Air Transport World

All eyes on Asia.

Manufacturers see little sign of a near-term recovery

As they eye the Asian economic situation warily, manufacturers of large aircraft and engines are still optimistic that they will not see many order cancellations this year.

Although Boeing is cutting production of most models, President and Chief Operating Officer Harry Stonecipher points out that just 84 of 620 deliveries in 1999 are bound for Asia. He sees a 2-5-year downturn. Airbus Industrie Senior Vice President-Commercial John Leahy sees some "firming" of the economy in Asia but says the region may be in for two more years of difficulty. The impact will amount to 2-3 years of lost growth.

An official at GE Aircraft Engines says that the situation has improved. A year ago, he guessed that the decline would cost manufacturers about 350 widebody orders, with cancellations and few new orders, and the ensuing recovery too weak to make up the loss. He has revised this to just 230 widebodies over eight years.

However, major manufacturers' executives agree that the intense ordering cycle of the past few years is finished and this year should see fewer orders than the past two. This is owing to a combination of the end of the single-aisle order surge because of Stage 3 noise constraints, the Asian situation depressing widebody sales and some feel it is just the end of another buying cycle.

These executives also downplay the fear that deliveries of all these airplanes will create a serious capacity glut, like the one in the early 1990s that followed the order surge of the late 1980s (ATW, 12198, p. 23). Some point out that the current situation is quite different from its 198891 counterpart. …

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