Airbus Trims ’03 Delivery Goal
More clouds gathered over a gloomy global airline market Tuesday, as Airbus cut its forecast for jet deliveries and two European carriers signaled they would press the plane maker and its archrival Boeing for cheaper aircraft.
Toulouse-based Airbus, which competes with Boeing Co. in the market for large commercial airliners, said it had cut its target for 2003 deliveries to 400 planes from a previous goal of 450.
Owned by European aerospace giant EADS and Britain’s BAE Systems, Airbus also admitted for the first time that it was discussing delivery delays with a number of airlines.
Carriers on both sides of the Atlantic have been stung in recent months by weaker economic growth. High-margin corporate travel, which accounts for as much as two-thirds of airline industry revenue, has been particularly hard hit as struggling companies scramble to cut costs.
“The situation is more clear now,” said a spokeswoman for Airbus. “There is a softening of the market, and we are aiming for 400,” she said when asked whether the group was cutting its delivery goal for 2003 from 450.
The news contributed to a drop in EADS and BAE Systems shares in Europe and forced the parent group to issue a statement reaffirming its profit targets. EADS shares slid 5% in Paris trading, while BAE fell 1.6% in London trading.
“Even this lower target is ambitious in the current environment,” said Nick Cunningham, analyst at Schroder Salomon Smith Barney in London. “Airlines, particularly in the United States, had some of their worst months on record in May, June and July.”
Less than two months ago at the Paris air show, Airbus reaffirmed plans to boost annual production and deliveries from a targeted 330 this year to 450 in 2003.
Since then, however, economic weakness in the United States and Europe has seriously dented airline profitability.
Major U.S. airlines, which have been the hardest hit, are slashing jobs, capacity and capital expenditures in an effort to weather the economic slowdown.
On Tuesday, German carrier Lufthansa said it also will cut capacity because of slowing global growth, saying demand for intercontinental flights had fallen significantly from the previous year.
European budget airline Ryanair stepped up the pressure on Boeing--its sole supplier--to cut prices for new aircraft in what it plainly sees as a buyer’s market.
The Irish group announced it was canceling options to purchase five new Boeing 737-800 jets in pursuit of better prices and warned it could cancel more.
KLM Royal Dutch Airlines, which announced Monday that it will cut its winter capacity by 3%, also sought to take advantage of the deteriorating environment, inviting tenders for the possible purchase of planes worth as much as $5 billion.
