After Record Year, Airbus Predicts Orders to Drop

17 Jan

Despite signs of a deepening slowdown in Europe and North America and waning airline industry profits, however, executives at the European plane maker and its parent, European Aeronautic Defense and Space, said they were confident the group’s performance would continue to buck the broader economic downtrend.

“With our increased backlog of orders, our net cash, EADS has the capacity to resist if there is a worsening of the world economy,” said Louis Gallois, the EADS chief executive.

He added that the group expected a “significant” improvement in profit this year and planned to hire 9,000 employees, mostly in Europe, as it ramped up production to keep up with demand.

Airbus recorded net orders for 1,419 commercial jets in 2011, up from 574 in 2010, giving it a market share of 64 percent by volume, or around 54 percent by list-price value. Deliveries of new jets reached 534, up 5 percent from the previous year.


Airbus’s bumper year was due mainly to a rash of orders for a revamped version of its top-selling A320 single-aisle jet equipped with more fuel-efficient engines. Airbus started marketing the plane — the A320neo, which stands for new engine option — in late 2010, more than six months before Boeing followed suit with a rival product, the 737 MAX, last summer.

It was the fourth consecutive year that Airbus had outpaced its rival. Boeing last week reported net orders for 805 planes in 2011 and 477 deliveries.

With its marketing effort for the 737 MAX now in full swing, Boeing has begun to narrow the gap with the A320neo, with more than 1,000 orders and commitments from 15 customers, including American Airlines and Southwest Airlines, as of Jan. 5. Airbus has booked 1,226 orders so far for the A320neo.

Airbus expects new jet orders of between 600 and 650 planes in 2012.

Some analysts have expressed concern that the protracted sovereign debt crisis in Europecould disrupt financing for new jet purchases. Stricter capital requirements may edge some of the region’s more vulnerable banks, particularly in France, out of the aircraft finance business.

But Thomas Enders, the Airbus chief executive, said European customers represented only 16 percent to 17 percent of the 570 planes Airbus expected to be delivered this year, while North American customers represented 11 percent.

More than half of 2012 deliveries were destined for airlines in Asia, including a substantial share from the booming air travel markets in China and India, he said.

“Our business model is already heavily focusing on the growth markets, particularly in Asia and the Middle East,” Mr. Enders said. While he conceded that French and other European banks appeared to be retreating, at least temporarily, from jet financing, “there are more and more Japanese, Chinese and now Scandinavian banks as well that are interested” in filling the financing gap.

More airlines have also begun to tap the corporate bond markets for cash as well.

John Leahy, head of sales for Airbus, dismissed concerns about a financing shortfall in the near term, saying that financing for about half of the planes set for delivery this year had already been secured. “The first half of the year is already locked in, and a good portion of the second half as well,” he said.


“There are no white tails planned for 2012,” Mr. Leahy said, using the industry term for planes that end up with no owner and no logo painted on their tail fins if airlines cannot get the loans to pay for them.

On the advice of its auditors, Airbus did not include in its 2011 order tally a landmark deal for 130 single-aisle jets announced last summer with American Airlines, whose parent company, AMR, filed for Chapter 11 bankruptcy protection in late November.

Mr. Leahy said American’s chief executive, Thomas W. Horton, had committed to follow through with the purchase, but said a U.S. Bankruptcy Court judge was not expected to formally approve the deal before 2013.

-visit for the popular JETTAB Android tablet


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: