EU enlargement ‘should boost aviation’

ENLARGEMENT of the EU will likely help the global aircraft industry emerge from its worst slump in years, the head of General Electric Company’s aircraft leasing arm in Europe said.

Shannon-based Declan Hartnett senior vice president and regional manager for Europe for General Electric Aircraft Services (GECAS) said the 10 mostly eastern European countries joining the EU next year would open new markets and boost demand for new planes.

He also said he thought the industry, hit by recession and the September 11 attacks two year's ago, which left thousands of planes parked in storage, was poised for a new cycle of growth.

"I would say we've bottomed out and I think we're looking at improvement next year," Hartnett said.

"I wouldn't say exactly that the recovery is going to be European-led, but I think that there are certain factors in Europe that give them a reason for optimism next year," he said.

He said demand for aircraft to service eastern Europe, where many airlines still fly outdated Soviet-era equipment, should help.

"There's going to be a stimulus next year of the 10 countries coming into the EU, where those countries will be open market for the rest of the EU from sometime next year onwards that will be a little bit of a stimulus," he said.

Connecticut-based GECAS earlier this year announced it had leased four regional Embraer 170 regional jets from its order book to LOT Polish Airlines.

Hartnett said GECAS had recently reshuffled its European operation to give it more direct focus on the smaller countries in the Baltics and in eastern Europe.

"We've been doing business for years in Hungary, The Czech Republic, Poland and some other countries, and particularly the Baltics are growing relatively rapidly compared to the rest of Europe at the moment," he said.

"They're small markets but we do see significant growth prospects," he said.

He said that, while the slump had hit the industry worldwide, it was particularly pronounced in the US where a few big companies fly most of the planes.

"I think maybe the European market has held up a little bit better than the US market in the last couple of years, purely because it has so many aircraft concentrated in so few hands in the US," he said.

While some big European carriers had gone bankrupt, the market had been buoyed by the relatively large number of national and regional carriers, he said.

But recovery would take time and Hartnett said he did not see business reaching an equilibrium level, with a smooth flow of new aircraft coming in and older ones retired, until 2006. He added that GECAS was weathering the storm relatively well, with all its new planes placed through the second quarter of 2005 and only five of its fleet of 1,200 aircraft grounded as of June 30 this year.

GE Commercial Financial, which includes GECAS and other leasing, financial and real estate operations of the world's biggest industrial company, said last week it expected profits to increase 15% in 2003. Earnings from aviation services were expected to be unchanged at $450 million to $470 million, with assets of $33 billion to $35 billion.