Planemakers fly high in 2007

Airbus confirmed 2007 as a record year for planemakers on Wednesday by posting orders for 1 341 aircraft while boosting cost savings aimed at catching arch-rival Boeing.

Boeing took top spot with 1 413 orders and has suffered less from a weakened dollar than Airbus, which has launched its Power8 cost-savings drive in response.

“These are enormous numbers; it was a staggering year. Now it becomes a question of how we manage the backlog,” Airbus chief Tom Enders told journalists.

“Power8 delivered cost savings very considerably ahead of schedule in 2007. The official version is more than â,¬300-million; I can tell you it is close to â,¬500-million,” he said.

The planemaker aims to cut 10 000 jobs and sell plants to lower its costs.
It said it had achieved 30% of its planned reduction in overhead positions in 2007, or 3 000 jobs, equally split between Airbus and its suppliers.

Yet despite the reductions achieved mainly through attrition, Airbus still needs to hire production workers and skilled engineers to deliver ambitious new projects.

The overall Airbus headcount of about 55 000 fell slightly in 2007, chief operating officer Fabice Bregier said.

Shares in Airbus parent EADS were up 0,4% at â,¬18,50 at 1.47pm GMT, erasing earlier losses.

The Airbus orders were valued at $157,1-billion at catalogue prices, though these are often subject to discounts.

The Toulouse-headquartered company’s backlog stood at 3 421 planes or six years of production.

Airbus said its 2007 deliveries reached a record 453 aircraft, topping its forecast of 440 to 450 planes.

Orders drop

For 2008, Enders predicted a drop in orders but deliveries above 470 aircraft, including a target of 13 A380 superjumbos. “We will put every effort into reaching our target for [13 A380] deliveries in 2008,” he said.

The delivery race is set to be a close contest this year as Boeing delays first deliveries of its 787 Dreamliner and Airbus pulls out all the stops to prevent a repeat of production problems that have delayed the A380.

Analysts pay close attention to deliveries since that is the point at which planemakers get paid for each plane produced.

The Airbus announcement came on a day when Boeing was preparing to announce a second delay to its 787 Dreamliner, a source familiar with the situation said, threatening to push deliveries of the new, hot-selling plane further back.

Airbus is recovering from a two-year delay to its A380 superjumbo, which entered service last year, and has been forced to push back its A400M military airlifter by six to 12 months.

“We are fierce competitors, but if anybody can understand the problems our colleagues at Boeing are probably facing at the moment, it’s us. I wish [Boeing commercial airplane chief] Scott Carson and his team good luck,” Enders said.

He repeated that Airbus is planning further cost-saving measures to combat the value of the dollar falling further, to about $1,48 to the euro from $1,35 when the 2007-2010 restructuring plan was first announced.

The original plan calls for recurring operating savings of at least â,¬2,1-billion by 2010, but the sliding dollar means this could fail to deliver the planned improvement in profit.

Enders said while the main savings target could still be met, it would be difficult to meet another target for a mid-single-digit 2010 return on sales at current dollar rates.

Bregier said the additional savings plan will be defined around the end of the first quarter.

Airbus’s net order tally was adjusted for 117 cancellations in 2007 as cargo carriers walked away from a freight version of the A380 and airlines began switching to a redesigned version of the A350, trading up from an earlier version.

Airbus received 290 orders in 2007 for the A350 XWB, a challenger to Boeing’s 787. That brought total orders for the mid-sized twinjet to 292 aircraft.

Sales chief John Leahy predicted more than 100 A350 orders in 2008 and 30 orders for the A380.—Reuters

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