LE BOURGET, FRANCE — The head of Boeing’s commercial jet division sought Monday to dispel some of the palpable pessimism at this year’s Paris Air Show, arguing that the global economy was showing signs of a recovery and predicting a resumption of growth in airline traffic as early as 2010.
“At this point it appears to us that the economic conditions have bottomed,” said Scott Carson, chief executive of Boeing Commercial Airplanes. “If they have bottomed and a recovery comes next year, I think we have a shot at getting through.”
Boeing has eschewed any slowdown of its assembly lines this year, though it expects to cut production rates for its long-range, wide-body 777 jet by 28 percent in mid-2010. Planned ramp-ups of 767 and 747 production were shelved. Its European rival, Airbus, has reduced output of both its A320 single-aisle plane and its A380 “superjumbo” while abandoning earlier plans to increase production of its wide-body A330.
Mr. Carson said the company’s moves on wide-body production were a specific reaction to the decline in air freight traffic that began in the fall of 2008. World air cargo traffic fell about 6 percent in 2008 and is expected to plunge by a further 17 percent in 2009.
“There remains some risk to the freight side but also an opportunity,” Mr. Carson said. “The next six months are going to be incredibly important to us as we watch to see if inventory rebuilding begins — which I believe it will.”
“It feels to me like we can manage our way to a recovery,” he said.
Mr. Carson added that he believed the current credit squeeze affecting airlines would be “short-lived” and that a “more normal trend” in lending would emerge by the second half of 2010.
Mr. Carson’s optimism was not universally shared by other participants at the Paris air show, however, where a thick, grey mantel of clouds hung like an unwanted metaphor over the opening day’s proceedings.
“You’ve got to look at the post-recession environment,” said Sash Tusa, an independent aerospace industry consultant in London. “What will be the effect of a rising interest-rate environment?”
Referring to Mr. Carson, Mr. Tusa added, “Financing orders a year out from now is not going to be as rosy as he thinks.”
The global economic slowdown has hit the airline industry hard, with passenger traffic expected to fall by 8 percent this year and cargo volumes down 17 percent. Just this month, the International Air Transport Association nearly doubled its forecast for 2009 industry losses to $9 billion from an earlier prediction of $4.7 billion. The industry lost $10.4 billion in 2008.
“I think the winter is going to be horrible” for air travel, said Nick Cunningham, an aerospace and airline industry analyst with Evolution Securities in London. “Returning to growth again is still about another year out — in other words, you’re looking at another 12 months of traffic still declining.”
“This is not a recovery,” Mr. Cunningham said. “This is just the worst juncture for year-on-year decline.”
Airbus, for its part, remains decidedly more cautious than its competitor. Over the weekend, Louis Gallois, chief executive of EADS, the parent company of Airbus, said that it was still impossible to predict when an economic turnaround might come.
“We have no capacity now to see what will be the depth of the crisis,” Mr. Gallois said.
Boeing last week lowered its 20 year market forecast for the first time in ten years, albeit only slightly. The Chicago-based company said annual air traffic growth, which has averaged more than 5 percent over the past 30 years, would dip to 4.9 percent per year over the next two decades. Aircraft deliveries for the period would fall by just 400 planes to 29,000, Boeing predicted.
Randy Tinseth, Boeing’s vice president of marketing, acknowledged that the forecast was based on assumptions made earlier this year about air traffic trends, which at the time assumed only a 5 percent decline in passenger traffic. Boeing plans to publish a revised forecast after the summer, Mr. Tinseth said.
Mr. Carson said that he did not expect the credit crisis to have a significant impact on the company’s deliveries in the near term. Boeing has a total order book valued at around $265 billion, equivalent to around 7 years of production at current rates.
“We believe we have the most coveted backlog in this industry — perhaps in the history of this industry,” Mr. Carson said.
Included in that backlog are around 860 of the company’s newest flagship, the 787 “Dreamliner,” which is due to make its first flight later this month and see its first delivery to All Nippon Airways of Japan in the first quarter of 2010. Mr. Carson said he did not foresee any of the airline customers lined up to buy the first of these planes running into financing trouble.
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