The head of European aerospace group EADS said on Tuesday that its planemaker Airbus would be unable to avoid the impact of global financial turmoil, although there was "no reason to panic."
By Philip Waller
EADS Chief Executive Louis Gallois said Airbus was monitoring the impact of the credit crunch on the airline market on a weekly basis and could not predict what was going to happen in 2009.
The company has not seen any cancellations linked to the crunch so far, although Gallois added: "I'm sure we will see more consequences next year."
The European aircraft maker's airline customers were beginning to feel the impact of falling traffic, limited or negative growth and passengers deserting business and first-class travel for economy seats, he said.
Even aircraft leasing companies, which had continued to order aircraft, were now having difficulties with financing, Gallois said.
Factors offsetting the economic gloom included falling oil prices and the fact that Toulouse-based Airbus had orders until 2011, he said.
"I have to say I don't think we will escape the crisis, but there's no reason to panic," Gallois told an investor conference in London's financial district.
Airbus said on Monday that it had total net orders of 756 aircraft and had made 437 deliveries at the end of November.
The group said it had no update on the engine-related problems that have delayed production of its new A400M military transport aircraft.
The A400M, Europe's largest military project, is running between six and 12 months late.
Last year, EADS took 1.4 billion euros (1.2 billion pounds) of provisions for delays in the A400M, which is costing seven European NATO nations 20 billion euros to develop and build.
The company was discussing the situation with the European governments that had pledged to buy the aircraft, which include France and Britain, Gallois said.
Earlier, Will Whitehorn of Sir Richard Branson's Virgin group, which includes airline Virgin Atlantic , told the conference that the industry was facing "a dire situation."
Highlighting difficulties that U.S. aircraft giant Boeing and Airbus were having with their 787 Dreamliner and A380 flagship aircraft respectively, Whitehorn, the president of Virgin's space travel venture Virgin Galactic, said: "There's going to be a lot of stress on the industry and it's up to these two manufacturers to sort themselves out and start delivering products fit for the 21st century."
(Reporting by Philip Waller, Editing by Will Waterman and Erica Billingham)
LONDON (Reuters)