2009 tough year for orders: Airbus

2009 tough year for orders: Airbus
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First Published: Mon, Jun 08 2009. 01 14 PM IST
Updated: Mon, Jun 08 2009. 01 14 PM IST
Kuala Lumpur: European aircraft manufacturer Airbus said on Monday that 2009 would be a tough year for plane orders, with quite a few being deferred, although it did not expect many more cancellations.
United Airlines’ plans to order as many as 150 new planes from Airbus or rival Boeing showed the market was starting to turn, Airbus sales chief John Leahy told Reuters.
“This is a tough year for orders,” Leahy said in an interview on the sidelines of the annual meeting of the International Air Transport Association.
Asked about what the United tender meant for the industry, he said: “It’s indicative of the fact that the market is starting to turn. We’re starting to see more activity. We are in negotiations with various airlines about new orders.”
Both Airbus and Boeing have suffered as travel demand has dried up in the global economic downturn, prompting several airlines to cancel or defer orders.
Airbus expects to report some orders at the Paris Air Show next week but they will be nothing like last year, Leahy said.
“There will at least be a few announcements, but I can absolutely assure you it will be nothing like the 400 orders we had at last year’s airshow,” Leahy said, referring to the annual event that alternates between Paris and Farnborough in Britain.
He also said he saw several orders being deferred but he did not expect many order cancellations.
“Cancellations are not as much of an issue as deferrals. I don’t think we’ll have that many more cancellations,” he said.
Shares in parent EADS opened up 0.9% at €11.8.
Market is not dead
Airbus, the world’s largest producer of commercial airliners ahead of Boeing, has net orders for just 11 aircraft so far this year after cancellations for 21 planes by end-May.
Leahy’s comments follow the positive outlook from some global policymakers and economists about a recovery in the wake of recent data such as slowing US job losses.
However, analysts say it remains unclear whether the market for airliners, such as the next-generation mid-size planes now being developed with a $200 million price tag, has hit bottom.
“I guess this won’t just happen overnight but at the same time it is clear that it shows that the market is not dead, so it is a bit of both,” said Paris-based aerospace analyst Olivier Brochet of Nattixis Securities of the United tender.
Analysts say United is certain to drive a hard bargain as the planemakers scour a thin market for orders. United is an existing customer for Airbus short-haul planes following an epic battle in the early 1990s, but a Boeing client for long-haul.
Airlines have cut capacity and jobs in response to a slide in profits, rising fuel prices and weak demand, made worse by the recent outbreak of the H1N1 flu virus.
Leahy said more consolidation in the industry was “definitely a possibility” as the downturn squeezes earnings.
Shares of China Eastern Airlines and smaller Shanghai Airlines were suspended on Monday after media said the two loss-making carriers were close to a merger deal.
IATA forecast global airlines could lose $9 billion this year, nearly double its estimate of just three months ago.
Leahy told Reuters on Sunday that Airbus was maintaining its 2009 sales target of 300 gross orders, but it was more difficult to accomplish. Airbus has booked 32 gross orders to end-May.
The head of IATA told Reuters last week that plane orders could fall 30 percent in 2010.
Separately, Leahy told a small group of reporters its A330-200 aircraft was safe and was essential for the airline industry.
“It’s the backbone of the industry,” he added.
An Airbus A330-200 operated by Air France crashed in the Atlantic Ocean last week, killing all 228 on board.
Investigators are considering the possibility that the speed sensors may have iced up but say it is too early to single this out or pinpoint any possible cause with the information to hand.
Air France said at the weekend it was speeding up the replacement of speed sensors after first noticing icing problems in May 2008 and disclosed disagreements with Airbus on how to act on the speed sensor problems before the crash happened.
Airbus said it could not comment during the official crash investigation.
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First Published: Mon, Jun 08 2009. 01 14 PM IST
More Topics: Airbus | Slowdown | John Leahy | Boeing | Airlines |