The trend over the last few years in which customers have placed extremely large orders for airliners has raised questions about the underlying reasons and its potential effect on OEMs that continue to raise production rates in response. The practice seems most prevalent among customers for narrowbodies, prompting both Boeing and Airbus to project rate increases to well beyond 40 in the coming years and raising concerns within some circles of a so-called bubble in the sector.
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In an informal poll of several hundred aircraft traders and lenders taken during the recent ISTAT airline finance conference, 74 percent thought narrowbody rates from 2013 to 2015 would prove too high. Only 9 percent rated narrowbody rates too low, and 17 percent “just right.”
Meanwhile, some of the industry’s highest profile leasing company executives offered mixed, but carefully considered, reactions to what CIT Group Transportation Finance president Jeffrey Knittel called the “mega order syndrome.”
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