Airbus warns of financial turbulence

LONDON: Airbus��� chief salesman John Leahy said on Friday that he is optimistic that the airline industry is recovering although he warned that financing conditions remain tight.

���Recessions begin, they have a middle and an end. We think we���re about the middle,��� he said during a presentation in London. ���We're seeing the recovery starting, but there are still some dark clouds on the horizon because the airlines are in weaker financial condition.���

Airlines are suffering from persistently high fuel prices, weak demand, and falling fares. They are struggling to fill seats, especially in business and first class, as the recession has hit air travel.

Airbus expects some cancellations and deferrals as airlines, who slashed prices in recent months to keep planes full, struggle to raise cash. ���This is going to be a difficult winter," said Leahy.

Airlines "didn't build up the war chest" to pay for planes as yields dropped over the summer, he said. In its global market forecast, Airbus said that it expects its airline customers to see passenger volumes recover next year with as much as 4.6 per cent growth in a "best case scenario," or with zero growth in the worst case..