Airbus lifts output forecast, but warns of 'dollar crunch'

19th September 2011, Comments 0 comments

European planemaker Airbus raised on Monday its long-term industry forecast, despite markets turmoil, but warned of a possible "dollar crunch" among European banks that could restrict aircraft financing.

Airbus, a unit of European aerospace giant EADS, predicted in a key report that almost 27,800 passenger and cargo aircraft would be sold for a total of $3.5 trillion (2.6 trillion euros) between 2011 and 2030.

"In the midst of troubled financial markets, Airbus foresees strong ongoing demand for commercial aircraft," the group said, noting that there was an ongoing trend for larger fuel-efficient aircraft.

It added: "People need and want to fly more than ever before. Over the next 20 years the aviation sector is expected to remain resilient to cyclical economic conditions as in the past."

Demand remains driven by the need to replace ageing jets, population increases and rapidly-growing emerging markets.

"Factors driving demand for new aircraft include population growth with increasing wealth, dynamic growth in emerging economies, strong continued growth in North America and European markets, greater urbanisation and a more than doubling in the number of mega-cities by 2030," Airbus said.

"Drivers also include the ongoing expansion of low cost carriers, and the need to replace older less efficient aircraft with new eco-efficient models in established markets."

However, the company also voiced worries about aircraft financing power from European banks, just days after the European Central Bank spearheaded a global drive to provide dollar liquidity as some European banks have found it difficult to borrow greenbacks.

"We are watching, especially with the European banks, the potential dollar crunch here," Airbus chief commercial officer John Leahy told reporters at a London press conference on Monday.

"We saw the ECB and (other) monetary authorities loaning dollars to the European banks.

"There has been a bit of an inability for some of the European banks to raise dollars.

"That concerns us because aircraft are to a very large degree, sold in dollars and financed in dollars, so you need to be able to raise long-term dollars.

"That could be a concern for us and we are watching it very carefully," he added.

Some European banks have run into serious problems in borrowing dollars recently because the US funds that normally lend to them have become reluctant to do so for fear of contagion from the eurozone debt crisis.

The combination of the debt crisis and liquidity squeeze threaten to turn into a credit crunch, according to some bankers.

© 2011 AFP

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