FARNBOROUGH, England, July 17 (Reuters) - Spiralling security risks are expected to push defence to the forefront of Britain's Farnborough Airshow, as aerospace and arms makers struggle to keep pace with demand for weapons while cementing a fragile recovery in civil jet and engine production.
With the Ukraine war in its fifth year and a ceasefire in tatters in the Gulf, those risks are also likely to move the ritual contest between Boeing BA.N and Airbus AIR.PA for jetliner orders down the pecking order at the July 20 to 24 show.
"The global security environment is arguably more complex and volatile today than we have seen in many, many decades, and we are watching security threats evolve at a breakneck pace," Air Chief Marshal Harv Smyth, head of the Royal Air Force, told an International Air Chiefs Conference ahead of the show.
Weapons makers enter their biennial bazaar witnessing the biggest rise in European defence spending since the Cold War but with unresolved questions about where and how it will be spent.
One of the industry's most influential figures warned the shift to drones and AI systems could disrupt defence as much as SpaceX transformed the launch business, as wars in Ukraine and Iran expose the need for faster developments and mass production.
"I know both worlds and they couldn't be further apart," said ex-Airbus CEO Tom Enders, who is co-chairman of German defence startup Helsing and heads foreign policy think tank DGAP.
"We used to have a saying that traditional defence companies … would only pick up a pen if the government paid for it," he said in an interview on the eve of the show.
"The younger companies are aggressive, not risk-averse. They spend their own money. Procurement agencies and armed forces increasingly understand that this is the way for a dynamic fast-moving industry," said Enders, who also chairs tank maker KNDS.
While some new budgeted funds will be spent on today's warplanes like the Lockheed Martin LMT.N F-35 and the Eurofighter — both performing displays next week — startups like Helsing and U.S.-based Anduril are pushing AI-driven systems like uncrewed fighter cohorts, despite initial setbacks.
"Valuations are tilting in favour of the defence entrants but...most militaries are still spending the vast amount of their resources on manned platforms," said Byron Callan, managing partner of research firm Capital Alpha.
Organisers said defence will represent half of the record 1,600 exhibitors at the show, up from 40% historically, with a sharp increase in AI, deep-tech and finance companies.
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