Record order books turn focus to jetmakers' production

Fri Jun 12, 2015 7:55pm EDT
 
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By Tim Hepher and Cyril Altmeyer

PARIS (Reuters) - After years of big-ticket plane orders, next week's Paris Airshow will see rather fewer multi-billion-dollar deals and rather more nervous expressions as planemakers face the daunting task of producing $1.8 trillion of jets already sold.

The world's biggest aerospace gathering will still have its fair share of announcements, including a potential 100-plane leasing order for Boeing, as well as the showmanship that goes with any public contest with European arch-rival Airbus.

But with almost a decade's worth of production on their books, any new business is likely to be couched in tougher than ever warnings that factories must 'execute' to win long term. And many analysts believe the order party is winding down.

"Given the fact that order books have swelled so large, it is unlikely that the headlines will be about large blocks of orders at this show and much more about the production process and viability of the supply chain," said aerospace consultant Jerrold Lundquist, managing director of The Lundquist Group.

"Although the battle for market share in orders will always be there, the contest for delivery share is growing, as each player strives to ... ramp up their production output."

Low interest rates and high oil prices created a stampede of orders for new planes and fuel-saving spin-offs of existing ones in recent years, leaving some 12,000 jetliners left to produce and lifting shares across the aerospace sector.

"We are getting to volumes where ... you need to build a single aisle aircraft every 6.5 hours. It is a drumbeat and intensity that is very demanding," Airbus Chief Operating Officer Tom Williams told reporters ahead of the air show.

But French engine maker Safran (SAF.PA: Quote) injected a note of caution this week by saying its priority would be to meet its already record commitments, before thinking about further production increases being explored by some planemakers.   Continued...