And That Concerns Boeing And Airbus

It took a little longer... but record-high oil prices have started to take their toll on carriers outside the United States, as well. On the same day Air Canada announced it plans to reduce capacity and cut jobs before the end of the year, comes news a number of profitable foreign airlines are also feeling the pinch.

Qantas, Cathay Pacific and low-cost carrier Ryanair are among the overseas airlines looking to park planes or reduce orders, according to the Chicago Tribune. Of even greater concern to airlines -- and planemakers Boeing and Airbus -- are signs record growth in a number of hot markets is starting to cool.

Passenger growth is beginning to decline in the Middle East, India, and China, according to a recent report by JPMorgan Securities analyst Joseph Nadol. Manufacturers in particular have looked to those regions to keep their streaks of record sales alive, even as the US economy slumps.

"There's no question it's a difficult situation," said Boeing Commercial Airplanes Marketing VP Randy Tinseth. The news comes at a particularly irksome time for the American planemaker, as recent difficulties with its upcoming 787 Dreamliner appear to be solved, and that plane moves closer to first deliveries.

The Dreamliner has a healthy sales backlog, with close to 900 gross orders for the composite-bodied plane. Most of those orders have come from overseas carriers... who may not be inclined to accept all their planes in coming years, should a global slump in air travel take firm hold.

More encouraging for Boeing and Airbus is a report by Paul Nisbet, an aviation analyst with JSA Research. Nisbet says even if growth does slow in the Mideast and Asia, it should still be healthy... just not at the breakneck pace seen in recent years.

The analyst also notes most foreign airlines have their fuel costs hedged -- and even if they don't, those airlines don't have to pay their fuel bills in US dollars. That's a significant reason behind current woes in the American airline industry.

Both Airbus and Boeing have about seven years of production backlog on their books... so even if they do lose some orders, Nisbet said, it shouldn't hurt them too much. "I don't see many of Boeing's orders likely to be in jeopardy, not at this point," he said. "They could lose several hundred and it wouldn't mean an awful lot."

Boeing's Tinseth adds even as US carriers look to park their oldest planes to reduce capacity, new orders may still be on the horizon... as airlines try to move to more efficient aircraft. A spokeswoman for American Airlines confirmed that carrier is stepping up deliveries of new 737s, to replace its old MD-82 and MD-83 airliners.

"With this combination of overbooking and airlines willing to move forward, we've been pretty well protected," Tinseth said. Airbus Chief Operating Officer John Leahy echoed those statements, saying Airbus' upcoming strategy will focus on "overbooking and very actively managing the order book.

"So far it is handing the airline crisis well, but if the fuel price 'bubble' were to soar to $200 per barrel, than all bets would be off," Leahy cautioned.

FMI: www.boeing.com, www.airbus.com