Airbus, Falling behind Boeing on Orders, Raises Market Forecast

Airbus unveiled a bullish long-term forecast for global aircraft demand Wednesday.


Airbus unveiled a bullish long-term forecast for global aircraft demand Wednesday, but said its share of orders had shrunk to about 36 percent by value, from 45 percent last year, as U.S. rival Boeing sold more mid-size and larger jets.

The European plane maker's biennial market outlook predicted demand for 22,700 aircraft worth US$2.6 trillion (euro2.03 trillion) over the next two decades, a significant increase on its 2004 forecast of 17,300 planes worth US$1.9 trillion (euro1.48 trillion) for the 20 years to 2023.

Airbus Chief Operating Officer John Leahy said much of the new demand was seen coming from the Middle East and emerging markets such as China and India - where the arrival of low-cost airlines is set to multiply growth in air travel among the expanding middle classes.

"This is a growth industry, no matter how you slice it," Leahy said during a news conference in London, broadcast live on the Airbus Web site.

U.S. rival Boeing Co. is on course to win more orders than Airbus this year for the first time since 2000. The Toulouse, France-based aircraft maker recently doubled the estimated production delay blighting its double-decker A380 to two years, angering customers and prompting a euro4.8 billion (US$6.1 billion) profit warning by parent European Aeronautic Defense and Space Co.

While the "chaos" surrounding the superjumbo has hurt business, Leahy said, Airbus is on track to deliver a record 425 planes in 2006 and keep its deliveries lead over Boeing unbroken for a fifth straight year in 2007.

"To sum up, this has been one of the best of years, but it's also been one of the worst of years," Leahy said.

Wednesday's report brings Airbus in line with its U.S. rival's valuation of the airliner market, but Boeing is predicting demand for more planes - 27,210 in total - of smaller average size.

Chicago-based Boeing sees sales of just 650 very large passenger planes such as the A380 and 747-8, while Airbus forecasts 1,250. Airbus expects its superjumbo to account for 1,300 of the total 1,665 orders it projects in this size category, including freighter variants.

Leahy said Airbus had taken firm orders for 619 planes so far this year, or 43 percent of the two rivals' combined total. Airbus continues to target a market share between 40 percent and 60 percent, he said.

In terms of catalog value, however, he acknowledged that Airbus' share of new business had slipped further to reach "35 to 37 percent" this year. While Airbus has been ahead in the single-aisle plane market, thanks to the popularity of its A320, Boeing increasingly dominates the higher-value market for larger aircraft.

Airbus set an industry record last year with a total of 1,111 orders, to Boeing's 1,002. But its share by value fell to 45 percent, from 54 percent in 2004, as its widebody A330, A340 and planned A350 planes lost ground to Boeing's 777 and 787 "Dreamliner" - set to enter service in 2008.

The decline raises pressure on parent EADS to launch the A350, a badly needed rival to the 777 and 787. In July, Airbus presented an upgraded US$10 billion (euro8 billion) A350 design dubbed XWB - for "extra-wide body" - promising a roomier passenger cabin, increased use of composite materials and large, Dreamliner-like windows.

The A350 decision has been complicated by upheaval at EADS. The German government has said it may buy a stake in the European defense group from DaimlerChrysler AG as the German carmaker pares its 22.5 percent holding, if another suitable investor cannot be found. A spokesman for Chancellor Angela Merkel said Wednesday that the outlines of a deal had been agreed with investors and would be announced "soon." EADS shares rose 5 percent to close at euro23.97 (US$30.89) in Paris.

Airbus' top salesman said he expects the EADS board to decide on the A350 by the end of November. "Speaking on behalf of the world's airlines, I'm getting a lot of requests for the A350 right now, especially the new XWB," Leahy said.


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