Farnborough Air Show: Civil aviation shake-up will weed out weak players

THE CIVIL aviation industry is set for a big shake-up, leaving an small elite group of airlines with financial muscle, according to Dick Evans, chief excecutive of British Aerospace. Mr Evans said that as the market recovered, aircraft makers would no longer provide aircraft leasing finance for weak or loss-making airlines, making it difficult for many to survive.

Speaking on the first day of the Farnborough Air Show, Mr Evans said that companies, including Boeing and Airbus - the European manufacturer in which BAe is a partner - are using their balance sheets to support 'lousy' airlines. He said the market for aircraft was beginning to grow again but the rate of growth would depend on the airlines' viability.

'As times get better, manufacturers will not put their balance sheets at the disposal of airlines,' Mr Evans said. 'Manufacturers will not support a twopenny-ha'penny airline in Chapter 11. TWA should have gone to the wall long ago.'

Airbus, whose partners include Aerospatiale of France, Casa of Spain and Deutsche Aerospace, plans to have its own finance subsidiary operating by the beginning of 1995. Mr Evans stressed that the new company would be concentrating on high- quality risks and would not go to shareholders or to the equity markets seeking money to prop up loss-making airlines.

Boeing of the US, Airbus's main rival, said that to finance planes airlines would need to increase their ability to make a profit under intense competition.

Ron Woodard, president of Boeing's commercial aeroplanes group, said: 'Achieving sustained profitability will be a major challenge. Ultimately, the health of the industry - for the airlines and the manufacturers - depends on their profitability.'