European planemaker Airbus signaled the start of a downward cycle in production as global recession curbs jetliner demand, saying deliveries could fall and orders were set to tumble in 2009.
Airbus sales chief John Leahy literally rubbed a crystal ball in front of 200 journalists to highlight the difficulty of making predictions amidst the economic crisis, but said Airbus would probably sell at the lower end of 300-400 planes in 2009. “It will be a very soft year,” Leahy told a news conference on Thursday.
Airbus held the top spot in global airliner production for the sixth year running in 2008 with a 7% rise in reported deliveries to a record 483 planes. Airbus also confirmed it had outsold Boeing last year with net orders for 777 planes, down 42% from 2007, though figures from both planemakers show the economy halting a three-year aviation boom.
Both Airbus and rival Boeing are bracing for more turbulence in an industry damaged by recent fuel price spikes as the economic downturn hits air travel. They also face a battle to prevent airlines canceling or deferring old orders. Shares in parent company EADS rose 0.9%.
Airbus sold planes worth $100 billion in 2008, giving it a market share of 54% and lifting its backlog to 3,715 jets -- just one more than rival Boeing, whose sales had been expected to cool after it smashed an industry record in 2007.
Asked if Airbus was profitable following two years of losses, chief executive Tom Enders said: “I would say so, yes.” EADS will publish results on March 10.
Boeing’s 2008 production was hit by a 58-day machinists’ strike with deliveries falling 15% to 375 planes. Boeing sold 662 aircraft, down 53%, it said last week. The latest figures mean global large jetliner production shared by the two companies fell 4% to 858 planes last year. But analysts say steeper falls may be necessary as airlines cancel or defer orders to cope with the financial rout.
Airbus’s prediction that it will sell fewer planes than it makes in 2009 means it will be the first year either big jetmaker has failed to replenish its backlog since 2003. Enders said while he expected the level of deliveries to be in the “same ballpark” as the 2008 record, Airbus had drawn up contingency plans to cut output if necessary. “It is more difficult than ever to predict the order intake, but I estimate the book-to-bill (order to delivery) ratio will be below one in 2009,” he said.
Airbus cut its A380 superjumbo delivery forecast for 2009 to 18 planes after recently warning it would miss its previous target of 21 by a “couple” of planes. Sales chief John Leahy said Airbus expected to sell 10 superjumbos in 2009. Airbus said Air Austral, of the French overseas department of La Reunion, had provisionally bought two A380s in a single-class configuration, meaning it could seat over 800.
Airbus’s biggest concern for 2009 is to ensure it does not end up making planes which it cannot sell as airlines starved of credit renege on past contracts at the last minute. “The focus this year needs to be protecting deliveries,” Enders said. “We are examining the situation on a daily basis.” To prevent unwanted planes known as “white tails” after the missing airline livery filling their tarmacs, planemakers can offer credit, line up alternative buyers or cut production.
Airbus recently sold jets discarded by India’s Kingfisher to Nigerian carrier Arik, but such replacement deals are rare. EADS said on Tuesday it was conserving cash and freezing acquisitions to help prop up aircraft sales by offering credit. Airbus financing was at a 20-year low above $1 billion in 2008 but it says it could absorb up to $5-6 billion.
“Both traffic and financing are an issue. Financing is a more immediate issue but both are essential to the outlook,” Natixis Securities analyst Olivier Brochet said. Airlines group IATA has said the industry was “shrinking by all measures” after a 4.6% traffic drop in November. Boeing last week announced 4,500 job cuts. (Reuters)