Kuala Lumpur: GE Aviation, a unit of General Electric Co and the world’s largest maker of jet engines, expects orders this year to halve as airlines slow plane buying amid a slump in travel demand.
Jack Lutze, vice-president of sales for Europe and Africa said on Tuesday that some deferrals were likely for next year’s deliveries but only a few cancellations, a sign that more airlines are likely to postpone plane buying in the downturn.
“Everybody is looking to push back 2010,” Lutze said on the sidelines of the International Air Transport Association’s (IATA) annual meeting in Kuala Lumpur.
“This industry lurches from boom to bust,” he said adding: “We lag the industry on the way down and on the way up.”
“GE Aviation still has an order backlog worth years of production,” Lutze said, after airlines went on an expansion drive earlier this decade with $500 billion worth of future plane orders placed by IATA airlines based on today’s list prices, according to Reuters calculations.
But airlines have been hit in the past year’s financial crisis by weak passenger and business travel demand, a slide in air cargo trade, trouble getting financing for new planes and by volatile oil prices.
Top plane maker Airbus said on Monday that it would be a tough year for orders and next week’s Paris Air Show would be nothing like last year.
GE Aviation, which makes engines for plane makers such as EADS unit Airbus and Boeing, said in January that it aimed to reduce its white-collar staff by more than 1,000 people this year, but did not plan to trim its manufacturing headcount.
The job cuts, off a base of 16,000 salaried employees, would come through attrition, retirement, buyout packages and some layoffs. Fellow engine maker Pratt & Whitney, a unit of United Technologies Corp, is also laying off 1,000 jobs.
Lutze said that the focus for GE Aviation was to maintain existing orders, get customers needing engine servicing or parts to pay up, and win new orders.
“Cash is king for us too,” said Paris-based Lutze.
The mood at the IATA meeting in the Malaysian capital was fairly grim with the association forecasting industry losses would be $9 billion this year, nearly double a forecast made just three months ago.
Many airline CEOs at the event said that this was the toughest environment they had faced and some said that they were considering deferring orders, though most have been careful to avoid mentioning cancellations.