ILFC mulls orders for up to 300 Airbus, Boeing planes on the back of airline deferrals
25 Jun 2008
International Lease Finance Corp, the world's biggest aircraft lessor, said it may order 300 jetliners from Boeing Co. and Airbus SAS to meet demand from airlines that can no longer afford to buy their own planes. The orders will likely materialise at the Farnborough International Air Show in the UK.
ILFC may purchase 150 single-aisle aircraft from each manufacturer, chief operating officer, John Plueger, said in an interview. The order could likely be worth about $22 billion at list prices, though the the lessor said it's seeking major discounts. Executives said that a marketplace in disarray could provide a ''lot of opportunities.''
Los Angeles-based ILFC, a unit of American International Group Inc, is the world's biggest owner of commercial airliners, with a 1,000-strong fleet.
Executives also said that the leasing firm could equally well wait six months to a year to place orders if prices of aircraft seemed likely to decline further. The industry is coping with a downturn on the back of a slowdown in the economy and climbing costs for airlines.
Airlines are increasingly looking at deferring, or even cancelling, orders placed by them in better times.
Kerosene now accounts for about 40 per cent of carrier costs - up from 13 per cent five years ago, according to IATA. Crude has already touched record highs of $139.89 a barrel on 16 June.
Manufacturers, Airbus and Boeing, may be forced to slash prices as the airline industry heads for losses estimated by IATA to reach $6.1 billion this year. Some 24 carriers have already folded up, or filed for bankruptcy in 2008. Others are postponing deliveries in order to cut spending.
Industry analysts now estimate that manufacturers Airbus and Boeing may lose as much as any as one-third of their orders. The Wall Street Journal cited ILFC chief executive officer, Steven Udvar-Hazy, as saying 25-30 per cent of the backlog may be at risk.
