Airline expert sees more than half scheduled aircraft deliveries being deferred this year

Boeing Co and Airbus have some 1,480 aircraft deliveries scheduled for this year, but more than half may be deferred as buyers wrestle with falling capacity demand and weaker credit markets, according to one industry spokesperson.

Speaking at the Wings Club in New York City on Thursday, Giovanni Bisignani, director general and CEO of Geneva-based International Air Transport Association (IATA), said his prediction was based on the rapid deterioration of cargo and passenger demand, conversations with airline CEOs and the turmoil in the financial markets.

"Now you have two situations, not just the problem of airlines not anymore interested in having this capacity, but also the financing," he said. "In order to finance those planes, you need at least $20 billion from the financial institutions. And I don't think that there is $20 billion available to finance those kinds of projects."

It's not an outlook to be taken lightly: Before IATA, Bisignani spent five years heading the Italian airline Alitalia, was and as advisor to Pratt & Whitney, and his currently board member with UK air-traffic management firm NATS Holdings Ltd.

However, he did offer a flicker of hope by saying that his "perception" that Airbus and Boeing will fail to deliver more than half of the aircraft produced this year "can easily change" if there is an improvement in economic conditions, the financial markets or airline traffic.

Earlier Thursday, Airbus said it would slow down its new aircraft production as carriers continue to cut their capacity in response to the economic slowdown. Last month, Boeing said it expects an increase of deferrals and cancellations for the year. (See: Airbus slows production)

Speaking with reporters, Bisignani said air traffic demand has been falling at an alarming rate, and that he expects to increase IATA's capacity-cut forecast for 2009 by one or two percentage points from the current 3 per cent. International airfreight traffic plunged 22.6 per cent in December compared to a year earlier, industry data showed.

Worse for passenger airlines is that as demand numbers continue to fall, yield numbers decline even more rapidly as premium ticket holders migrate to economy class. The headcount's still there, but revenues will be even lower, he said. The signal that things will finally turn around for the economy will be a reversal in cargo traffic, particularly in the Asia-Pacific region.