Boeing and U.S. government officials sought to calm fears about Southeast Asia on Monday, saying the financial crisis will end sooner than most experts believe.
Company and government officials, speaking on the first day of the Asian Aerospace Show here, appeared to downplay the seriousness of the economic turmoil to try to prevent further panic. Nearly every official who spoke expressed confidence that the financially troubled region will overcome what everyone is calling a short-term problem.
But aerospace executives arriving at the show are nervous and uncertain about how the financial turmoil will affect airplane sales.
The executives fear that if one airline cancels an order, others will follow, causing a frightening chain reaction.
“This industry is like real-estate speculation and the stock market - they overshoot in both directions,” said Joel Johnson, a spokesman for the Aerospace Industries Association. “What you don’t want is a reverse cascade of events.”
Boeing, which has the most at stake in Asia, was especially cautious in its remarks.
About 77 percent of the airplanes to be delivered to Asia this year are coming from Boeing, and officials hope none of the deliveries will be canceled or delayed.
The company believes the Asia-Pacific region still is the fastest-growing market for air travel and commercial airplane purchases. Asian carriers will account for a third of the world’s orders for commercial aircraft, worth about $150 billion, over the next 20 years.
Respected industry analysts, however, have a more sober outlook. Passenger growth has stalled for many Asian airlines, reflecting their countries’ weakening economies, they say.
The best the Asia-Pacific region can achieve by the new millennium is an annual 3 percent increase in passenger travel. That estimate is down dramatically from earlier projections of 10 percent annual growth, according to The Airline Monitor, an industry newsletter.
That translates into at least 370 fewer jetliners needed in the Asia-Pacific region in the next three years than previously expected.
Larry Dickenson, Boeing’s senior vice president for Asia/Pacific, said that despite the economic troubles, no airlines have canceled an order.
Boeing officials have said that as many as 60 airplanes ordered by Asian airlines could be canceled or delayed over the next three years, but Dickenson said it’s difficult to pin down a number.
“Realistically, there has been a lot of movement back and forth,” he said. “We’ve had many discussions with airlines, and we have not seen anything of that magnitude materialize thus far.”
Even Philippine Airlines, which appears to be on the verge of canceling orders for seven 747-400s, has yet to make a decision, Dickenson said.
“I can tell you right now they have not canceled any 747s,” he said. “We are in discussions with them on how they best can meet their needs. But from my standpoint, there is no thought toward cancellations.”
Following the theme of the day, Dickenson sought to reassure Boeing’s Asian customers and suppliers. The company has 150 suppliers throughout Asia who generate more than 22,000 jobs.
“We will be here with our customers, suppliers and partners in the good times and the bad,” he said. “What you see today is a very temporary problem.
So far, though, there is no evidence the crisis will end shortly.
In fact, U.S. Commerce Secretary William Daley, who concluded his tour of the region with a stop here before the aerospace show, called this crisis a “defining moment for Asia - perhaps the most important in 30 years.”
He called on Japan to offer more financial assistance to the region by opening its markets to imports - something the Japanese government rejected Sunday.
“As the second-largest economy in the world, Japan will determine the speed and strength of the recovery of Asia,” Daley said in his speech. “As Japan goes, so goes Asia.”
Asian governments also have delayed or canceled the purchase of military equipment. Thailand, for example, is canceling its order for Boeing F-18 fighter jets and is looking for another buyer.
Financially strapped governments have postponed military exercises scheduled with the U.S. military, said U.S. Air Force Lieutenant General Eugene Santarelli, vice commander of the Pacific.
“We have noticed an impact,” Santarelli said. Some military sales have been delayed, he said, and “we’ve had to delay and temporarily cancel some exercises, but we do not see that as a long-term effect.”
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