Boeing sees aircraft order book shrinking

By Harry Suhartono and Mariko Katsumura

SINGAPORE (BestGrowthStock) – U.S. aerospace giant Boeing Co said on Tuesday it expects new orders for commercial aircraft this year to fall short of deliveries and no increase in demand until 2012.

Randy Tinseth, vice president of marketing for Boeing Commercial Airplanes, repeatedly declined to elaborate on any impact on Boeing sales to China arising from the escalating row over U.S. arms sales to Taiwan.

“It’s government-to-government and I’m just not going to speculate,” he told Reuters in an interview on the sidelines of the Singapore Airshow.

Chinese airlines have ordered hundreds of aircraft from Boeing, including its latest Boeing 787 Dreamliner, to be delivered over the next few years.

Boeing unit McDonnell Douglas builds the Harpoon Telemetry missiles that are part of the package of sales to Taiwan. China has threatened to punish the firms involved.

Boeing expects to deliver 460 to 465 aircraft in 2010 against 481 last year, a large number of which would be from the short-haul 737 series, Tinseth said.

A drop in global passenger demand led Boeing and rival Airbus to face their worst annual order tally last year in at least 15 years as struggling airlines canceled or deferred deliveries of almost as many planes as they were buying. “Clearly the business and environment has affected our production but this substantial backlog helped us maintain a relatively robust rate during this downturn,” Tinseth said.

“Generally we see 2010 as the year of economic recovery and 2011 a year where airlines recover to profitability and as a result of that (we see) an increase in demand for airplanes in 2012.”

He also said the company expects to see fewer deferrals and cancellations in 2010, compared to 2009 when Boeing had about 270 airplane orders being deferred and around 120 canceled.

Tinseth reaffirmed that Boeing plans to deliver the first of its repeatedly delayed 787 Dreamliners to All Nippon Airways in the fourth quarter of 2010.

He said the plane’s fly test program was on track.

On the bankruptcy of Japan Airlines (JAL), Tinseth said Boeing has not received any cancellations of the 70-odd Boeings JAL has on order.

JAL, which filed for bankruptcy protection last month as part of state-led restructuring plans to retire all of its 37 Boeing 747-400 jumbo jets and all 16 McDonnell Douglas MD-90 planes and buy smaller aircraft to take their place.

Tinseth said Boeing was looking to fit more efficient engines on the 737 family but would take its time before deciding on the engine providers.

He said Boeing was committed to continuously improving the efficiency of the 737 range that analysts say needs a substantial re-design to achieve large fuel efficiency gains, such as fitting new engines and designing a new airframe.

“We’re looking at all of the available engines in the marketplace. Re-engining the airplane is an option. We have time to make that decision and we’re going take our time to make sure it’s the best decision.”

Boeing has sold over 5,000 next-generation 737 models since production began 12 years ago, of which about 3,000 have been delivered. The first 737s were built in the late 1960s.

Boeing 737 and Airbus A320 family models are the workhorses used on many short-haul routes.

“There’s no question that we will replace the airplane at some time. Our customers have asked for some very significant improvements,” he said, pointing to calls for short-haul aircraft that are 15 to 20 percent more fuel efficient and cheaper to maintain.


(Additional reporting by David Fogarty; Editing by Lincoln Feast)

Boeing sees aircraft order book shrinking