Jul 14 2008
What Boeing/Airbus Troubles and Chinese Competition Mean To Travel
The airline industry may lose as much as $6.1 billion this year, according to the International Air Transport Association (IATA). I was thinking about the likely impact this has on Airbus and Boeing, and looked at each company’s recent comments thereon.
From my seat, it looks as though we’re going to be traveling on older planes for the foreseeable future.
Airlines are teetering on the verge of bankruptcy due to current and speculated future fuel costs. Given that, it isn’t likely that most of them will have access to the credit needed to acquire new and more fuel-efficient planes. Orders will likely be canceled or delayed.
Airbus.
The company indicated yesterday that as many as one-third of its airplane orders may be at risk due to the economic woes facing the airline industry. They have a record 3,663 plane backlog, worth an 
estimated $557 billion! Airbus is moving quickly to reduce costs and improve affordability. Last month they announced that they will begin assembling A320’s in Tianjin, China.
Boeing.
Boeing is, at least for the time being, taking a contrary and optimistic view. Their CEO, James McNerney, indicated this weekend that he believes soaring oil prices will speed up orders for more fuel efficient airplanes.
How does one company put a positive spin on the situation and the other a doomsday prediction?
I think Boeing just doesn’t get it and continues to believe that their orders are not at risk. They are also hoping to help the airlines in buying their new planes, via Boeing’s financial services company.
Chinese Competition.
China is committed to building commercial aircraft by 2020. They will be built by Shanghai-based Commercial Aircraft Corp. of China.
Originally it was thought that their first planes would be in the 737/A320 replacement size. They recently announced, however, it would carry more than 150 passengers, which would be more of a 757/A310 replacement.
Conclusion.
I expect to see Airbus predictions of cancellations and postponements to start coming to fruition for them and for Boeing in the very near future.
For the time being, we may well be riding in older and less fuel-efficient fleets. In the long run, don’t be surprised to be flying in planes either wholly made or assembled in China.
>Related Posts:
