Weakening Aviation Cycle Anticipated

In a worst-case scenario, Airbus could see 27% of its record airplane order backlog canceled or deferred as the aviation industry cycle weakens, Chief Operating Officer for Customers John Leahy told analysts recently.

Airbus and rival Boeing both had record sales years for 2007, but expect airplane orders to weaken during 2008 as airline customers trim their spending, reports CBS MarketWatch. Each company has experienced strong demand over the past several years, and now have order backlogs containing about five-to-six years of production.

During past industry downturns, airlines have often canceled or delayed airplane orders to offset weaker passenger demand. "We do have a strong backlog with a little bit of overbooking," Leahy (shown at right) told analysts Thursday at an investor conference in Spain.

Leahy added that given their huge order backlogs, Airbus and Boeing might not begin developing new replacements for their respective single-aisle airplanes -- the A320 Family and Boeing's erstwhile 737 -- until late in the next decade. "I think we’ll be talking about 2017, 2020," he said.

Airbus and Boeing both report backlogs of over 3,400 airplanes. In 2007, Airbus received orders for 1,341 aircraft, while Boeing secured orders for 1,413 aircraft.

Airbus delivered 453 aircraft in 2007, surpassing the previous year by 19 aircraft with the best company quality and on-time standards so far achieved.

2008 deliveries are expected to exceed 470 jetliners, with 34 aircraft from its A320 single-aisle family each month, along with eight A330/A340 wide-bodies and one A380 monthly.

Airbus is part of EADS, the European Aeronautic, Defence and Space Co.

FMI: www.airbus.com; www.boeing.com