More than $12 billion in airplane orders from lessors and Asia-Pacific carriers dominated the third day of the Farnborough Airshow, as manufacturers stood ready to raise their forecasts for the year on the back of strong demand.

Before most show attendees had even had breakfast, government-controlled British bank Royal Bank of Scotland acknowledged being the mystery buyer of nearly $8 billion in new passenger jets.

Leasing subsidiary RBS Aviation Capital put its name to orders for 52 Airbus A320 family planes and 43 Boeing 737 family aircraft, all of which had been previously listed on the planemakers' books as sales to unnamed buyers.

We always buy when we think there is demand and sell when we see no demand from investors, Peter Barrett, the chief executive of RBS Aviation Capital, said in an interview.

It reflects the underlying long-term trend that there is demand for leased airplanes, particularly for the narrow-body workhorses of the industry (the Airbus A320 and Boeing 737).

Add to that orders from the likes of Garuda, Thai Air, Qantas and Qatar Airways and manufacturers were ready to improve their forecasts for 2010 orders.

We've raised our orders forecast twice. We might do it a third time, Boeing commercial boss Jim Albaugh told Reuters in an interview at the show.

Airbus sales chief John Leahy told Reuters Insider TV on Tuesday that Airbus would surpass its own forecast for up to 300 orders this year as well, possibly hitting 400.

The civil side has had a good week but the worry remains that the mature markets of Europe and North America are not the ones that have been committing to new aircraft, said Howard Wheeldon, senior strategist at BGC Partners.

MODEST MILITARY

The military segment of the aviation industry is still at the show, and still selling despite a lack of public attention. In the suburbs of the air show, at the far end of the grounds away from most of the cameras, smaller contractors are working aggressively to drum up business from Africa and elsewhere.

At the same time, though, the Western majors are struggling with the new realities of defense spending.

UK Defense Secretary Liam Fox drove that home Tuesday with a speech at Farnborough in which he said the industry needed to cut its prices and deliver better value for money to taxpayers.

We're getting very close to the staring grid in terms of what and how deep the cuts will be, BGC's Wheeldon said.

Some may sense an opportunity in that cutting, among them Airbus parent EADS. The head of EADS North America reiterated in an interview that his business was looking at several different acquisition targets in the military services sector.

(Reporting by Reuters Farnborough bureau, editing by Ben Berkowitz)

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