Aircraft orders slow as cycle peaks; potential for production impact seen

Thu Dec 10, 2015 4:53pm EST
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Alwyn Scott

NEW YORK (Reuters) - A decline in aircraft orders this year shows the order cycle is peaking after five years of torrid growth, industry experts said on Thursday, raising speculation that Boeing Co (BA.N: Quote) and Airbus (AIR.PA: Quote) may be forced to scale back higher production rates planned for coming years.

"Orders have a history of very high peaks and very low troughs," said Edmund Greenslet, an independent analyst who publishes the Airline Monitor. After big surges, "orders drop very quickly."

With three weeks left in 2015, Boeing Co and Airbus have booked 1,582 orders, a decline from 2,888 in 2014.

Boeing Co (BA.N: Quote) booked 11 new jetliner orders worth about $1.1 billion at list prices on Thursday, leaving it about 180 short of its 2015 target of 755-760 planes.

Airbus has booked 1,007 net orders this year, versus 575 for Boeing, giving it 64 percent of orders. Boeing is likely to deliver far more airplanes than Airbus in 2015.

The slowdown itself is not a surprise. Because Boeing and Airbus have eight to 10 years of backlog, planes ordered today won't be delivered until 2023 or later, said John Plueger, president of Air Lease Corp AL.N.

"There's not a whole lot left really to sell," he said. Slow sales in the next few years is "a normal reaction."

But some see rising risk of a production excess. "I can see signs of a glut emerging," said Adam Pilarski, an analyst at consulting firm Avitas, that could mean order cancellations.   Continued...

 
Old airplanes, including Boeing 747-400s, are stored in the desert in Victorville, California March 13, 2015.  REUTERS/Lucy Nicholson