MAX KINGSLEY-JONES, COMMERCIAL AVIATION EDITORAirbus's output is set to be better Boeing's for the first time as gloom continues
Although the airline industry recovery did not start to materialise as optimists had forecast a year ago, there were some glimmers of hope for Airbus and Boeing in 2002. But while the growing low-cost carriers and a few Asian airlines provided some relief for the manufacturers in an otherwise bleak year, it remains to be seen whether similar opportunities will emerge during the next 12 months.
The two major manufacturers' deliveries dropped 21% to 670 aircraft in 2002 and are set for a further 15% fall to 570 in 2003. It looks unlikely that business will recover sufficiently to allow an increase in 2004, and analysts currently predict that 2003's output level will be maintained into 2004 and warn that shipments could be even lower.
The fall in output is even more dramatic when compared to the level manufacturers had in their sights just two years ago, when deliveries were forecast to reach over 900 aircraft in 2003. This was largely due to a projected ramp-up at Airbus to around 450 aircraft as Boeing sustained an annual output of 500 aircraft.
The slowdown has forced Airbus to rein in output to around 290 units, while Boeing has slashed production to 380 aircraft in 2002 and around 280 in 2003 - putting it behind the Europeans for the first time ever. Both manufacturers anticipate that output levels will remain similar in 2004.
Airbus seems to have ridden the downturn better than Boeing, with its output falling just 10% from the high of 325 aircraft in 2000 to around 290 next year as the US manufacturer's production tumbled 47%. Boeing has made public its displeasure at this, accusing Airbus of not reacting to market demand and producing too many aircraft. But Airbus's output was in its ascendant when the downturn struck, while Boeing was at the top of its cycle, so direct comparisons of their cuts cannot be made.
As 2002 closed, the two players had secured firm orders for 450 aircraft, net of cancellations. Remarkably, this is slightly up on the net order tally in 2001, but is largely thanks to some eye-popping deals by low-cost carriers EasyJet and Ryanair, which between them accounted for half of the orders placed.Discount deals
On paper the order situation looks better than was feared a year ago, with bettering the 300 net annual sales taken in the trough that followed the 1991 Gulf War. But in reality a large proportion of the 2002 transactions have been high-discount deals designed to see the manufacturers through the short to medium term until demand picks up. The net tally has also remained high, as cancellations have been limited. Manufacturers have often been able to negotiate deferrals rather than terminations and to place unsold white-tail aircraft at short notice into markets where demand does exist.
The medium-term situation could still be bleak, however. The International Civil Aviation Organisation predicts that passenger traffic worldwide will have remained constant in 2002 compared to 2001 - which was down 3% on 2000. ICAO expects traffic will recover by over 7% in 2003, but world traffic will not be back to 2000 levels until 2004, effectively meaning that three years' growth has been eliminated. And this does not account for any impact another Gulf war would have.
The International Air Transport Association predicts that airlines will lose a combined $5 billion on international operations in 2002, so it is unlikely that many carriers will be in a buying mood during 2003.
There are some bright signs, however. The overall growth figures are distorted by major regional deviations, with the negative impact of the areas badly affected by 11 September - USA, transatlantic and to a lesser extent transpacific - offsetting markets such as Asia, Australasia and Europe where traffic levels remain strong. Although 2003's order tally could be bolstered by more sales into these regions, white knights like EasyJet could be few and far between. "Its difficult to see where new orders are going to come from," says one aerospace analyst. The reality is that sales look set to remain flat until well into 2004 - hence the sustained pessimistic output forecasts.Idle fleet
The capacity cuts implemented after 11 September saw the idle jet fleet soar to over 2,200 aircraft. This is already declining and further reductions in the parked fleet are likely as newer aircraft return to the skies and older aircraft are removed at the hands of the scrap merchants. But demand for second-hand aircraft remains low.
Both Airbus and Boeing had something to celebrate in 2002, beginning deliveries of the A340-600 and 747-400ER to Virgin Atlantic and Qantas, respectively. The A340-600's ultra-long-range sister, the -500, is due to enter service early in 2003 with Air Canada, and the latest A320 family member - the 107-seat A318 - following in the third quarter with Frontier Airlines. Boeing, meanwhile, expects to start flight-testing the General Electric GE90-powered 777-300ER in January and deliver the first aircraft in April 2004.
As 2002 closed Boeing finally took the decision to ditch its Sonic Cruiser in favour of the all new "Super Efficient Airplane", and this project should gather pace throughout 2003 as it aims for a launch in a year's time. While the US manufacturer struggles to define a new-generation 747, the Airbus A380 marches on towards a first flight in early 2005, with Cathay Pacific heading the list of the next batch of prospective buyers.
With the regional market less affected post-11 September, output levels have remained fairly solid. This has not stopped two key players leaving the market, however, and trading conditions remain particularly tough at the top end of the sector.
BAE Systems made a tactical withdrawal from regional aircraft manufacturing in 2002 when it ceased production of the Avro RJ, and was followed almost immediately by Fairchild Dornier entering bankruptcy in April. The latter's demise froze the 70- to 100-seat 728/928 family before the regional jet had even flown.
Although it remains to be seen whether efforts to revive Fairchild Dornier's product line will be successful, the long expected shake-out leaves just two key players in the 40- to 100-seat regional market - Bombardier and Embraer - with ATR providing some competition for the Bombardier Dash 8 in the limited market for new turboprops.Output falls
Bombardier increased production in 2002, but a drop in deliveries at Embraer and the exit of BAE and Fairchild Dornier resulted in an overall 10% decline in output of regional jets. This may have been just a blip, as production is scheduled to increase to around 340 aircraft in 2003. Sales of new turboprops continue to decline, particularly as so many young second-hand examples are available, falling to an estimated 50 aircraft in 2002.
Despite continued demand for the smaller regional jets, the downturn has made life difficult for Bombardier and Embraer as they seek buyers for their new larger jets. The Brazilian manufacturer's efforts were dealt a blow by slippages in the Embraer 170 programme, with deliveries to launch customer Swiss International Airlines due to begin in December, but now not likely to start until the third quarter. Meanwhile deliveries of the latest Bombardier CRJ, the 86-seat CRJ900, will begin in January to launch customer Mesa Air Group/Freedom Airlines.
Although the market seems to be telling suppliers that it does not want another regional jet model, at least two more aircraft are on the drawing board - the Sukhoi-led Russian Regional Jet joint-venture in which Boeing is a participant, and China's ARJ21 - and 2003 could well be a make-or-break year for either or both projects.
In Russia and the Ukraine, aircraft output remains low despite local initiatives to fund airline orders and the discouragement of Western aircraft acquisitions through hefty import taxes. The strongest programme currently appears to be the 200-seat Tupolev Tu-204/214 twinjet, which has a relatively solid orderbook and funding. If this programme can succeed, it is likely to become the blueprint for the resurrection of the region's other struggling programmes like the Ilyushin Il-96 and Tupolev Tu-334.
Source: Flight International