Airbus and Boeing Unfazed by Warnings of Massive Funding Gap

The sentiment expressed by the world’s two big airliner manufacturers seem increasingly out of line with the reality perceived by the financial community w

By Gregory Polek • Senior Editor

March 30, 2009

The sentiment expressed by the world’s two big airliner manufacturers seem increasingly out of line with the reality perceived by the financial community when it comes to airlines’ ability to fund aircraft deliveries this year, according to some of the industry’s most prominent analysts. Merrill Lynch and UBS each reported from this month’s ISTAT conference that a yawning funding gap will force Boeing and Airbus to modify their respective plans for maintaining production rates or find themselves building dreaded “white tails.”

“All but the manufacturers foresee a $10 billion to $20 billion funding gap, equivalent to 15- to 30 percent of 2009 forecast production, mainly attributable to much lower commercial bank funding,” said the UBS report. Merrill Lynch, meanwhile, projected the very same 15- to 30-percent cut in production rates, but by mid-2010.

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