Air Transport World

'Footprints don't predict the future.'(Aircraft Order Cycle)

Airlines ordered only 354 Western-built jet transports last year, the fewest since 1984. Airframe manufacturers delivered 519 jets, the smallest number since 1988. And according to Chase Manhattan Bank, the backlog of seats on order at Airbus, Boeing and McDonnell Douglas declined 28% to 380,000 last Dec. 31, from 525,000 on Jan. 1, 1994.

This scarcity of new jet transport orders and deliveries, despite signs of a pending capacity crunch, is causing some people to take a fresh look at the likely shape of the next equipment order cycle. Although these individuals are confident that a major order cycle is inevitable, they see significant differences between the coming and past cycles that are the reason for the lack of new orders. "Footprints don't predict the future anymore, " says Thomas J. Gallagher, senior vice president and group executive aerospace, for Chase Manhattan Bank.

Of course, from an airline-investor perspective, the absence of new orders may be seen as a positive. After all, many of the difficulties experienced by airlines in the early. 1990s had their genesis in the excesses of the 1985-90 order cycle. Airline debt ballooned, particularly off-balance-sheet lease payments, while overcapacity depressed operating performance. …

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