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Airline Industry

Boeing, Airbus see weak demand last for at least two more years

Chan Sue Ling and Wendy Leung  Feb 03, 2010

Airbus SAS and Boeing Co., the world’s two biggest planemakers, expect a demand slump to continue for at least two more years as airlines pare growth following a record drop in air travel.

“The market will stay slow for new orders until 2012,” Airbus Chief Operating Officer John Leahy said in a Bloomberg TV interview at the Singapore Air Show yesterday. The planemaker expects to win between 250 and 300 orders this year, he said. That would be a third straight decline from the record 1,458 achieved in 2007.

Carriers have slowed expansion plans and cut capacity after global international air travel plunged 3.5 percent last year, the most since World War II. The industry will likely take three years to rebound from the decline, according to the International Air Transport Association.

“It’s been a tough road,” said Boeing’s commercial aircraft marketing head Randy Tinseth. “Things are better, but they can still improve a great deal more.”

Carriers including Singapore Airlines Ltd. and Cathay Pacific Airways Ltd. have said that bookings are picking up from last year’s low. Still, the Singapore-based carrier said this week it may be too early to call an end to the slump because of continued “uncertainties” about the global economy.

“No one has any real confidence,” said Jay Ryu, an analyst at Mirae Asset Securities Co. in Hong Kong.

China Competition

The expected rebound in aircraft orders may also coincide with new competition for Boeing and Airbus in China, the world’s fastest-growing air-travel market. State-controlled Commercial Aircraft Corp. of China’s 168-seat C919, the nation’s first narrow-body aircraft, is due to make its maiden flight in 2012 and to then enter service two years later.

China Southern Airlines Co. and Air China Ltd., two of the nation’s big three carriers, both said this week that they will support the domestic planemaker. The carriers operate at least 550 Boeing and Airbus planes between them, and Airbus expects the country to account for about a third of industrywide Asia- Pacific plane orders over the next 20 years.

Bombardier Inc.’s C-Series, which will carry as many as 149 passengers, is also due to make its maiden flight in 2012, with deliveries scheduled to start a year later. The Canadian planemaker anticipates slow growth in demand this year and next before a surge in 2012.

“When the airline industry really recovers in 2012, that’s when you will see large number of orders come in,” said Gary Scott, president of the company’s commercial-aircraft unit.

Boeing, Airbus see weak demand last for at least two more years
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