Boeing, Airbus Backed Up
Airplane Makers Struggle to Meet Record Demand

By Emma Vandore
Associated Press
Thursday, January 17, 2008

TOULOUSE, France, Jan. 16 -- The problem for Airbus and Boeing isn't too few customers, it's making planes fast enough to meet demand.

Together, the rivals got 2,754 orders last year. Airbus said Wednesday that it beat its U.S. rival in deliveries, 453 to 441, though it took fewer orders, 1,341 to Boeing's 1,413.

Both companies have struggled to get new models to the airlines lining up to buy them.

Airbus said that its backlog would increase this year -- even as new orders slow -- and that its passenger jets are mostly sold out through 2011.

Boeing said that it would put off for as long as three months the inaugural flight of its 787 Dreamliner because of supply-chain problems and manufacturing delays.

The delay means Boeing won't be able to begin delivering the airplane until early 2009, instead of late this year.

Boeing's 787 program has been delayed twice before. In October, Boeing said it was pushing back flight testing until March and delivery to its first customer, Japan's All Nippon Airways, to the end of 2008.

Scott E. Carson, president and chief executive of Boeing's commercial airplanes unit, said he was "deeply disappointed" by the latest delay but that the program was sound. "When we have tested the technology and its application to this new family of airplanes, our confidence has only increased," he said.

Airbus's flagship A380 super-jumbo jet has also been delayed, and the company had to redesign its planned competitor to the 787, the A350.

Despite expectations that high oil prices and a credit squeeze would hurt the airline industry, both companies are riding a boom in the sector that has lasted three years, partly because of demand from Asian airline companies.

"Cycles in this industry used to be peaks and, I guess, sort of canyons or big troughs," said John J. Leahy, Airbus's chief salesman. "Now it looks like we are getting more hills and valleys."

Thomas Enders, the Airbus chief executive, said he expected "demand to continue to be strong" in 2008, though not as high as in 2007.

Carson has also said he expects fewer orders this year. Last month, he told the Seattle Post-Intelligencer that if Boeing and Airbus combine for 1,000 to 1,200 orders, 2008 "would kind of be a normal year." He was not available for comment Wednesday.

Leahy played down Airbus's loss in the order race, saying the record total was "staggering."

"It doesn't matter who is first," he said. "The main question is, how do we manage the backlog?"

At the end of 2007, Airbus said it had an order backlog of 3,421 aircraft that will take at least six years to fill. It is scheduled to deliver more than 470 planes this year.

Boeing's backlog is 3,427 airplanes, which the company projects it will take more than five years to fill. It plans to deliver 440 planes this year.

Airbus ceded the top sales spot to Boeing in 2006 and has faced a series of management and production issues in the past couple of years that led to a shuffling of top executives and a restructuring that aims to save about $2.95 billion by 2010 and cut 10,000 jobs.

Airbus's revenue also has been hurt by the weaker U.S. currency.

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