Airbus sees slow sales, flat output

Airbus is sticking to a sales target of 300 planes for 2009, but sees a slow return to a healthy flow of new orders over the next two years, its top sales executive said.
Despite gloom in the industry, Airbus also expects to keep output flat as the “panic” of the economic crisis wears off and some airlines speed up deliveries they deferred after the economy sank last year, John Leahy told Reuters Television.
“Three hundred is still the target (for 2009) … we’re still aiming for it. It’s a stretched target now, but I think we’ll get close. We are getting a lot closer than many people think,” Leahy said in an interview at the Dubai Air Show.
“It will probably be another two years of low incremental orders, but still we can try and keep very high production levels.”
The timing echoes comments by Boeing’s top commercial executive to Reuters earlier this week.
Airbus has 166 firm orders so far this year, including 15 signed at a subdued Dubai Air Show, which contrasts with the order frenzy seen at the same event two years ago.
Leahy said there could be a partial breakthrough in coming months on one of the few large deals around, a contest between Airbus and Boeing to provide some 150 aircraft to UAL Corp’s United Airlines, while suggesting little would happen this year.
“This might happen in two tranches. First, a wide-body deal for 20, 30 wide bodies and then come back six months from now and then maybe look at other aircraft,” said Leahy, who is the Chief Operating Officer for Customers at the European plane maker.
Emirates airline said this week it was in talks with Boeing Co and Airbus to buy “tens of planes,” possibly 777s and A330s, as it prepares for a recovery.
But Leahy, who oversaw the sale of 58 A380 super-jumbos to the airline, said he would not slash prices for a quick deal.
“Pricing is relatively stable. I’m not saying that we are increasing prices through the recession, but we’re not really discounting a lot as industry forecasters say. If the deal isn’t acceptable, it isn’t a fire sale and we say no and go for a nice lunch.”
Crucial winter
Leahy said EADS unit Airbus had a backlog of 3400 orders that would help it maintain its current record production levels.
This winter could be the trigger for any decision to cut, amid industry fears that airlines have failed to build up cash reserves during the northern hemisphere’s tourist season.
Keeping up production depends on airlines having enough funding to pay for aircraft when they are ready for delivery.
“Right now we’ve told our suppliers we stay flat at rate 34 (a month), but we are vigilant … because this winter is going to be tough. I think if we get through this winter we see a pretty spring ahead of us,” Leahy said.
Asked what kind of contingency planning Airbus had for any cuts, he said that single-aisle production tended to be altered in stages of two aircraft per month, meaning that, if there is a cut, the next step down could be to 32 a month.
On production of the future A350 mid-sized jet, which is due in 2013, Airbus is determined to avoid a repetition of two-year production delays on the A380 super-jumbo and is monitoring its rival’s progress on the delayed Boeing 787 Dreamliner.
“Having gone through the A380, learning from our mistakes, watching what is happening with the 787 and coming out four years after the 787, I think we should all be shot for gross incompetence if we have another screw-up in the A350 programme,” Leahy said. “I’m sure we’ll be on target.”
Ethiopian Airlines placed an order for 12 A350 jets earlier in the week, bringing sales of the future mid-sized, long-range passenger jet above the 500 mark.
Boeing has won 840 sales for the 787. It repeated this week that a first flight would be made this year.

Pic: Boeing 777 plane