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 WEDNESDAY, FEBRUARY 10, 2010 2:01 am |
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Local News 
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Jet orders not so solid for Boeing, Airbus EVERETT -- This economic downturn is robbing jet makers the Boeing Co. and Airbus of their recession-proof customers."There are no safe havens," said Richard Aboulafia, an analyst with the Teal Group. Low-cost carriers and leasing companies that previously saw Boeing and Airbus through tough times may not be the "go-to" customers this time around. Although the jet makers have record backlogs, that won't protect them from customer deferrals, which could mean layoffs for Puget Sound area workers. Both companies have more order cancellations in 2009 than new orders. Boeing and Airbus both have 14 customers each with 70 or more jets on order, with leasing companies making up more than a quarter of those top orders. Aircraft lessors, previously considered solid customers, have turned squishy in recent months. On Monday, the U.S. government gave the OK to back bidders for International Lease Finance Corp., a major Boeing and Airbus customer. ILFC's parent company, AIG, warned its leasing unit might not be able to cover its $6.2 billion debt load in 2009. Boeing's shares fell below $30 Monday for the first time since 2003 on the AIG report. ILFC's chief, Steven Udvar-Hazy, has warned that Boeing and Airbus may need to cut jet production by as much as 35 percent. On Tuesday, another aircraft leasing company faced troubles brought on by its parent company. Analysts speculated that GE Commercial Aviation Services's parent company, General Electric, will lose its top AAA credit rating this year, which could trickle down to the aircraft leasing division. While the financial meltdown hinders the ability of leasing companies to broker jet deals, the slowdown in traffic is hurting even low-cost carriers. Many low-cost carriers operate single-aisle jets, leaving Boeing's 737 and Airbus' A320 susceptible to deferrals. Airbus will slow its A320 line down in October, but Boeing hasn't announced a production cut yet. Boeing's top low-cost carriers include Ryanair and Southwest -- each with 100 or more orders for single-aisle 737s. Ireland's Ryanair has bucked market trend the last two months, seeing an 11 percent upswing in traffic. But Southwest reported a drop of 6 percent or more in January and February. The Texas-based carrier, which operates an all-737 fleet, announced plans in January to scale back deliveries to 53 jets, down from 94, from 2010 to 2012. Both Boeing and Airbus have been pinning growth hopes on the Middle East. But analyst Aboulafia sees some concerns there as well. While the drop in fuel prices has been good for many carriers in the U.S. and in Europe, it could hurt Middle Eastern leasing companies and airlines backed by a government that profits from high oil prices. The region continues to see a modest increase in air traffic; passengers were up 3.1 percent in January. However, the region's carriers had expected even more, increasing their capacity by 10.8 percent. That means it won't need more jets as quickly as it thought. Aboulafia believes that Airbus stands to lose the most if the region doesn't pan out -- a third of Airbus' widebody jet backlog comes from Middle Eastern companies. Legacy carriers like U.S. Airways and Continental have been hurt by the economic downturn as well. In December, the International Air Transport Association had predicted that U.S. carriers would earn a profit in 2009. But declines in traffic outpaced capacity cuts in January. U.S. Airways, Airbus' top customer with 139 aircraft on order, said it has financing for 20 A320 deliveries this year. But the airline is "evaluating financing alternatives" for the five A330s due for delivery. If Airbus and Boeing have to scale back jet deliveries significantly, their development programs may suffer, Aboulafia said. At this stage, a drop in cash flow could hinder development of Airbus' new A350 XWB. Europe's stimulus plan hasn't been as robust as the United States', creating uncertainty about funding for the program. "It's a fair bet (Airbus is) going to need help to get the A350 to market," Aboulafia said. Analyst Aboulafia sticks by his assessment that the commercial jet market will rebound by 2013. But he sees a rough few years ahead -- trouble that likely translates into further layoffs for Boeing workers. Last month, the company surprised many by issuing layoff notices to 452 of its Machinists after saying it wouldn't cut its production work force. "We're a long way from the bottom," Aboulafia said. The Associated Press contributed to this report. |
- Sorry, Hawkeye; M*A*S*H gets bowled over
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- County archive software paid for but waiting for set-up
- Ruling expected on Sultan beating statement
- ‘Roadkill’ caucus seeks a voice for centrist Democrats
- Police seek witnesses in two accidents
- PAWS calls out for critter care-givers
- Boeing has a busy test schedule
- Ex-Boeing engineer jailed for espionage
- Morning mystery: What happened to House Bill 3181?
- Lynnwood sets height limit on grass: 8 inches
(10) - State Senate votes to toss I-960's tax-raising hurdle (9)
- School levies in Snohomish County all passing, Marysville bond failing (6)
- A tidy lawn could be law in Lynnwood (4)
- Vote on school levies by Tuesday (3)
- Two suspects sought in Everett shooting that injured two (3)
- County archive software paid for but waiting for set-up (3)
- Former Whidbey student shot (2)
- Snohomish County's bargain housing won't last (2)
- Reader poll: Should the WIAA add lacrosse as a sanctioned sport? (2)
- Jackson girls outlast Meadowdale owdale
- OBT raises barre in children’s program
- Junior firefighters
- School levies passing
- Mavericks topple Wolfpack
- Get a second look at Second City Feb. 13
- Sports Briefs
- Warriors advance 11 to regional meet
- Arlington's Cascade Valley Hospital celebrates expansion, national award and 100 years of service
- Business Licences Feb. 2010
- Technology tips for launching your own business
- Business Events Feb. 2010
- Tech Talk: No excuse today for going without a Web site
- State already raising fees and rates that restrict business growth
- Some legislators again targeting people’s initiative petition rights
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