CAROLE SHIFRIN WASHINGTON
Citing continuing uncertainty stemming from the terrorist attacks, Boeing has substantially scaled back its outlook for aircraft deliveries for the next three years, while Airbus is discussing order deferrals with some carriers.
"In the near term, we expect demand for new commercial airplanes to be sharply reduced," says Boeing chairman Phil Condit. The company is forecasting that the peak of 522 aircraft deliveries this year will fall to between 350 and 400 next, and cautions that "the downward trend" will continue in 2003. In the September quarter Boeing delivered 120 aircraft, down from an expected 139. It is also studying whether to close its 717 production line, and the launch of the sonic cruiser will most likely be delayed.
Although officials have declined to specify future production levels, some suppliers have suggested that Boeing's output could be cut nearly in half if passenger levels and airline finances do not show signs of an upturn next year. The company last month set in motion a scale back of its workforce that could total 30,000 by the end of 2002, and major engine makers followed with their own employee layoffs.
Although outright cancellations of aircraft orders remain relatively low, many carriers - even the strongest financially - have been seeking to defer deliveries of new aircraft until, it is hoped, passengers loads and revenues are on the upswing. Even perennially profitable Southwest Airlines, which has a fleet of 358 Boeing 737s, worked out an agreement with Boeing to defer deliveries of some aircraft until 2005 and 2008. It is also looking for a way to store, at an acceptable cost, 19 737s set for delivery between now and April 2002. One bright spot for Boeing was an order for 30 737s from China. Boeing also disclosed that orders for 10 aircraft earlier this year attributed to "unidentified customers" were slated for Chinese carriers.
Rival Airbus is in discussions with US Airways and other customers about delivery deferrals. Rainer Hertrich, co-chief executive officer of EADS, which has an 80% stake in Airbus, said some airlines were asking to postpone deliveries by six to twelve months, while others were hoping to maintain their delivery commitments but were seeking some financing aid.
The officials also believe the diversity of the Airbus order portfolio - with only one quarter slated for the USA - will help in the current climate. So far, the manufacturer is maintaining its forecast of about 320 deliveries for 2001.
Even before the terrorist acts, EADS officials said, the economic slowdown had caused Airbus to trim production growth. Afterwards, it decided to keep production in the mid-300s for 2002 and to put additional investments and hirings on hold.
Source: Airline Business
