Fri, Dec 05, 2008
'White Tails' Could Soon Roll Off Production Lines
Boeing and Airbus owe much of the value of their stocks to their
order backlogs. Both manufacturers have years worth of production
stacked up on waiting lists, which could be a major factor in
helping them weather a tough recession.
But both companies are already seeing options for additional
planes dropped by their airline customers... and in some cases,
firm orders are at risk.
The Associated Press reports Airbus and Boeing are carefully
managing their backlogs to avoid building what the industry calls
"white tails" -- jets which roll off the assembly line with no
customer's logo to paint on the empennage.
Air France-KLM revealed last month it will not exercise 15
options to buy Boeing 777s, in a move to save 1.4 billion euro, or
about $1.8 billion US. The airline was also expected to sign a firm
order for long-range airliners, either Boeing's 787 Dreamliner or
the Airbus A350 XWB, by the end of this year. That has been
Kingfisher Airlines, Iberia SA and Cathay Pacific have all said
they expect to delay or cancel orders from Boeing or Airbus.
One of the more sensitive portions of the Airbus backlog is the
A380 superjumbo. Two years late and way over-budget in development,
Airbus needs to sell over 400 of the planes just to break even,
according to analysts. British Airways has 12 of the huge planes on
order, and Qantas 19 more. With merger talks underway between the
two carriers, it's very possible a combined airline might not need
all 31 superjumbos.
Analysts watching the industry believe the worst is yet to come.
Sandy Morris, an analyst at ABN Amro bank in London notes, "What
we've seen so far is a very gentle adjustment. We do expect there
is worse to come."
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