Aircraft industry woes seen denting titanium demand
biz.yahoo.com
Friday September 21, 12:20 pm Eastern Time
NEW YORK, Sept 21 (Reuters) - Announced cutbacks in aircraft production and massive industry layoffs following last week's plane attacks on U.S. landmarks should hurt consumption of key aerospace manufacturing materials such as titanium, a U.S. metals executive said on Friday.
Demand for titanium was likely to drop in 2001 and 2002 amid growing demand fears at Boeing Co (NYSE:BA - news). and Airbus SAS, said Mark A. Wallace, executive vice president and chief operating officer of Titanium Metals Corp. (NYSE:TIE - news), the world's largest maker of titanium mill products. "In terms of what's happened to the airlines and the cutbacks at Boeing and Airbus, we certainly do expect that the cutbacks will affect the titanium industry," Wallace told Reuters.
Airbus said on Thursday it scrapped plans to increase production in the wake of last week's hijackings, while its competitor Boeing said it would lay off between 20,000 and 30,000 commercial jet workers by year-end 2002 in anticipation of a sharp drop in aircraft deliveries this year and next. Boeing also said 40 of its 538 aircraft deliveries this year could be in jeopardy, as commercial airlines began to sharply reduce their flight schedules and eliminate jobs.
``We don't know the timing of those changes because it takes information a while to flow through the supply chain, from the airlines and the aircraft manufacturers to the jet-engine makers and forging manufacturers,'' Wallace said. ``Titanium metals companies are at the tail-end of that chain. That is something that we're monitoring and something that will impact us in 2002, I'm sure,'' he added.
Denver, Colorado-based TIMET produces titanium sponge, titanium ingot and mill products. Most demand for titanium is from the commercial aerospace market, which accounts for 65 percent of domestic titanium consumption and 85 percent of TIMET's revenue, according to Standard & Poor's.
TIMET in January said it had completed a 10-year supply agreement with Rolls-Royce Plc (quote from Yahoo! UK & Ireland: RR.L), one of the world's leading manufacturers of airplane engines and engine components. The company declined to comment on possible changes to the Rolls-Royce deal in the aftermath of the plane attacks. |
