Boeing likely to delay deliveries to Asia due to economic slump
Boeing likely to delay deliveries to Asia due to economic slump
KUALA LUMPUR (Reuters): The head of Boeing Co said on Saturday that Asia's financial difficulties might delay airplane deliveries over the next three years but would have no long-term impact on the U.S. aerospace giant's business.
Boeing chairman Phil Condit told a news conference in the Malaysian capital that a trip to Asia had boosted his confidence in the region's capacity to recover from a financial crisis that has cast a shadow over its economic prospects.
"My confidence, if anything, is higher," he said after signing a 153 million ringgit (US$40 million) agreement to set up a joint composite parts factory with Hexcel Corp, Malaysia Helicopter Services Bhd and Sime Darby Bhd.
Condit said Boeing's investment in the joint venture, which will make composite parts for secondary structures for Boeing commercial aircraft and eventually other customers, underscored the firm's commitment to Malaysia and Asia.
"Together we can weather what is a local storm," he said.
Prime Minister Mahathir Mohamad witnessed the joint venture signing.
"What is happening in Malaysia today will not last forever," he said, referring to the slowdown and financial turmoil that have battered both the ringgit and local shares.
"We can make adjustments and I am quite sure that businesses of a long-term nature will eventually find they not only survive but succeed," Mahathir said.
"I hope the haze in the financial world as well as the other haze will disappear," the prime minister said, referring to smoke from forest fires in neighboring Indonesia last year that covered much of Southeast Asia in smog.
Last month Boeing said it expected to deliver 60 fewer airplanes than previously forecast to Asian customers over the next three years due to the region's economic woes.
Boeing said it expected the crisis mainly to affect deliveries of wide-body 747 and 777 jets in 1999 and 2000.
Philippines Airlines last month moved to cancel four 747-400s and some analysts believe more cancellations or deferrals could come from other regional carriers.
Condit was asked to comment on Boeing's assessment now that he had visited Indonesia and Malaysia this week.
"The visit has been very positive. Any airline must adjust to current traffic situations. So we may see some airplanes move just to adjust to the current conditions," he said.
"But my fundamental assessment has not changed, and when we talked about the 60 airplanes, that was a macro look at the economic impact, and really was a delay over the next three years. But long term we don't see any diminution at all."
The chairman of Malaysian Airline System Bhd told Reuters after the news conference that his airline would not cancel aircraft orders due to the economic slowdown.
"Those aircraft that we have, the older aircraft that we have, we may be selling some of them, or maybe lease out some of them," Tajudin Ramli said.
Malaysia Helicopter Services has a 29.5 percent stake in national carrier Malaysian Airline.
Each of the four joint venture partners will hold equal stakes in the composite parts company, called Asian Composites Manufacturing Sdn Bhd. The factory will be located on a 31-acre site in northern Kedah state.