With airliner orders rebounding, the focus of discussion at this year's Paris air show is expected to firmly center on orders and strategic directions for the big aircraft makers.

But the aerospace industry will still be wrestling with multiple challenges as it gathers for the 49th biennial event, held this year June 20-26 at the Le Bourget airport on the outskirts of Paris. High oil prices are a threat to airline customers, a strong euro is a headache for European suppliers and mounting pressure is being felt all the way down the aerospace supply chain as production rates ramp up.

Meanwhile, the defense realm is grappling with its own demons, most caused by budget cuts for the sector both in Europe and the U.S. This is forcing contractors throughout the supply chain to reassess their portfolios, which has already spurred a number of deals this year with more in the offing.

But turbulent times have not depressed attendance. In fact, a record number of exhibitors have signed up, says the general commissioner of the Paris air show, Louis Le Portz, citing 2,129 as confirmed. The event itself sold out about six months ago.

Industry officials are streamlining their approach though, opting for either a slightly larger chalet or exhibit space, rather than supporting both. Le Portz concedes that such a shift is taking place, but quickly adds that any freed capacity has been snatched up by small- and medium-sized enterprises, many of whom are first-time exhibitors.

The strong euro continues to create waves. U.S. companies have complained for the last few years about the high costs of the event, and the currency exchange is behind many decisions to cut back on space (see p. 58). The euro pitted against several other currencies could also influence a potential reduction in attendees. But since hotels and other bookings are made in advance, La Portz believes cost-saving measures will largely result in attendees shortening their stay, rather than canceling outright.

That said, the event will still present an obligatory number of “firsts.” On the military side, the Airbus Military A400M transport will make its formal entry at the Paris air show, its first appearance after the program was effectively birthed here in 1995 as part of a multi-national agreement. The A400M was to have debuted two years ago at Le Bourget, but program delays scuttled those plans.

The same “big splash” presentation is playing out on the commercial side, where Boeing will for the first time bring the 787 twin-widebody to the event. And the 747-8 will be showcased, marking the first major international air show appearance for Boeing's newest commercial product.

The outlook for order activity at Le Bourget is positive. EADS CFO Hans Peter Ring says Airbus and turboprop-maker ATR are seeing “commercial momentum” going into the event. And, he adds, Le Bourget will be a milestone for the A320 New Engine Option (NEO) program, which launched in December with the Pratt & Whitney PW1100G and CFM International Leap-X.

Airbus's A380 (two will be present) will merely be a sideshow, the first time in a decade this aircraft has received second-billing. The NEO program will hold center stage. In the first five months since program launch, Airbus secured 332 NEO commitments, and the goal is to top 500 before the show is complete. Discussions regarding NEO commitments are being held with airlines in the Middle East, Asia and Latin America.

On the flip side, Boeing is playing down expectations that a major announcement would be made about countering the NEO. At various times, the company has mulled over a 737 reengining effort, creating something entirely new or doing nothing. There were indications that a strategic decision would be unveiled at Le Bourget, but the company's official stance now seems to be that the A320NEO represents no real threat.

In the narrowbody realm, the Bombardier CSeries CS300 will be spotlighted. The Canada-based manufacturer is competing with Airbus and Boeing single-aisle products. Since Airbus began to ratchet up talk of reengining programs, order intake for the CSeries has stalled even as development has been advancing. Bombardier officials have tried to shrug off the lull in orders, although one official close to the program says there is an intense effort under way to reverse course, and that more deals could be announced at next month's event.

In fact, no one is sitting idly by. China will bring a full-size cabin mockup of its Comac C919 to Le Bourget for the first time. And Embraer is ramping up its activity. The Brazil-based aircraft maker this month named Luís Carlos Affonso as head of new programs, an indication it is getting more serious about evolving its product portfolio beyond the Embraer 190/195, which is now at the high end of its lineup.

