September 22, 2011 / 9:25 PM / in 6 years

UPDATE 2-Airbus ready to support squeezed buyers if needed

* Short-term concern over credit for aircraft buyers

* Airbus can support buyers, no drastic action seen

* CEO backs delay margin of a few months in A350 assembly (Adds background)

By Tim Hepher

PARIS, Sept 22 (Reuters) - Airbus EAD.PA said on Thursday it stood ready if needed to help customers overcome growing fears of a squeeze on aircraft financing, as the industry suffers a knock-on effect from Europe’s debt crisis.

French banks that specialize in bankrolling the $80 billion annual jetliner market have scaled down lending amid problems in securing dollars, as U.S. investors withhold deposits from institutions perceived as most exposed to Greece.

Airbus Chief Executive Tom Enders told a French newspaper he did not foresee the need for drastic action, but expressed some concern about the dwindling supply of funding.

“In the short term, we are worried to see that access to bank credit could once again become scarce, in particular long-term financing in dollars from some European banks,” Enders told Le Figaro in an interview.

However, he stressed other sources of finance, including U.S. and Chinese banks and capital markets remained available.

Asked if Airbus would offer support to its clients, he said: “We did it in 2008-2009 and if needed we are ready to do it again.”

Enders’ comments in Friday’s edition of Le Figaro were released late on Thursday. They were translated into French by the newspaper and retranslated into English by Reuters.

The shares of Airbus parent EADS fell 7.9 percent to 20.89 euros earlier on Thursday, as European shares slumped to a 26-month closing low.

Aircraft makers Airbus and Boeing Co (BA.N) have so far succeeded in pushing out record numbers of aircraft to meet demand from China, India and elsewhere, while grappling with fragile supply chains and now a credit disruption.

Airbus said earlier it was stepping in to buy a majority stake in a German supplier that faced a “severe liquidity crisis” [ID:nL5E7KM1MT]. The move is seen as a stopgap measure.

PFW Aerospace, based in the southwestern city of Speyer, is owned by Philadelphia-based private equity fund Safeguard International. It supplies metal tubes not only to Airbus, but also to Boeing and makes parts for European fighters.

Airlines order aircraft years ahead, but mostly pay on delivery, when any disruption to funding would be felt.

During the 2008 crisis, government export credit agencies on both sides of the Atlantic filled the gap with guarantees as market sources of funds dried up, but doubts have resurfaced recently about how aviation’s sharp growth will be financed.

Lenders and airlines were warned earlier this week the industry could become a casualty of Europe’s debt crisis and the worries surrounding French banks, which took part in 30 percent of aircraft transactions in 2010. [ID:nL5E7KK3MQ].

    The finance director of Ryanair Holdings Plc (RYA.I), Europe’s largest budget airline and Boeing’s main buyer outside the United States, said French banks had stopped serving new clients.

    France’s banks are fighting to restore confidence amid fears they are ill-equipped to cope with a Greek debt default.

    EADS finance director Hans Peter Ring was confident the industry would be financed in coming years.

    “Nearly all French banks have stated to us that they have no intention of leaving this sector,” Hans Peter Ring said in response to a question from Reuters. “We have seen many new banks entering or reentering the aviation market.”

    On the business outlook for Airbus, Enders said the France-based company was heading for one of its strongest years in 2011 as it raises output, despite the market turmoil.

    He did not see any sign of a recession.

    He was also cautious about the start of final assembly of the first A350, due at the end of 2011.

    Enders said he would rather the process were delayed by a “few months” to ensure assembly lines were fully prepared, than risk a repetition of unexpected bottlenecks that upset A380 output and hobbled the European company for several years.

    Airbus delayed parts of the A350 programme by 18 to 24 months in June to allow for design changes and reshuffled priorities. (Additional reporting by Maria Sheahan, Cyril Altmeyer and Christian Plumb; editing by Andre Grenon)

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