Investment bank UBS predicts there will be a surplus of 1,400 airliners at the end of this year, necessitating production cuts at both Airbus and Boeing.
The bank made its forecast in a detailed report at the end of August on Airbus parent EADS, warning that the "significantly reduced production rates" required to address overcapacity were "currently not being planned for". It expects Airbus production rates to fall by about 40% by 2012.
Separately, lessor AWAS has told Flightglobal's financial news service Commercial Aviation Online that, according to its own internal analysis, there will be an aircraft surplus of about 1,000 aircraft by the end of this year and about 1,600 by the end of 2010.
The lessor believes the global economy will enter recovery around the middle of 2010, with air traffic beginning to grow beyond pre-recession levels in 2011, at an annual rate of about 5%. This will reduce the airliner surplus to about 750 in 2011 and to about 400 in 2012. All AWAS figures include regional airliners.
In its report, UBS notes that EADS management has been able to deliver on its financial guidance thanks to Airbus's backlog management, in which strong airlines are moved forward in the schedules to take aircraft deferred by weaker ones. However, backlog management is "covering up the need for cuts in production rates", writes the bank.
Taking this into account, as well as retirements and the prospect of 700 parked aircraft coming back into the active fleet, the only way to deal with the overcapacity is to cut production, according to UBS.
Passenger traffic would have to grow at the rate of an estimated 14% to avoid production cuts, way beyond the 4-5% growth projected.
UBS concludes that there would have to be 3,600 aircraft retirements to avoid cutting production, another unrealistic possibility.
Source: Flight International
