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Airbus Is Ready To Ride Out The Aviation Industry’s Crisis

TOULOUSE, FRANCE (dpa) – The aviation industry crisis has prompted fears are growing at European plane consortium Airbus and its giant U.S. rival, Boeing, about a drastic orders drop in the coming year.

After orders in 2001 at around 675 new planes in the 100-seat or above category, Airbus is projecting a plunge next year to fewer than 350 plane sales.

“At the worst, new orders in the entire civilian market will be reduced by one-half,” said Martin Howes, technical marketing director at Airbus headquarters in Toulouse.

Airlines are reporting that the number of passengers on international routes are again slowly returning to normal after the steep dropoff after the September 11 terror attacks. “But the insecurity on the market is still great,” a Boeing company statement noted.

Two facts come as encouragement to the two rivals despite a series of contract cancellations or delayed deliveries: both Boeing and Airbus are sitting atop a mountain of orders whose value runs into the triple digits of billions of dollars. No other industry can make such a claim.

“This is enough to secure capacity utilisation for another four years,” one Airbus official said in Toulouse.

Industry analysts also point to the large number of airplanes which airlines are going to have to get rid of in order to radically cut their costs. In the deserts of Arizona and California, some 1,600 planes are now in mothballs, and experts say the figure is soon going to rise to 2,000.

“The airplanes are mostly older models and so they will scarcely have any chance of returning to the market once the crisis is past,” says aviation expert Peter Pletschacher. “What is more likely to happen is that they will be scrapped.”

Initially, one conceivable result will be a strong dropoff in new plane orders.

“But over the medium- to long term, strong growth rates can again be expected – not the least due to the fact that the planes taken out of service will have to be replaced,” Pletschacher said.

Marketing expert Howes also expects that the crisis will be a tough one, but will not last for very long. In 2003, the market should again see new plane orders reaching around 600.

Airbus believes it is in a better position than Boeing is to ride out the crisis. Through November 2001, the European plane maker ranked first in the world with 352 new orders, against 284 for Boeing. In value terms, the Airbus planes at around 40 billion dollars were far ahead of the 23 billion dollars for Boeing.

The European plane consortium’s order book volume at the end of October totalled 1,643 aircraft, also clearly surpassing the 1,406 passenger planes on order at Boeing.

The U.S. company has responded to the strong dropoff by cutting the number of employees in civilian plane manufacturing from 100,000 to only around 30,000. Airbus, expecting only a moderate drop in new plane deliveries next year from 320 to 300, is aiming to maintain payrolls at around 44,000 employees.

A further trump card for Airbus in the crisis-ridden aviation sector is the new giant superjumbo A380 with up to 800 seats. The plane is to be put into service at the start of 2006.

At the leading airlines which are gearing up for an expected long- term trend of rising passenger numbers, the A380 is increasingly in demand. So far there are 70 firm orders, plus 12 options for the giant planes.

The announcement recently by German air carrier Deutsche Lufthansa that it is ordering 15 of the new superliners has shored up Airbus’ resolve to keep on its present course.

Work on the production site for the huge airplane at the Airbus plant on the Elbe River in Hamburg has already gotten started, and ground-breaking for a new A380 plant in Toulouse is expected shortly.

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