Cancellations outpace orders for Boeing and Airbus

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Boeing and Airbus are starting to lose more orders than they’re booking.

In January, both of the world’s major aircraft manufacturers reported more cancellations than orders, as airlines continued to cut back on capacity and scale back their growth plans.

In January, Boeing reported orders for 18 jetliners, a drop of about 72% from the same month a year earlier. During the same month, the manufacturer also reported 31 cancellations, for a net drop in the order book of 13 aircraft.

For 2008, Boeing reported 662 net orders for commercial aircraft, less than half of its 2007 total and its lowest total since 2004.

Airbus, meanwhile, booked only four orders in January and reported 12 cancellations (three A318s, two A319s, three A320s and four A321s), reducing the total number of aircraft on order by eight.

Of the two plane makers, Boeing might be the one to suffer the greatest impact. As 2008 ended, it looked like the cancellations and airline delivery delays could play into the manufacturer’s favor because it was already behind schedule, owing to a lengthy strike through the fall and development issues with its 787 Dreamliner.

But staying on schedule is no longer the problem. With the recession deepening and the list of cancellations growing, Boeing is considering a production slowdown.

Boeing Commercial Airplanes CEO Scott Carson told investors at a Barclays Capital investors conference this month that orders have been deferred by a couple of fiscal periods, and production cuts might be necessary in 2010.

International Lease Finance Corp., a leasing company that is the biggest overall client for both Boeing and Airbus, said the two manufacturers might have to cut their respective outputs by more than a third to compensate for the drop in orders.

Southwest was supposed to take delivery of 22 Boeing 737s in 2010 and now is slated for only 10. The airline has dropped firm orders for nine Boeing jets and options on another 32 through 2012.

American will receive seven fewer 737-800s from Boeing this year. It still plans to buy 76 of the planes, including 29 this year, which it will use to replace MD-80s.

And American is still on board with its order to buy 42 Boeing 787-9 Dreamliners for about $8 billion, with an option for 58 more.

But Boeing has seen some drop in demand for its Dreamliner on the international front. LCAL, a Dubai-based leasing firm, recently cut its 787 order from 21 to five, while Russia’s S7 Group canceled its 15-plane order.

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