As airliner output heads to record levels, two leading aircraft lessors have urged Airbus and Boeing to re-examine their production rates amid warnings that the current market turmoil will hamper the availability of capital to finance aircraft.
The two major airframers have delivered a combined 674 aircraft so far this year, and before the current industrial action at Boeing total 2008 output was forecast to surpass 900 aircraft.
But Flight's Commercial Aviation Online reports that at this week's International Society of Transport Aircraft Trading (ISTAT) European conference in Prague, senior executives from International Lease Finance and CIT Aerospace became the first high-profile customers to urge a rethink on output levels.
"Boeing and Airbus should take a look at eventsand take a serious look at production rates," said ILFC president John Plueger. He likened the current state of the financial crisis to a "patient in an emergency room with shock pedals being applied".
Jeffrey Knittel, president of CIT, echoed Plueger's production concerns: "This is the time to pull back and lower [production] rates," he said, because the market "can see clouds on the horizon".
He added that the strike at Boeing is "helpful" as it is reducing the flow of aircraft into the market.
Knittel also warned that the aviation industry is facing an unprecedented challenge in raising capital. "This is the first time we are talking about the availability of capital instead of price," he said. "Historically, we have paid more to get capital, but the reality iswill there be enough capital for the delivery of airplanes?"
He added: "No-one can say where the capital is coming from or how it will work."
Jose Abramovici, global head of aviation and rail finance for French bank Calyon, told the ISTAT conference that he anticipated a $20-25 billion funding gap next year. Of the $70 billion in financing needs in 2009, $15 billion will be made up of cash contributions, he said. This leaves $55 billion in financing in which Abramovici anticipated export credit agencies would contribute $15 billion and aviation banks $15-$20 billion.
Abramovici believed that several sources could step in to fund the shortage including sovereign banks, sovereign funds, hedge funds and manufacturer financing.
Source: Flight International
