More than $100 billion (£50.2 billion) of aircraft orders could be cancelled or postponed in the next couple of years as the high price of fuel drives airlines into bankruptcy or forces them to cut spending.

Analysts estimate that 20 to 30 per cent of the $530 billion order backlog held by Boeing and Airbus, the aircraft manufacturers, could be cancelled or delayed as the aviation industry heads towards a winter of turmoil. These cancellations would have a significant impact on aerospace suppliers such as Rolls-Royce, the engine maker.

Evolution Securities, the brokerage, has cut its forecast for Rolls's earnings per share by 20 per cent, which would represent a £150 million reduction in earnings.

A spokesman for Rolls declined to comment on the possibility of big order cancellations, but he did point out that the company now gets more than 50 per cent of its revenue from non-civil aerospace, including the defence market, which continues to experience strong growth.

Pessimism over the future of the airline industry is expected to lead to a muted Farnborough Air Show, which starts today. A few large orders are expected, including a possible $20 billion order from Etihad, the Abu Dhabi-based carrier, but the bonanza that has marked recent air shows is unlikely to be repeated.

The high price of fuel has already forced more than 20 airlines worldwide out of business and many more are expected to enter bankruptcy this year as their costs rise and passenger demand drops because of the economic slowdown in the United States and Europe. According to the International Air Travel Association (IATA), every $1 rise in the price of oil increases the fuel costs for the global airline industry by $1.6 billion.

Fears about a drop in aircraft orders come as Boeing and Airbus have a competitor in the trillion-dollar, shorthaul aircraft market for the first time in over a decade after the announcement yesterday that Bombardier, the Canadian engineering group, is to build a new passenger jet, the C-Series.

Part of the funding for the $3 billion project will come from the British Government because Bombardier plans to build the wings for the C-Series at its factory in Northern Ireland.

The C-Series' launch customer is Lufthansa, the German airline, which has bought 30 of the $46 million aircraft, worth about $1.4 billion at market prices. Bombardier becomes the first manufacturer to challenge the Boeing-Airbus duopoly in the large aircraft market since McDonald Douglas was bought by Boeing in 1997.

The massive investment required to develop large aircraft has allowed Boeing and Airbus to dominate this market, but now they face challenges from Bombardier and other aspiring competitors in Brazil, Russia, China and Japan.

The launch of the C-Series came as the heads of the world's big defence and aerospace companies arrived in Britain for the Farnborough show.

At a presentation on Saturday, EADS, the owner of Airbus, outlined its plans to cut costs further to cope with the rising value of the euro, which makes it more expensive to operate in Europe.

Airbus has already introduced a costcutting and restructuring scheme, called Power 8, which is intended to save €2.1billion (£1.68 billion) and eliminate 10,000 jobs. Louis Gallois, the chief executive of EADS, said that the company would extend this project with Power 8+ in order to achieve further savings.

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