Airbus Industrie and Boeing cannot ignore the implications of doing business in euros, but both manufacturers are holding back on offering airlines wholesale opportunities to sign euro sales contracts.

Sale executives at the companies confirm that airlines have approached them with requests to buy aircraft with Europe's single currency, but there is a feeling that the manufacturers are waiting for the market to shape demand rather than stimulating it themselves.

Aerospace analysts have always pointed to Boeing's advantage over Airbus because it has been able to manufacture and sell in the same currency. Airbus will continue with its hedging policy against the US dollar, however, as both manufacturers avoid the euro's unstable infancy.

Contracting sales in the euro is not simple. Because the world of commercial aircraft has been focused on US dollar residual values and appraisals, a vast shadow culture would need to develop to underpin a euro version.

Also, lease rental values are handled in US dollars. While it may be possible for an aircraft to be bought in one currency and the same aircraft leased out in another, industry analysts are cautious.

Perhaps a clearer and stronger reaction to the euro and subsequent policy forming is coming from regional manufacturers such as British Aerospace.

Although BAe says most of its exposure is expected to remain in US dollars, from January the company has offered all new contracts in the euro, too. "The two currencies will naturally divide," says a BAe official. "We would prefer to trade in euros with countries in Euroland but we would also offer them the US dollar route."

What will probably happen is that a natural equilibrium will form between airline demand for euro contracts and trading stability in the currency. But this may take some time before industry players can become generally comfortable with a dual-currency approach.

Source: Flight International