Financial worries for airplane makers

The World

Some 100,000 people work in Toulouse in the aero technology industry. Airbus CEO a year ago expressed confidence but since then the airline industry in Europe has been hit hard. Last month alone Airbus received a drop in a third of its orders since last year. Local residents have a lot to say. This business owner says the aero technology businesses are the lifeline of the region and anything affects them affects the rest of the businesses in the region. Clearly locals are in money saving mode, but Toulouse and Airbus are not in crisis mode yet. The trouble is still around the corner says this French bank director whose banks lends money to airline companies. He says the liquidity crunch is creating a huge shortfall and someone has to drop out. If credit doesn’t materialize, analysts predict Airbus could have up to 100 unsold planes idling in its own parking lot. Some analysts say Airbus can withstand a limited slowdown in the short term but if global liquidity doesn’t improve by the end of the year, things could become very difficult. Lowcost airline failures could also bring more bad news to Toulouse. Last year lowcost flights accounted for about two-thirds of new traffic into Toulouse. Lowering prices is one strategy open to Airbus as well, but so far that’s not in the cards.

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