IATA's Bisignani predicts massive 2009 delivery shortfall for Airbus and Boeing

By Brendan Sobie

IATA director general and CEO Giovanni Bisignani is predicting Airbus and Boeing will fail to deliver more than half of the aircraft they will produce in 2009.

Bisignani, speaking to reporters today after a speech at the Wings Club in New York, says IATA members are struggling to secure financing for their 2009 deliveries in the current environment and for many it no longer makes commercial sense to take delivery of additional aircraft.

He calls his prediction that Airbus and Boeing will deliver "less than half" of the aircraft they are planning to produce this year "a guess" based on "a perception" he has of the current situation. But he acknowledges he has had conversations with several airline CEOs who have confessed that they do not think they will be able to take delivery of all the aircraft they are scheduled to take in 2009.

"I'm a Catholic priest. I know all the sins but can't tell," Bisignani says.

He adds a lack of available credit in particular is making it difficult for airlines to secure financing for new aircraft. Bisignani says Airbus and Boeing, as well as the US and French governments, have pledged to provide more of their own financing but the gap is simply too big to bridge entirely.

"Try to go to a bank and say 'I need $10 billion in financing this year,'" Bisignani says.

But he adds "this perception" that Airbus and Boeing will fail to deliver more than half of the aircraft produced this year "can easily change" if there is an improvement in economic conditions, the financial markets or airline traffic. But so far there are no signs of any improvement or an indication the bottom is approaching.

"At the moment there's a very negative perception on what's going on in the economy," Bisignani says.

As for traffic, Bisignani warns the figures for January will be even worse than the December figures. IATA reported in late January a 5% drop in international passenger traffic for December. January figures will be released next week.

"The worse is coming in January and February," Bisignani says.

He explains it is impossible to predict when traffic will bottom out but the first indication that the industry has hit bottom will come when cargo figures start to recover as cargo traditionally has been a leading indicator. IATA international cargo traffic was down 23% in December.

"We have a very good economist at IATA but we don't have a magician," Bisignani says when asked to predict when the recovery will occur.

Bisignani's aircraft delivery prediction for 2009 comes just hours after Airbus announced it would cut Airbus A320 family production by two aircraft per month and not follow through on earlier plans to increase Airbus A330/A340 production. When asked about the Airbus announcement Bisignani said "I'm not surprised". The Airbus cut, however, will not have much of an impact on 2009 production as the slower production rate will not be implemented until October.

Later in the day Embraer also announced it was cutting 2009 production.

If Bisignani's prediction holds true, there will be several hundred new aircraft sitting idle at the end of 2009. When asked if that was really possible, Bisignani pointed out that there are now thousands of new cars sitting idle without owners because of slumping automotive sales.

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