With sales hard to come by since the 11th September terror attacks, manufacturers are facing an uncertain couple of years

Airbus and Boeing have battened down the hatches for a rough ride in 2002 following the order slump in the aftermath of the terrorist attacks last September. The two rivals secured orders for 710 aircraft last year, but the net tally (less cancellations and adjustments) fell to 546 units. The spoils were divided equally, and represented a 50% drop on 2000.

Flight International estimates that last year's combined gross order intake was worth around $74 billion (Boeing value based on average 2001 list prices). The 164 cancellations/adjustments reduces the order value to $62 billion - down 25% on 2000's $83 billion.

Significantly, around 80% of last year's orders were placed in the eight months prior to 11 September. The attacks stopped airlines and lessors in their tracks and from then on most were only interested in talking deferrals. The manufacturers are under no illusions as to what the next 12-24 months have in store.

From the start of last year, the manufacturers had already accepted that they were facing a major drop in orders for 2001, and mid-year estimates were put at a combined 800 aircraft. They can take some solace from the fact that their gross performance was within 10% of their forecasts, despite the airlines' unprecedented slump from September onwards.

Airbus executive vice-president customer affairs John Leahy forecasts that the two manufacturers' combined orders are set to tumble by another 50% this year to around 300-350 aircraft. Boeing has so far been unwilling to make any predictions about orders in 2002, despite securing a welcome Ryanair order for 100 737-800s last week.

Thanks largely to its 85 A380 sales, Airbus has for the first time beaten Boeing handsomely in the order value stakes, with net orders of $37 billion. Despite a 40% drop in order intake on 2000, the value of Airbus's 2001 net orders is $2 billion higher than the year before. It is also 50% more than the $24.5 billion Flight International estimates Boeing's 2001 net orders were worth.

Deliveries were up 7% last year, as Airbus set a personal best of 325 aircraft and Boeing ramped up to 527 units from its reduced output in 2000. With Airbus taking the honours in the order stakes, Boeing has been at pains to point out that it delivered over 60% of the world's jet airliners (excluding regional jets) last year.

Based on announced turnover and revenue figures from Airbus and Boeing, 2001 deliveries were worth almost $56 billion. However based on 2001 "sticker" prices, Flight International estimates that the deliveries were worth $69 billion. Boeing's quoted 2001 revenue of $35 billion for its commercial aircraft division is $10 billion lower than our estimate, which chief executive Phil Condit puts down to discounts offered to airlines from the quoted list price.

Output this year is set to fall by 20% to around 680 aircraft. Airbus chief executive Noel Forgeard predicts that Airbus will produce 300 aircraft, while Boeing is targeting around 380. Forgeard says that based on current orders, the European manufacturer will maintain its 2002 output level into 2003. However he cautions that experience with previous recessions suggests that the next 18-24 months will see output reaching the bottom of the current cycle which could therefore force further production cuts. Forgeard says that he and Leahy will hold meetings with customers this spring to determine actual production for next year.

Airbus has made it clear publicly that it will not entertain major discounts to encourage airlines to take delivery of aircraft during the downturn. "We are not about to sell aircraft below the cost of production," says Leahy.

Boeing has already accepted that 2003 will be lower, currently forecasting 275-300 deliveries. It adds that 2002's production allocation is "virtually sold out" and 75% of its lower 2003 production estimate has been sold.

The two companies' combined backlog has fallen 10% to 2,932 aircraft at the end of 2001, worth an estimated $250 billion. A year ago, the backlog was split equally between the two rivals, but Airbus has edged ahead with 54% of the total, worth an estimated $131 billion. Boeing's share is worth an estimated $119 billion.

Source: Flight International