Boeing bullish on plane cancellations

By Bill Rigby

FARNBOROUGH (Reuters) - Boeing 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 (135 billion pounds) 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.