Demand will fall 50%: Airbus

AIRCRAFT manufacturer Airbus has said that demand for its new aircraft will likely drop by more than 50% this year as an initial flurry of A320neo purchases wanes.

While Airbus’s record orders in 2011 saw it extend its lead over Boeing, this year both rivals will face the challenge of increasing production and driving sales in an environment where component suppliers and airlines are encountering financing hurdles amid the European debt crisis.

Based in Toulouse, France, Airbus won 1,419 orders last year, beating its previous high of 1,341 in 2007. A unit of the European Aeronautic, Defence & Space Co (EADS), Airbus delivered a record 534 planes ahead of budget and predicted deliveries will rise to 570 aircraft in 2012.

The introduction of the A320neo and its more efficient engines unleashed demand from airlines seeking planes that burn less fuel, helping extend Airbus’s lead over Boeing to a ninth year.

The US planemaker had a net order tally of 805 planes and deliveries of 477 planes. Both companies boosted production as demand from Asia, particularly China, offset a slowdown in the US and European markets.

“Airbus’s record intake is the result of our strategic decision on the A320neo,” said Airbus chief executive Tom Enders. “However, the continuous ramp-up to unprecedented production rates on all programmes will demand a strong focus on the supply chain and our own delivery capabilities.”

EADS was little changed on Paris exchanges yesterday after rising as much as 1.3% earlier in the day. The stock has advanced 8% in six months, compared with Boeing’s 7.3% gain.

Mr Enders is the most likely candidate to succeed retiring Louis Gallois as EADS chief executive.

Gallois has urged investors to be patient on the succession plan, saying it may not happen right away. EADS will have a significant improvement in profitability this year, Gallois said.

Airbus, which claims a 64% market share, expects to win about 650 orders in 2012, according to chief operating officer John Leahy.

Only 4% of last year’s deliveries went to North American carriers.

The Asia-Pacific region accounted for 32%, and Europe 23%. Companies that lease planes took delivery of 22% of the total.