AIRCRAFT PRODUCTION

Airbus flies ahead of Boeing in 2011

Airbus retained its position as the world's leading builder and seller of commercial jets last year, but acknowledged that 2012 will be a different story as the duopoly in the global market that the European plane maker shares with US rival Boeing Co becomes more balanced, reported the Wall Street Journal.

Thanks to a steady increase in its production rates, Airbus delivered a record 534 aircraft of more than 100 seats last year, a 4.7 percent rise from 510 in 2010 and 12 percent more than the 477 planes that Boeing produced, Airbus chief executive Tom Enders told a press conference.

The wholly-owned division of European Aeronautic Defence & Space booked 1,608 gross orders last year, marking a new industry record for annual orders, and putting in the shade Boeing's 921 orders. These numbers translate into a global market share of 64 percent for Airbus, compared with 36 percent for Boeing. This was mirrored by the result for orders excluding cancellations, with Airbus racking up 1,419 net orders compared to Boeing's 805.

In revenue terms, Airbus also came first. Its gross orders were worth US$168.8 billion, while net orders came in at $140.5 billion.

EADS "is a growth story and a cash machine" thanks to the surge in commercial-aircraft orders and higher prices, the aero-defense group's chief executive Louis Gallois said.

EADS revenue in 2011 was "nicely" above the 2010 level of US57.89 billion thanks to increased pricing and the surge in order intake at Airbus, Gallois said. EADS will see a "significant" rise in profitability in 2012, he added, helped by reduced losses from the Airbus A380 programme and stepped-up production.

EADS stock has risen 24 percent in the past year, the best performer among component stocks of the CAC-40 benchmark index.

However, the surge in orders as airlines rushed to buy a new fuel-efficient version of the A320 medium-haul jet will subside in 2012, Airbus chief operating officer, customers, John Leahy said.

Leahy said that for now there's no problem with aircraft financing even though some providers, notably French ones, have pulled out of the business. "It is tighter in 2012 than in 2011, but we think we'll be able to get through," he said.

More than half of this year's deliveries are assured of financing, he said, some with debt financing, some with airlines' own cash and some under sale and lease back schemes.

"The situation with French banks is that they are having some difficulty raising US dollars," he said, "but other banks around the world don't have that same problem."

Even as demand slackens this year, Airbus and Boeing will continue to dominate the market for large jetliners, Leahy said.
"Our goal is to remain in a stable duopoly with a market share of between 60 percent and 40 percent and I predict that in 2012 we will be down around 50 percent, probably even lower," he said.
Boeing is expected to keep pulling in orders for the 737 MAX, a re-engined version of the jet that's a workhorse for many low-cost airlines. Leahy said order intake this year is likely to be between 600 and 650 new orders, a steep drop from 2011.

With a year-end order backlog of 4,437 aircraft compared to Boeing's 3,771, Airbus reckons that it's fairly well shielded from any potential downturn in global air traffic that might accompany an economic slowdown and encourage airlines to hold off expanding or renewing their fleets. The current backlog represents more than eight years of production at current rates, but Airbus is stepping up output to reduce the long lead times between orders and deliveries. At the same time, Airbus has a policy of over-booking its delivery slots so that it doesn't end up with unsold aircraft on the tarmac.

Airbus said it's planning to increase deliveries in 2012 to around 570, mainly due to rising production of the fast-selling A320 family of medium-haul, single-aisle jets. Just over a year ago, Airbus decided to launch a re-engined version of the A320 that the company claims will offer 15 percent fuel savings compared to the current version. The new catalogue addition, called the A320neo, resulted in 1,226 firm orders last year, or three-quarters of total order intake.

Airbus delivered 26 of its A380 super jumbos last year and took in 29 orders. Leahy said 30 A380s should be delivered this year, and he's aiming to match that figure with fresh orders. He said customers are asking Airbus to work on a stretched version of the double-decker A380, which can already carry up to 850 passengers. He said a longer plane could add an extra 100 to 150 seats. Airbus is currently making A320s at a rate of 38 a month and plans to raise production to 42 a month by the end of this year.

Leahy cast doubt on Boeing's claim that it has over 1,000 firm orders and commitments for the 737 MAX, saying most of the commitments Boeing refers to seem to be non-binding "letters of possible interest" signed by airlines that say they like what they see and might buy it at some point.

"They haven't given prices to these people. They haven't given hard delivery slots or performance data—any money that was put down is totally refundable," Leahy told a group of reporters.

While Airbus took 70 percent of the market segment of smaller 100 to 200-seat aircraft, Boeing took three-quarters of the global market for wide-bodied jets with between 275 and 375 seats, thanks to its popular 777 jetliner and new 787-9 plane.

Airbus' rival in this category, the new A350-900, is due to enter into service in 2014, with a stretched version set to come to market by 2017.