Published On: Tue, Jul 26th, 2016

As global demand slows, airlines defer wide body jet orders

widebodyAmerican Airlines’s decision to postpone delivery of nearly two dozen of Airbus Group SE’s sleek, fuel-efficient A350 jetliners amplifies concerns that demand is sagging for international air travel and large new aircraft.

Wide-body sales have stalled this year as inexpensive fuel and a glut of readily available used jets diminishes airlines’ need to upgrade their fleets. Airbus and Boeing Co. notched few orders of twin-aisle planes at last week’s Farnborough Air Show in the U.K. Boeing’s 777 jetliners and Airbus’s A380 superjumbo were shut out altogether.

American said Friday it would take 22 of the Airbus planes an average of 26 months later than planned as it reins in capital spending. The world’s largest carrier — with an influence that ripples through the industry — is the third major U.S. airline this year to delay new aircraft deliveries in favor of older models in an effort to tamp down costs or capacity.

Airbus dropped 1.2 percent to 51.40 euros, while Rolls Royce Holdings Plc, the sole engine maker for the A350, slid 3.2 percent to 721 pence. Boeing, which shares a twin-aisle duopoly with Airbus, fell slightly.

American delayed delivery of five Dreamliners last year. The airline told employees in May it would speed the retirement of some of its Boeing 767s and all of its Embraer E190 regional jets. The carrier’s A350s were expected to replace aging Airbus A330-300 aircraft that American had decided to retire.

Airlines are tightening belts out of concern “that last year’s oil windfall was a one-off” event, Aboulafia said. “Cutting spending and reducing new jet intake is one of the only other levers they control in any kind of downturn.”

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