Booming Industry

Airbus Fears Bumpy Landing

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The order books are full but will the good times last?
  • Why it matters

    Why it matters

    Aircraft makers have strong order books, but future profits may be dented by economic weakness in Asia.

  • Facts

    Facts

    • For the first time in its history the aircraft manufacturer Airbus has orders in its books for more than €1 trillion.
    • The company wants to ratchet up its production capacity from 650 jets this year to 720 in the year 2019.
    • Demand for mid range aircraft is strong. Airbus is planning to produce 60 aircraft of the type A320, starting in 2019. Boeing wants to increase the production rate for the 737 by 2018 from currently 42 to 52 machines.
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    Audio

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The figures are difficult to digest. For the first time in its history the aircraft manufacturer Airbus has orders in its books for more than €1 trillion ($1.1. trillion). Airbus boss Tom Enders  said at a London press conference that it will take nine years to process the orders. And in order to shorten the waiting time a little, the company wants to ratchet up its production capacity from 650 jets this year to 720 in the year 2019.

The boom above the clouds seems to know no limits. But is it sustainable? Some 11,000 km south-east of London, at the Singapore Airshow in mid February, the mood was downbeat. Because for the first time in a long while, orders were in decline. There were meager deals for just 12 Boeing 737s, or one for six Airbus A350s.

The huge fall in the price of oil is partly to blame. And it is unlikely to change greatly in the near future, given the fact that Iran is getting back into the oil business. The cheap fuel means many airlines are letting their old, less fuel-efficient machines fly longer. The machines are often already paid for and written off for tax purposes, and the low operating costs mean they are earning money, even if fuel consumption is higher.

“We are seeing the first clients postpone delivery of aircraft already ordered due to the low oil price,“ said Bertrand Grabowski, board member at the DVB Bank.

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