On the widebody side, several product questions also will hang over the proceedings in Paris, although few answers are likely to emerge. Among the topics are what Boeing will do to modernize the 777-300ER as rival Airbus's A350-1000 progresses. Conversely, questions remain over whether the latest schedule for the A350XWB will hold, or if the lead version, the -900, will suffer another delay beyond the planned entry into service in the second half of 2013.

The other major theme for the commercial aircraft world gathering will be an intensified effort to convince the public and politicians alike of the industry's commitment to environmental health. To help make the “green” case, the event will see the first air show appearance of the Solar Impulse. Its Paris debut comes about a month after the vehicle flew for the first time outside Switzerland, landing in Brussels, the home of the European Union.

The solar-powered, single-person vehicle flew for the first time throughout the night last year to demonstrate how sustainable energy might be useful, although industry officials acknowledge there is little direct technical relevance to solar flight and curing the airline industry's fuel-burn problem.

Presentations revolving around biofuels should offer more operational relevance to the green movement. A specific booth in Hall 2 will be dedicated to the theme. On the agenda are potential biofuel flights. While industry officials are hopeful biofuels will help deliver needed CO2 reduction targets, Airbus CEO Tom Enders worries that the price of these types of fuel will remain too high unless broader action is taken to increase production capacity and keep biofuels from being diverted to other modes of transport.

While the commercial landscape is largely focused on managing growth, the defense community faces the polar opposite problem: how to handle contraction in large swaths of the marketplace. The U.K. and France have already rolled out a slew of cuts, with more on the horizon. And the anticipated full-scale reduction in Germany's defense modernization plans have yet to be announced.

This Le Bourget gathering also marks the first major European air show since Britain and France agreed on a long-term security partnership, in part to help offset capability losses. The two countries have held a series of exchanges and the treaty is formally set to come into force on July 1.

One area where the new relationship is likely to be reflected on the industrial side is in the talks between BAE Systems and Dassault regarding cooperation on a future, joint unmanned aircraft program.

Another project that is starting to gel is the Dassault-led European Neuron unmanned combat aircraft demonstrator, which has heavy Swedish and Italian involvement, too. A first flight is eyed for next year.

Meanwhile, the battle in France continues over how to meet near-term medium-altitude, long-endurance system needs. Dassault and Thales are proposing a concept based on the Israel Aerospace Industries Heron TP, while EADS is trying to convince France, Spain and Germany to fund its Talarion UAV concept. The Talarion will probably also involve Turkey.

Another predominant theme in the defense sector is the drive by U.S. and European manufacturers to position themselves for exports in order to offset in overseas markets the revenue streams that have dried up back home. With fighter competitions running in India, Japan and Brazil, as well as other locations, there will be a continued focus on showcasing enhanced capabilities. Hometown favorite Dassault Rafale and the neighboring rival, Eurofighter Typhoon, enter the Le Bourget event with strong tailwind since making it into the final downselect round in India's medium multirole combat aircraft competition, beating out the Saab Gripen, Boeing F/A-18E/F, Lockheed Martin F-16 and MiG-35.

Also in the limelight will be some of the systems that have demonstrated their operational relevance in recent months in Afghanistan and over Libya, including the Typhoon, fresh off its combat debut in both air-to-air and air-to-ground roles. Although the Gripen will not be there, Swedish officials are expected to shed some more light on the single-engine fighter's operations in support of the Libya no-fly zone, where it has been used for air-to-air missions and reconnaissance roles. The MBDA dual-mode Brimstone also has received much scrutiny.

Despite a lack of money for new ideas, there should still be opportunities for some fresh thinking to come to the fore. MBDA, for instance, wants to showcase the latest of its concept weapons—ideas about how to deal with future challenges that are not necessarily representative of specific weapons. This time the goal is to look at maritime strike in complex littoral environments, says Steve Wadey, head of MBDA U.K.

Airbus Military will be promoting its latest concept, an airborne early warning C295 version. A prototype was unveiled days ago, with the goal of flying the aircraft for the first time in June.