Analyst: Boeing, Airbus May Lose Most Of Their Order Backlogs

By Glenn Pew, Contributing Editor, Video Editor

Currently sitting on more than five years worth of unfilled orders, both Airbus and Boeing may hope that backlog could carry them through even a moderately prolonged economic slump, but orders on paper don't always become flying aircraft and at least one analyst sees much less certainty than the order books suggest. The Teal Group's Richard Aboulafia believes the possibility exists that as much as 70 percent of more than 7400 total orders held by Boeing and Airbus will become order deferrals instead of aircraft. A global economic crisis coupled with erratic fuel prices throws a big wrench into the engine of just about every kind of air travel and as airlines around the world struggle to direct their fleets toward profitability the most expedient solution for some may be a rollback of expansion plans.

Together, the two companies in 2007 set an industry record of 2,754 orders. For 2008, the combined tally looks like it won't pass much over 1,500. Some carriers may need to replace aging aircraft or seek to put newer, more efficient aircraft into service in the place of older, less efficient models. But, lacking a competitive market interested in their older jets, it's possible even those carriers will elect to make do with what they already have. Looking at the numbers, Aboulafia expects the sharpest cuts to be made manifest in 2010 (when Boeing's delayed 787 Dreamliner may see its first deliveries) and beyond. The manufacturers may agree -- Boeing has already taken some defensive measures. Boeing announced last year that it may take action to reduce the size of its workforce and slow production. Those actions would translate into hiring freezes enacted to allow for workforce reductions through normal attrition, but the company warns it may enact proactive layoffs.


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