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EADS CEO Sees No Sign Of Industry Downturn
Published on 31/01/2008 08:58

© Roman Schröder
The head of Airbus parent EADS sees no sign of a downturn in the aviation industry despite global financial turbulence and does not expect more major swings in demand after a record year for orders in 2007. Growing pressure to fly cleaner, more fuel-efficient aircraft could also push carriers to replace older planes, though US airlines were still not coming forward with new orders, EADS Chief Executive Louis Gallois said on Tuesday. While in the past planemakers had suffered from "a very brutal cycle with peaks and canyons", the emergence of an autonomous second market in the Middle East and Asia made the industry less susceptible to the current credit crisis and threat of a US recession. "We do not see that the second market is suffering from the downturn for the time being," Gallois told an international media seminar at the company's plant in Bremen, Germany. "It's two different markets, two different cycles. We could expect not to have peaks and canyons, but more hills and valleys." Airbus and Boeing announced earlier this month that 2007 was a record year for plane orders, with the European planemaker winning 1,341 and its US rival beating it with 1,413 orders. Airbus has said it does not expect to match that level of orders this year, though its order books are full for years ahead at it continues to roll out its delayed A380 superjumbo. Environmental pressure on the air transport industry and the high cost of fuel amid record oil prices could prompt more airline customers to invest in new aircraft, Gallois said, adding that taxes could also play a key role. "The environment should not be a threat or a burden. It's the opposite. It's an opportunity," he said. "Taxation could be a very efficient way of pushing us to make progress and to push also some of our customers. It could be an incentive for airlines to go to new products and replace their fleet." US carriers that currently seemed reluctant to return to the market would be obliged to replace their fleets to be competitive, as their aircraft burned 10-20 percent more fuel than the most modern planes, the EADS chief added. At the same time as orders are booming, Airbus is cutting 10,000 jobs and selling plants to restore its competitiveness after being hurt by the A380 delays and as it struggles with the strength of the euro against the dollar, the currency in which aircraft are sold. EADS meanwhile is on the look-out for acquisitions in the United States to reduce its dependence on Airbus revenues. Group strategy chief Marwan Lahoud recently told French newspaper Le Figaro a purchase in the US this year was a necessity, but Gallois said there was no rush. "We are looking for acquisitions," Gallois told reporters. "We are just at the beginning of 2008 and we will see. We are not obliged to buy a company in 2008. If we have a good opportunity, we will take it." Gallois also remained hopeful of clinching a deal to supply refueling tankers to the US Air Force in a joint bid with Northrop Grumman. "I think we have the best product. Our product is ready. We have our chance to win," Gallois said, adding he expected a decision could come in February or March.  (Reuters)
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