Aircraft deliveries may fall 30pc: Trade group

Airbus and Boeing deliveries may fall 30 per cent in the next year as carriers from Singapore Airlines, Asia's most profitable, to discount flyer Southwest Airlines trim capacity.

That's the assessment of Giovanni Bisignani, chief executive of the airlines' biggest trade group. The scramble by many of the largest carriers to offer fewer seats by parking planes in the desert or leasing them to others will deeply hurt the two manufacturers, the only competitors in selling the biggest jets, Bisignani said in an interview.

"We've seen all the numbers getting worse," Bisignani said by telephone from Kuala Lumpur, where the International Air Transport Association will hold its annual meeting next week. "Past experience shows us that in previous recessions, there's been a reduction of 30 per cent a year."

Bisignani plans to announce Iata's new industry forecast for 2009 on June 8. The group's 240 members collectively carry 94 per cent of the world's airline traffic.

The figures will be "substantially worse" than the March projection for losses of US$4.7 billion ($7.4 billion), he said. The health of planemakers is deteriorating as continuing declines in traffic, particularly in lucrative premium travel, and difficulties in persuading banks to finance aircraft purchases will force a reduction in deliveries, Bisignani said.

More airlines will defer or cancel planes before the recession ends, he added.

Air New Zealand's first Boeing 747-400 yesterday headed for a scrapheap in the United States to be dismantled for parts in what the airline said was a sad and very visible example of the effects of the economic downturn.

Toulouse, France-based Airbus, and Boeing, with its headquarters in Chicago, are more optimistic. Airbus predicts 2009 deliveries to be "flat" compared with 2008, which was a record year, according to chief operating officer John Leahy.

"We'd hope to stay flat through 2010," Leahy said in an interview.

Boeing hasn't released its projection for 2010, according to Bernard Choi, a Boeing spokesman. The planemaker has said it will cut production of the 777 by 29 per cent starting in June 2010 and won't raise rates for the 747 and 767 as had been planned. Boeing wants to keep manufacturing steady on the 737, its best seller.

So far this year, predicted aircraft deliveries are holding up, with Airbus expecting to hand over 480 planes, little changed from the 483 in 2008, and Boeing projecting 480 to 485 deliveries. Even so, many of the aircraft delivered in 2009 had financing arranged before economic growth tumbled.

- BLOOMBERG