Airbus Board May Slash 2002, 2003 Production Goals

Airbus’ board might cut aircraft production goals for next year and 2003 because of a likely fall in demand after Tuesday’s terrorist attacks on the U.S., said BAE System, a 20% shareholder in the No. 2 plane maker.

Airbus directors will consider reducing 2003 production to less than 400 aircraft, BAE Chief Operating Officer Mike Turner said. Production next year will probably be at the lower end of a 350-to-370-aircraft range, he said, though this year’s output will reach the company’s target of 330 planes.

Boeing Co., Airbus’ U.S. rival, announced it has received orders for 10 of its 737 jetliners valued at about $550 million, but it declined to say who ordered the planes.

Chicago-based Boeing previously had cut its forecast for next year’s deliveries to as few as 510 from 530 because of the economic slowdown and has said it will release a forecast for 2003 next month.

Boeing has received 105 orders for its 737. Overall, it has received 212 plane orders this year, though cancellations and changes will result in a net order total of 164, Boeing said.

Analysts expect Airbus and Boeing to see orders fall and existing contracts deferred as airlines respond to a likely 20% decline in demand for travel. Airlines already had discussed delaying deliveries because of the global economic slowdown, Airbus has said.

“If airlines face real difficulties, they will come to Boeing and Airbus and ask if we’d mind slipping the delivery date for a year or two until better times come around,” Turner said at a BAE news conference. “After Tuesday, there are going to be pressures on flying and oil prices and on airline financials themselves.”

The five-member Airbus board, on which Turner is one of two BAE representatives, will consider modifying production goals at a scheduled meeting next month, Turner added. The board must approve the production rate for next year and set a provisional rate for 2003. Plans to accelerate narrow-body aircraft output to 30 a month next October from the current 27 will be reconsidered, he said.

Airbus cut its production targets as recently as last month in response to the slowing world economy, with chief salesman John Leahy saying it expected to deliver 400 aircraft in 2003--more than 50 less than the 456-plane capacity it once planned.

The airline sector this year was headed for a $2.8-billion loss on international traffic alone, even before the attacks on New York’s World Trade Center and Washington’s Pentagon, the International Air Transport Assn. has said.

Turner said Airbus’ order backlog of 1,700 planes, or four years’ output, is still “very healthy,” and he said it’s still on course to capture 50% of a world market of 840 planes a year for the next 20 years. He said Airbus has “solid deposits” on the orders and is also better placed to cope with deferrals now that it’s a single company.