Aircraft builders hit turbulence

Johannesburg - The world's biggest aircraft manufacturer, Airbus, says it has been forced by the global financial crisis and 2008's high fuel prices to halt investment in production capacity and cut jobs.

"We took a decision in 2008 to pause our ramp-up in production and maintain our production rates at current levels instead of increasing them," an Airbus spokesperson told Fin24.com.

The company delivered a record 483 commercial aircraft in 2008 - 30 more than in 2007. The number comprises 12 flagship A380 and 85 A330 and A340 series aircraft, while A318- to A321-generation aircraft made up the rest.

"We would be happy to have around the same number of deliveries this year, but we have contingency plans in case a reduction is required," said the spokesperson.

The Airbus figures compare favourably to its rival Boeing, which delivered 375 aeroplanes during 2008. Boeing's fuel-efficient 737-400 dominated the list, with 290 units delivered to airline companies around the world. South Africa's own Comair took delivery of four 737-400s.

However, both companies said they received higher new orders in 2008. Airbus said it received orders for 777 aircraft while Boeing received 662 new contracts, with demand for the all-new 787 Dreamliner remaining strong with 93 ordered.

That takes the production backlog of the respective companies to over 3 700 each, although Airbus has the edge in market share with 54% of new orders for commercial aircrafts.

Those came despite the financial markets crisis, which would potentially make funding the purchases difficult, in addition to higher fuel prices.

A combination of the turn-around programme, financial and fuel crises saw 123 order cancellations at Airbus. "One customer was bankrupted by the high fuel prices, and this accounts for 65 of the cancellations. Another 23 of the cancellations were customers cancelling their old A350 orders and converting to the new A350 XWB," says Airbus.

"With regards to financing, the situation is more difficult and we expect up to 50% of financing to be done by export credit agencies, doubling their participation."

That won't shield the respective companies' employees from job losses, as both have said they're cutting jobs.

In early January, Boeing said it had begun cutting about 4 500 jobs as part of an effort to ensure competitiveness and control costs; Airbus said its employees had been reduced by 5 000.

"We are taking prudent action to make sure Boeing remains well positioned in today's difficult economic environment," said Scott Carson, president and CEO of Boeing Commercial Aeroplanes.

- Fin24.com