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'Cut single-aisle output by 10 a month': Udvar-Hazy
ILFC boss urges Airbus and Boeing to remove 150 narrowbodies from 2009/10 deliveries
Airbus and Boeing should cut single-aisle production by around 10 units a month next year to avoid a glut of airliners on the market, warns International Lease Finance chairman Steven Udvar-Hazy, who says the airframers are "starting to listen" to his pleas to reduce output.
"We are putting a lot of pressure on them to do something on production rates," he told Flight's Airline Business Daily at the Latin Airline Leaders Forum in Cancun in November.
"From the June 2009 to June 2010 period, if they knock out 120-150 single-aisle aircraft [from the total] it would not hurt the industry," says Hazy. "This is only a total of five a month on each side. If they do nothing there's going to be a surplus."
Although ILFC has relatively low aircraft delivery commitments for the next two years, it is likely that there will be distressed airlines that are unable to fulfil their aircraft orders. "There could be opportunistic transactions for us to pick up some new and young used aircraft," says Hazy.
Airbus executive vice-president of programmes Tom Williams, who predicts that the airframer will achieve a net order total of 800 aircraft in 2008, says that while the Airbus order backlog is "significant" at 3,700 aircraft, he is "under no illusions" that the financial crisis will cause some of this to "disappear".
A review of the business situation conducted in September concluded that there was some softening in the "outer years" of the backlog, says Williams, and that it was "prudent to have a pause in the production ramp-up".
Airbus chief executive Tom Enders told the International Herald Tribune last week the airframer does "not exclude further action if the situation deteriorates".
Williams describes recent the fuel price decline as "a doubled-edged sword" as airlines could be tempted to "hang on to older aircraft for longer". This contrasts with the situation that existed back in July at the Farnborough air show when Williams noted that although financing was a problem, the tendency to defer new aircraft and retire older, less-efficient types had been dampened by spiralling fuel prices. Now the trends in the finance market and fuel prices are incentivising deferrals, but Williams is confident that vacated delivery slots will be snapped up quickly, citing the interest in Skybus's recent cancellations. There is still demand for fuel-efficient aircraft with lower maintenance costs, he says.
While Airbus single-aisle production will rise from 34 a month to 36 by December, a plan to increase it to 38 in spring 2009 and 40 by the end of December has been deemed too aggressive, as it would stretch the supply chain.
Boeing 737 output had been averaging 30 a month in the period immediately before the machinists' strike in September.
Boeing 737 output had been averaging 30 a month before the strike
Source: Flight International
