每日跟讀#591: Jet Makers May Feel Ripples From Falling Oil Prices
Sharply falling oil prices are a boon to airlines, saving billions of dollars in monthly fuel bills for a highly competitive industry that last year eked out an average profit of just $6 a passenger.
But what is good news for the airlines raises questions for the world’s largest jet makers, Boeing and Airbus, which have been riding a wave of demand for the latest fuel-efficient jets, driven in large part by the high price of oil.
The concern is that the drop in oil prices could prompt airlines to delay orders, after nearly a decade in which the aircraft makers have benefited from a boom in orders.
“What has propelled the market to record growth are two factors: cheap cash and expensive fuel,” said Richard Aboulafia, an aerospace analyst . “Now something has changed.” If the fall in the price of oil continues, airlines would be motivated to keep their older, fuel-guzzling jets flying for a few more years and delay new orders in hopes of saving money.
The total backlog of unfilled orders for Boeing and Airbus stands at more than 12,000 aircraft, valued at close to $2 trillion and enough to keep their assembly lines humming for more than eight years.
And orders kept coming in last year. Airbus said recently that it secured purchase contracts for a net 1,456 jets last year, down slightly from 1,503 planes in 2013, and that it delivered 629 in 2014. And Boeing recently reported 1,432 net orders in 2014, up from 1,355 a year earlier, and 723 plane deliveries for the year — an industry record.
Boeing and Airbus each control roughly half the market for airliners with more than 100 seats.
Gains in fuel efficiency have topped the manufacturers’ lists of selling points for their newest generation of commercial jets. They include recently upgraded versions of short-range workhorses like the Boeing 737 and the Airbus A320, as well as lightweight, wide-bodied models made from carbon fiber like the Boeing 787 Dreamliner or the Airbus A350 .
Weaker growth, in addition to the influx of new planes and a flood of new low-cost players in the air travel market, has already translated into a glut of available airline seats in parts of Asia, driving down ticket prices there.
“You are beginning to see the effects of overcapacity on airline profitability,” said Nick Cunningham of Agency Partners, a brokerage firm in London. “You can’t keep on adding capacity without bankrupting the industry,” Mr. Cunningham said.
Falling oil prices may exacerbate the overcapacity problem by tempting airlines to lower fares in an effort to increase market share, said Adam M. Pilarski of Avitas, an aviation consulting firm in Virginia. That not only reduces the cash that airlines have available to pay for new planes they have ordered, he said, but also increases the odds that financially shaky carriers will delay or cancel orders — or not survive long enough to take delivery of their jets.
“Manufacturers know that when they sell a plane today for delivery in nine years, by then the environment might change,” Mr. Pilarski said. “The airline may change its mind, or it might not even be in business anymore.”
Airbus filed a lawsuit in December against Skymark, a struggling Japanese budget carrier that canceled a $2 billion order for six A380 superjumbo passenger jets in July. Airbus’s claim, filed in a British court, seeks unspecified damages .
Any prolonged slowdown in the overall replacement rate could put the brakes on Boeing and Airbus delivery rates, analysts said. A study published last year by Ascend, an aviation consultancy , found that about 50 percent of all new jet deliveries over the past five years had been for replacement purposes rather than growth .
Plane makers, though, are showing few signs of concern.
Darren Hulst of Boeing said airlines will still need new aircraft “to continue to grow and take advantage of the tailwinds in the operating cost environment.”
Fabrice Bregier of Airbus said that with oil prices impossible to predict, airlines would be wise to keep buying aircraft with lower fuel consumption. But he also emphasized that Airbus could weather any decline in orders.
“We have almost 6,400 aircraft in the backlog,” Mr. Bregier said . “So we could, in principle, even sustain no orders for three to four years.”
Source article: https://paper.udn.com/udnpaper/POH0067/273447/web/