Speaking in London yesterday to outline the Airbus forecast for world airliner sales, chief salesman John Leahy said the company is increasingly worried about a possible “dollar crunch” as European banks struggle under the weight of the eurozone financial crisis to raise the dollar finance that Airbus’s customers need to buy its aircraft. The result may be a move by Airbus to vendor financing, to keep aircraft moving from assembly lines to airlines.
Airbus parent EADS may be sitting on an €11 billion cash pile – fed largely by deposits and other pre-delivery payments by airlines and aircraft leasing companies which have filled its order backlog to bursting – but is the company wise to open a bank? As its fear of a “dollar crunch” testifies, that business is difficult enough these days for the specialists – who don’t have to worry about all the commercial risks associated with forecasting markets and designing and building aircraft.
Growth of vendor financing is historically a sign of wobbly markets, and it’s hard to avoid that conclusion here. Ultimately Airbus, and arch-rival Boeing, rely on customers – airlines – who are facing a financial hurricane of high fuel prices and recession-level demand for travel.