving the largest population, to planemakers.

“This is just the beginning, there’s more going forward. With the growth of India (and) the growth of the Indian aviation market … this is the right time for us to place this order,” IndiGo Chief Executive Pieter Elbers told a news conference.

In another key market, Airbus said Saudi budget airline flynas had firmed up an order for 30 of its A320neo-family narrowbody aircraft, confirming a Bloomberg report.

The air show is taking place under the shadow of the conflict in Ukraine, with no Russian presence in the chalets and exhibition halls in contrast to the last event four years ago.

A Ukrainian minister told Reuters that Kyiv is in talks with Western arms manufacturers to boost production of weapons, including drones, and could sign contracts in coming months.

Belgium said it would apply to join as an observer the potential successor to the Rafale and multinational Eurofighter, the Franco-German-Spanish FCAS fighter project, despite differences between industrial partners over whether to expand.

France’s Thales also announced a contract from Indonesia for 13 long-range air surveillance radars.

Looking ahead to the rest of the show, Air India may finalise its recent huge order, split between Airbus and Boeing, as Irish lessor Avolon finalises a deal with Boeing which is having a relatively quiet show after a string of recent orders.

Airbus is seen close to a potentially large deal with Mexico’s Viva Aerobus, but by Monday some sources were predicting the volume could be closer to 60 jets than the triple digits first reported, with no guarantee of a result this week.

And with increased bargaining power at their disposal from tight supplies, airline executives say planemakers are being tougher on price and more circumspect than in previous upcycles.

Engine makers are meanwhile sketching bets on fuel-saving technology that will influence how jets evolve next decade.

(Reporting by Tim Hepher, Joanna Plucinska, Allison Lampert and Valerie Insinna; Additional reporting by Aditi Shah, Julia Payne, Nandan Mandayam; Editing by Mark Potter and Jonathan Oatis)

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