Despite customers putting off orders, Boeing says it can weather the crisis

Boeing Commercial Airplanes, Boeing Company’s jetliner business division, says the aircraft-manufacturing giant will be able to survive the current crisis arising out of the prohibitive prices of aviation fuel. Scott Carson, president and chief executive officer of Boeing Commercial Airplanes, said in an interview in Istanbul, Turkey, on the sidelines of the annual membership meeting of the International Air Transport Association: “ In terms of the impact on us, it is all very manageable right now. It is all consistent with patterns we have seen in the past and we have provided for those patterns. We are seeing no adverse impact, but we are concerned about the condition of the airlines and we continue to work with them to find ways to allow them to be successful.”

The Boeing Company, with its international headquarters is in Chicago, Illinois, the United States, is the world’s biggest aircraft manufacturer by revenue, orders and deliveries.

The International Air Transport Association, headquartered in Montreal, Quebec, Canada, represents 230 of the world’s top international airlines, comprising 94% of scheduled international air traffic.

“Boeing,” Scott Carson added, “has won orders for over 1,000 planes in each of the past three years. Rather than cutting production as it did after 2001, Boeing continues to slowly boost production to get those new jets to customers. Airbus is also raising production rates.”

Boeing Company and Airbus Industrie, based in Toulouse, France, both have won record orders since 2005. However, with prices of oil reaching over $130 a barrel and burdening the airline industry worldwide, some carriers recently put off buying new planes from Boeing and Airbus.

A few days ago, AirTran Airways had said it had reached an agreement with Boeing to postpone taking delivery of 18 Boeing 737-700 aircraft for up to 5 years.

AirTran Airways, a low-cost airline based in Orlando, Florida, the United States, and a subsidiary of AirTran Holdings, was supposed to receive the Boeing 737-700 jets starting 2009 and continuing through 2010. AirTran Airways will now take delivery of the planes in 2013 and 2014.

AirTran Airways, which claims to have some of the lowest non-fuel costs in the  airline industry, has estimated that it will spend $1.31 billion on aviation fuel in 2008 – which is 63% more than it spent in 2007.

A few days prior to AirTran Airways announced putting off buying new jets from Boeing, JetBlue Airways, a low-cost airline headquartered in the Forest Hills neighborhood of the New York City borough of Queens, postponed delivery of 21 Airbus planes for 4 or 5 years because of soaring fuel costs.

Recently, a statement from Airbus had said that orders in 2008 for its A380, the world’s biggest passenger plane, would be about a third less than it predicted earlier, thanks to higher fuel prices and an economic slowdown in the United States.

The website seattlepi.nwsource.com quoted John Heimlich, chief economist for the Air Transport Association, which represents airlines in the United States, as saying: “What is happening with airline fuel costs is the worst crisis since 9/11. If what followed the terrorist attacks was the worst downturn in the history of the airline industry, this downturn has the potential to be orders of magnitude worse than it was after 9/11, and more pervasive.”

Scott Carson, president and CEO of Boeing Commercial Airplanes, went on to explain at the interview in Istanbul: “The deferrals (of Boeing and Airbus jets) are tied to all the uncertainty around traffic and the price of oil and the general condition of the economy. And, I suspect we will continue to see that kind of dynamic play out in the market place.”

However, he said he remained confident that even hard-hit airlines in the United States would order new, more fuel-efficient jets. “Operators that are flying older, less fuel-efficient airplanes absolutely need newer ones,” he added.

For instance, American Airlines, the world’s largest airline, had declared recently that it was cutting capacity and would retire 85 older planes because of high fuel costs and slowing traffic.