Airbus aims too high

21 July 2004 By Marianne Brun-Rovet

The announcement of a big Middle Eastern order may appear to give credence to its argument that things are on the mend. But it doesn t change the fact that there is still too much capacity around. Airbus s plans to crank up production look foolhardy.

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Airbus announced a $7bn order from a recentlyformed Middle Eastern airline, underscoring the European aerospace company's recent upbeat comments on the state of the global aviation market.

Etihad Airways, the Abu Dhabibased airline that started flying last November, on Tuesday placed one of the biggest ever orders for longhaul aircraft, including four Airbus A380 superjumbos.

The order was unveiled by Airbus on the second day of the UK's Farnborough Air Show, one of the key events in the aviation industry calendar.

The news followed comments from Noel Forgeard, chief executive of Airbus, earlier this week in which he forecast that the company would increase output of its main family of aircraft, the A320, by nearly 50 per cent over two years.

Boeing of the US also made upbeat comments about the state of the aviation industry, but said nothing about increasing production. Airbus delivered more aircraft than Boeing for the first time in its history last year and expects to do the same this year.

Etihad signed a memorandum of understanding with the European aircraft maker for 24 widebodied aircraft with options on a further 12 in a deal valued at $7bn at list prices, before heavy discounts.

Delivery of the 24 aircraft will start in January 2006, with 22 to be delivered by the end of 2007 and two in 2008.

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