By Bill Rigby
FARNBOROUGH (Reuters) - Boeing Co is confident it will not face mass cancellations of plane orders from the world's airlines, even as they come under massive strain from soaring oil prices, hard on the heels of the biggest buying spree in the industry's history.
After a three-year boom in sales, the U.S. plane maker has 3,661 aircraft in its order book, worth more than $270 billion at list prices, to be delivered over the next six years or so. Rival Airbus, a unit of EADS , has 3,663 planes to deliver.
Some industry insiders and analysts predict that as much as 30 percent of that backlog will end up being cancelled as emerging and cash-strapped airlines get cold feet when it comes to handing over the bulk of the money for their planes.
But Boeing is holding fast to its view that the fallout will not be nearly as bad as some predict.
"Cancellations for Boeing are rare," said Randy Tinseth, head of marketing for the company's commercial plane business, in an interview at Farnborough Airshow. "We've had 196 cancellations over the last 10 years, out of about 5,000 net orders."
As record fuel prices force U.S. airlines to cut flights or rein in their growth plans, only two carriers have deferred orders, according to Tinseth -- Southwest Airlines Co and AirTran Airways, owned by AirTran Holdings .
"After the attacks of September 11, 2001, we did see about 15 percent of our backlog deferred, but few cancellations," said Tinseth. "These deferrals in the most part were from U.S. airlines."
This time around, Boeing has a much lower exposure to the U.S. market, which it hopes will lessen the blow if airlines' woes continue.
Tinseth said only 10.5 percent of Boeing's order book is destined for U.S. airlines, compared with about 60 percent during the last downturn after 9/11. Airbus says 11 percent of its current order book is from U.S. customers.
"Every week, we are looking at our deliveries a number of years out," said Tinseth, to keep a close watch on customers' financing and get an early warning if any problems are likely to occur. There are no visible problems on deliveries scheduled through 2009, he said.
Even so, Boeing is worried by the sharp rise in oil prices, chiefly for its potential effect on the world's economies.
"We're very concerned about oil, and what high oil will do to economic growth," said Tinseth. Generally, sales of commercial planes track gross domestic product growth, which Boeing is forecasting at around 3.2 percent per year over the next 20 years.
Boeing makes no official forecast for oil prices, but Tinseth said its hired consultants are forecasting $70 to $80 a barrel for the longer term, as supply and demand eventually balance out. Crude oil futures traded around $136 per barrel on Thursday.
Tinseth did not attempt to predict orders for this year. The plane maker's commercial plane chief Scott Carson said earlier this year that Boeing was not likely to hit 1,000 net orders for the fourth year running.
Boeing will have more than 600 orders for the year so far when it adds deals announced at Farnborough to its order book. Last year it took an industry-record 1,413 net orders, easing ahead of rival Airbus, even though the company had made downbeat comments about order growth.
"We do a terrible job of forecasting orders," said Tinseth.
(Editing by David Cowell)
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