Home' Asian Aviation : AAV Dec Jan2011 2012. Contents Andrzej Jeziorski
As the contents of this issue demonstrate, the year 2011 is
ending in a cacophony of mixed signals about the state of
global aviation and aerospace.
e announcement that American Airlines parent AMR
had nally failed in its ten-year struggle to be the only major
US legacy carrier to avoid bankruptcy (see page 7) sent
shudders through the industry. at development is largely
due to the company s failure to reach agreement with its
unions on labour costs.
In stark contrast, the Dubai Airshow earlier in the month
drew a record number of visitors and announcements of
massive aircra orders from both Boeing and Airbus (see page
20). At the same time, Australia s Qantas is at loggerheads
with its own unions (see page 17) and the International Air
Transport Association is issuing dire warnings about falling
cargo demand (see page 6) -- an early indicator of declining
business con dence.
Analysts say, however, that the AMR bankruptcy
announcement may in fact turn out for the best for the
"To succeed in the US airline industry, you need to go
bankrupt rst," says Teal Group analyst Richard Aboula a,
only half jokingly. He points out that Chapter 11 protection
now gives AMR the freedom it needs to extract itself from
onerous labour, aircra leasing and other obligations, and with
some US$4 billion in cash available, AMR is -- paradoxically
-- " scally solid enough for a successful bankruptcy".
Boeing Commercial Airplanes President and CEO Jim
Albaugh told Bloomberg that he was "really con dent that
American s going to come through this restructuring a better
company, a more competitive company, and if they re more
competitive and making more money, they re going to buy
Another paradox of this situation is that AMR has hitherto
faced a disadvantage for not having gone bankrupt earlier --
it has been le out of the airline mergers that have seen it
knocked from its former ranking as the world s largest carrier
to being the US number three.
ere was no way a restructured, post-bankruptcy airline
would combine with a carrier still facing the problems
afflicting AMR . After bankruptcy, Aboulafia says, the
road will be cleared for a merger with a suitable partner --
"USAir ways, for example," Aboula a suggests.
Earlier in November at the Dubai Airshow, Airbus proudly
announced its second-best order intake ever at the event, which
attracted a record 56,548 attendees seeking to do business in
the Middle East -- seen as an oasis of stability as markets such
as Europe and the US struggle with economic upheavals.
Airbus collected 211 orders in Dubai, valued at US$20.5
billion, thanks to airlines enthusiasm for the re-engined
A320neo, which has racked up an impressive 1,500 orders
and commitments from 26 customers just a year a er the
programme was launched.
Qatar Air ways was the biggest buyer, ordering 50
A320neos and ve A380 Superjumbos, worth a total US$6.4
billion at list prices. Meanwhile, Kuwait-based Aviation Lease
and Finance (ALAFCO) ordered another 50 A320neos and
Aviation Capital Group ordered 30, showing the aircra s
strong appeal to lessors.
"Our A320neo has again been the star of the show,"
bragged John Leahy, Airbus s top salesman. Striking a brief
note of caution amidst his optimism, he added: "Despite
some storm clouds on the horizon, there is still strong market
demand for fuel-e cient aircra from airlines and lessors."
For its part, Boeing revealed its biggest single order ever
by dollar value in Dubai, with Emirates signing an US$18
billion deal for 50 777-300ERs, with US$8 billion worth of
options for 20 more. e order makes 2011 the 777 s best-
selling year, surpassing the 154 orders Boeing won in 2005.
Then -- potentially surpassing even that -- came the
announcement from Indonesia s Lion Air of a commitment
for 201 of Boeing s re-engined 737 MAX jetliners and 20
737-900ERs (see page 6). If this agreement pans out into a
rm order -- valued at US$21.7 billion -- it will overshadow
the Emirates 777 order as Boeing s biggest single deal ever,
both by dollar value and by aircra numbers.
e agreement also covers purchase rights for an additional
150 aircra , valued at more than US$14 billion.
Also at the show, business aircra manufacturers waxed
lyrical about the potential of the Saudi Arabian market.
"Right now, we see Saudi Arabia as the greatest opportunity
for sales in the region," said Mark Paolucci, Cessna s senior
vice-president of sales. "The country s government and
individual customers continue to be key players in the
Dassault Falcon clearly agreed, as it announced that Saudia
Private Aviation-- the private aviation arm of Saudi Arabian
Airlines -- was set to become the world s largest owner of
Dassault Falcon 7X business jets, taking delivery of its fourth
aircra in the weeks following the show.
Cessna s Paolucci also said that the business jet maker
believes "that Morocco is another great market that shows
good potential for Cessna".
Agreement came this time from Bombardier, which
revealed that it has signed a preliminary agreement with the
Moroccan Government to set up a manufacturing facility
there. e Canadian company says it plans to invest about
US$200 million in the new plant over the next eight years.
The one thing that is clear from this mixed bag of
developments is that the biggest trouble spots for the
industry are in its biggest traditional markets -- the US and
Europe. Meanwhile, Asia and the Middle East continue to
become ever more attractive for makers of both commercial
and business aircra .
Mixed signals for industry
as 2011 draws to an end
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"To succeed in the US airline industry,
you need to go bankrupt first." --
Teal Group analyst Richard Aboulafia
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