Leasing companies today recommended that Airbus and Boeing should slash production by about 25 percent due to the current difficulties faced by operators and lessors in financing aircraft in today's economic environment.
ILFC chief Steven Udvar-Hazy believes a 25-to-30 percent cut makes sense, while others on a leasing panel today at ISTAT suggested "similar" reductions, albeit at a slightly lesser range.
Whatever the amount, Udvar-Hazy believes it is "inevitable" there is going to be production cuts, "it's just a matter of when and to what degree".
Most speakers this week at ISTAT have identified a significant funding gap in aircraft ordered and those that will be financed.
Responding to these comments, a Boeing executive in the audience said aircraft are committed to production in 2009 and if an airline can't finance it, "we'll have whitetails". But in 2010 and beyond Boeing "will be looking very carefully at supply and demand so that we don't overproduce", he says.
An Airbus executive in the audience also chimed in, noting that Airbus is currently producing 34 A320s per month, down from a previous rate of 40 per month. "We continue to monitor it" and Airbus is being "realistic and proactive", he says.