Friday Jul 18 2008
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Farnborough International Airshow 2008 Jul 14 - Jul 20, 2008
Farnborough, Hampshire, UK
Airbus shrugs off downturn and unveils plans to raise production
Published: Jul 18, 2008 

Airbus is pressing ahead with its plans to raise commercial aircraft production by about a third by 2010 undeterred by growing uncertainties in the global economy and the heavy impact of surging fuel costs on airline finances.

In spite of pessimistic forecasts of falling orders, Airbus said yesterday it had enjoyed its second most successful Farnborough air show, with firm orders booked for 247 jets plus commitments for a further nine valued in total at $40.5bn at list prices before discounts.

Recent orders are heavily concentrated in the Middle East with Etihad, the Abu Dhabi carrier, placing orders this week for 100 aircraft including 55 from Airbus and 45 from Boeing, while DAE Capital, the leasing arm of Dubai Aerospace Enterprise, has finalised its purchase agreement for 100 aircraft from Airbus.

The preliminary DAE deal was announced last November but has only been taken into the Airbus order book this week. The Etihad orders cover deliveries until 2020.

Both Airbus and its US rival Boeing have enjoyed three years of record orders, and Airbus expected at the beginning of the year that new orders would fall by 50 per cent in 2008 to about 700.

John Leahy, Airbus chief commercial officer, said the group had already booked 730 net new orders this year after taking account of 38 cancellations and he forecast that new orders could reach about 850 in the full year.

The increasing rate of production is supported by the group's record order backlog, which stands at 3,700 aircraft equivalent to about six years of work.

Tom Enders, Airbus chief executive, said that in spite of concerns that the aircraft maker might face more airlines seeking to defer or cancel deliveries the group saw no reason to change its plan to increase production rates. "At this point we have no reason to question that. Of course we are watching the market and we will see again after the peak summer season is over."

Where orders had already been deferred, other airlines had been eager to acquire the earlier production slots, said Mr. Leahy.

Airbus's determination to continue to raise production is in sharp contrast to the much more cautious stance adopted by Boeing.

Scott Carson, chief executive of Boeing's commercial aircraft division, said this week that the group had no plan to increase the output rate of its 737 family of short-haul jets, its main volume product. Airbus production is forecast to rise to more than 600 jets a year by 2010, its highest level, from a forecast level of more than 470 this year.

It is increasing output of its A320 family of short-haul jets from 34 now to 40 a month by 2010.

Output of its wide body A330/A340 family of long-haul jets is being raised from eight to 11 a month in the same period, while the group is also hoping to reach a rate of four a month for deliveries of the A380 superjumbo, although it is still struggling to overcome difficulties in the production process, which have led to delays of more than two years in early deliveries.

Mr. Leahy said sales in coming years would increasingly be supported by replacement demand as much as by airlines seeking to expand.

The 46th edition of the Farnborough International Airshow celebrates its 60th Anniversary that commemorates its first show in 1948 held for the very first time at the Farnborough Aerodrome.
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