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Thursday 16 October 2008
Airbus to Delay Increase in Production
Airbus said Wednesday that it would delay an increase in the production of commercial planes because the global financial crisis might reduce passenger traffic and cause airlines to postpone taking deliveries. Listen PDF
PARIS: Airbus said Wednesday that it would delay an increase in the production of commercial planes because the global financial crisis might reduce passenger traffic and cause airlines to postpone taking deliveries.
“This is a prudent decision following our current market view, but we’ll continue to monitor the markets and are preserving our ability to act at the same time,” the chief executive, Thomas Enders, said in a statement in response to inquiries from Bloomberg News.
Airbus will maintain production of A320 narrow-body jets at 36 a month, the current level, after saying earlier that it would raise the monthly rate to 40 by 2010.
The company will also slow an increase in output of wide-body planes, stopping at 10 a month by 2010 instead of an intended rate of 11.
Airbus is now building eight wide-bodies monthly.
“It’s the right decision, but it’s a tough decision,” said Nick Cunningham, who is an analyst at the London investment bank Evolution Securities and had criticized the company’s plans to increase production.
“The problem they face now is, the orders are all specific. It’s fine to say, ‘You shouldn’t build that many,’ but when it comes down to it, which airlines’ deliveries are they going to cut? That’s a more difficult process.”
Even so, some of Airbus’s biggest customers have said the plan to raise production was not sustainable. More than two dozen carriers have failed in the past nine months and other airlines are cutting capacity and parking planes.
John Plueger, chief operating officer of International Lease Finance Corp., which is the biggest customer of Airbus, said last week that it should consider a slowdown.
Boeing, the lone competitor to Airbus in supplying the largest airliners, has been stalled in its production for more than five weeks by a machinists’ strike. This is delaying the introduction of the 787 Dreamliner, which was supposed to fly for the first time next month.
Airlines generally secure bank financing or other loans two to six months before planes are handed over, so the global banking crisis may start affecting deliveries this year.
Lufthansa said Friday that the proportion of seats filled at its main passenger service fell in September by the greatest amount since April 2003.
British Airways, SAS and the seven largest carriers in the United States all reported drops in September traffic as the banking crisis shook consumer confidence.
Shares of European Aeronautic Defense & Space, the parent of Airbus, fell 93 euro cents, or 8.38 percent, to close at – 0.17 on Wednesday.
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Airbus to Delay Increase in Production
Bloomberg News
15 October 2008
PARIS: Airbus said Wednesday that it would delay an increase in the production of commercial planes because the global financial crisis might reduce passenger traffic and cause airlines to postpone taking deliveries.
“This is a prudent decision following our current market view, but we’ll continue to monitor the markets and are preserving our ability to act at the same time,” the chief executive, Thomas Enders, said in a statement in response to inquiries from Bloomberg News.
Airbus will maintain production of A320 narrow-body jets at 36 a month, the current level, after saying earlier that it would raise the monthly rate to 40 by 2010.
The company will also slow an increase in output of wide-body planes, stopping at 10 a month by 2010 instead of an intended rate of 11.
Airbus is now building eight wide-bodies monthly.
“It’s the right decision, but it’s a tough decision,” said Nick Cunningham, who is an analyst at the London investment bank Evolution Securities and had criticized the company’s plans to increase production.
“The problem they face now is, the orders are all specific. It’s fine to say, ‘You shouldn’t build that many,’ but when it comes down to it, which airlines’ deliveries are they going to cut? That’s a more difficult process.”
Even so, some of Airbus’s biggest customers have said the plan to raise production was not sustainable. More than two dozen carriers have failed in the past nine months and other airlines are cutting capacity and parking planes.
John Plueger, chief operating officer of International Lease Finance Corp., which is the biggest customer of Airbus, said last week that it should consider a slowdown.
Boeing, the lone competitor to Airbus in supplying the largest airliners, has been stalled in its production for more than five weeks by a machinists’ strike. This is delaying the introduction of the 787 Dreamliner, which was supposed to fly for the first time next month.
Airlines generally secure bank financing or other loans two to six months before planes are handed over, so the global banking crisis may start affecting deliveries this year.
Lufthansa said Friday that the proportion of seats filled at its main passenger service fell in September by the greatest amount since April 2003.
British Airways, SAS and the seven largest carriers in the United States all reported drops in September traffic as the banking crisis shook consumer confidence.
Shares of European Aeronautic Defense & Space, the parent of Airbus, fell 93 euro cents, or 8.38 percent, to close at – 0.17 on Wednesday.
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