Graveyard yawns for ailing plane makers

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Are the soaraway cheap airlines flying too close to the sun?

A vast stretch of the Arizona desert where the world's airlines park their surplus jets is to expand to a record size, causing fears over the future of Boeing and Airbus.

The desert park is home to 1,828 grounded aircraft, but research by investment bank UBS Warburg predicts that number will grow to 2,250 by the end of the year.

This will represent 15 per cent of the global fleet, surpassing the previous peak of 11 per cent in 1991 when many countries had slipped into recession.

The glut of new and used jetliners will play into the hands of the no-frills airlines which are defying the gloom and placing large orders for new aircraft.

Last week easyJet revealed that it was planning to buy 75 new Boeing or Airbus aircraft. Based on the list price of new aircraft, this would cost the company around £2.3bn. But airline insiders say easyJet will be able to negotiate a 25 per cent discount.

For the airlines, such as Ryanair, seeking second-hand aircraft discounts on the usual price could be has high as 60 per cent, depending on the age of the plane.

UBS Warburg points out that while the world's airlines reacted swiftly to the downturn in the industry after the terrorist attacks of 11 September, Boeing and Airbus were slow to cut capacity. "As a result, the demand supply imbalance is likely to be extended and thus the industry recovery [damped down]," says the report.

Boeing delivered 522 new aircraft in 2001 and states the number will fall to between 350 and 400 this year. Airbus is more bullish. In 2001 it delivered 320 and says that will fall to 300 in 2002.

UBS Warburg says that the two aircraft makers may have to cut capacity even further next year.