Thousands of plane buffs, industry executives and the world's media began flocking to the biennial air show near London for a week-long extravaganza of deal-making, fly pasts and a marketing blitz.

The mood among industry chiefs was markedly more optimistic than two years ago, when the aviation industry was sinking into its worst financial crisis in the wake of the September 11, 2001 terrorist hijackings in the United States.

Boeing scored an early point against arch-rival Airbus with an order from Dubai-based airline Emirates for four Boeing 777-300ER aircraft and an option on nine more in a deal worth 2.96 billion dollars at list prices.

But otherwise deals were thin on the ground on the first day, though Airbus executives hinted they could unveil orders later in the week, possibly for the new A380 superjumbo.

The commercial rivalry between the two manufacturers has shifted up a gear recently as the US group Boeing accuses its European rival of receiving what it says are unjustified government subsidies.

Airbus is 80 percent owned by the European Aeronautic, Defense and Space company (EADS) and 20 percent by BAE Systems.

Airbus chief executive Noel Forgeard hit back with a long tirade against Boeing's complaints, insisting that his company receives loans not subsidies from European governments.

"We pay commercial interest on them and we shall repay every cent," he told reporters. Boeing also received state aid from the state of Washington, Forgeard pointed out.

"It's a classic part of our competitor's speech that we will not be able to repay our loans," he added.

Alan Mulally, head of Boeing Co's commercial aircraft division, accused Airbus of not abiding by the spirit of a 1992 bilateral agreement between the US and European authorities to gradually reduce state aid.

"The EU and the US agreed to move in this direction in 1992 and they haven't," he said, calling for the agreement to be renegotiated.

However, both manufacturers said they wanted to avoid sparking a full-blown transatlantic trade spat that could hit both companies' orders.

"I don't think it's going to come down to a trade war," Mulally said.

Both manufacturers are looking forward to a pick-up in orders in the coming years as growth in global air travel, notably in Asia, drives demand for new aircraft, despite record high oil prices.

Global passenger traffic levels have at last recovered to levels seen before the September 11, 2001 terrorist attacks, and low-cost carriers in particular are flourishing.

"Two years ago the industry was in recession," said Airbus's Forgeard.

"Our customers were suffering badly. Today we see the end of the tunnel and growth is again resuming. Airline traffic is picking up again. Indications are that this upward trend will continue and even accelerate."

Boeing's Mulally predicted "a gradual recovery" in the commercial aviation industry, though he said high oil prices and terrorism fears would pare growth.

Farnborough 2004 is the first since European aircraft manufacturer Airbus stole the top spot in civil aviation from US arch-rival Boeing last year.

Airbus believes it has stolen a march on Boeing with the development of the 550-seat A380 superjumbo, which will be the world's largest airliner, eclipsing Boeing's 747. So far it has 129 orders for the A380, which is due to enter service in 2006.

Boeing meanwhile is pinning its hopes on the 7E7, a midsize jet it says is 20 percent more fuel-efficient than comparable aircraft in its class, with the long-haul range of a larger aircraft.

The US giant already has orders for 62 planes, which is scheduled for delivery in 2008.

Meanwhile Brazilian aircraft maker Embraer announced orders for nine planes from two US carriers, seven ERJ 145s from Trans State Airlines and two Embraer 170s from Republic Airways. Financial details were not disclosed.

SPACE.WIRE