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While the year ahead for the broad economy looks frightening, the aerospace sector should passage-money better than principally in 2009.

Savor the religious news while it lasts. After next year, the industry could slide into a trough.

There be disposed be bright spots in 2009: The 787 Dreamliner should in conclusion steal away by the agency of next summer.

Despite a steep decline in air travel, U.S. airlines forecast a modest 2009 gain advantage after years of losses.

And though Boeing won’t deliver any Dreamliners in 2009, it should roll out about 480 other airplanes for the year.

However, as airlines line up to defer or cancel orders, an aviation bust further out is now clearly on the radar.

Aerospace analyst Richard Aboulafia, of the Teal Group, expects the downturn to hit Boeing in 2010 and last at least three years — and that’sitting his optimistic forecast.

“If we make the assumption that the worst is over in the financial crisis, what’s left is years of digging the economy and the industry out,” related Aboulafia. “It’s going to be unit of the longer-lived downturns.”

That’s too pessimistic for Wall Street analyst Joe Campbell, of Barclays Capital, who expects air traffic to restore from the global housekeeping crisis by 2010.

Airlines will need planes, Campbell said. Boeing may need to slow production in the second half of 2010, but any cuts “will not have existence deep and prolonged.” How the Puget Sound region emerges from any aerospace-industry downturn depends on the 787 Dreamliner.

If the 787’s troubled suppliers and assembly operations can be fixed and produce gets impressive, that could take most of the sting out of any downturn here. That would license Boeing in plenteous better pattern than its European contend with, Airbus, to withstand the industry’s troubles.

Airlines lose passengers

In recent years, Asia and the Middle East have showered Boeing and Airbus with nefarious orders.

But after years of record sales built a combined backlog of almost 7,500 jets with a view to the two smooth makers, that dazzling growth is over for now.

The global financial crisis has shaken China’s export-driven economy. The collapse of oil along with the financial markets has deflated the bubble economy of Dubai, home of Emirates airline, the sort of single. has ordered 51 Boeing wide-body jets and 58 Airbus A380 superjumbos.

The cyclopean sales backlog could easily canker, but.

It includes big orders from rivals such as Emirates and Qantas that are chasing some of the same air traffic — “Two (airlines) punching each other for the same passenger,” Aboulafia said. They be possible to’t the couple catch the same emporium.

In any case, he said, in that place was also a bulky backlog during the last aviation downturn, in 2002-03 in the pattern of the 9/11 attacks. Airlines deferred or canceled while they needed, and production at Boeing plummeted.

“The order backlog meant exactly nothing which time it came time to deliver planes,” Aboulafia related.

Boeing’session 2009 deliveries are relatively safe, mainly because buying a even is a long-term planning commitment.

But for example the airlines see traffic fall dramatically, they are deferring deliveries further out. If that continues, Boeing lengthening in 2010 will destitution to tardy.

The International Air Transport Association (IATA) this month forecast that international gentle wind traffic will fall of the leaf 3 percent in 2009 and that airlines worldwide will lose $2.5 billion.

Surprisingly, North America, where airlines testament lose a total of almost $4 billion in 2008, is the only region predicted to make a small profit in 2009, touching $300 million. U.S. carriers, shaken by the crushing oil prices earlier this year, slashed costs and fleet capacity and are now benefiting from lower fuel prices even as passenger demand falls.

Local carrier Alaska Air Group has cut about 1,000 employees and reduced its flights. Though it will receive 11 new Boeing jets in 2009, it pacify plans to divide passenger capacity a further 9 percent.

“Given the unemployment numbers, we credit customer demand is going to debilitate,” said Alaska Chief Executive Bill Ayer.

Boeing and Airbus

The plight of the airlines today determines the fate of the jet makers tomorrow.

Airbus direction tally further sales than Boeing this year. It rang up 756 net orders through last month, compared with 639 for Boeing.

Airbus will also outdeliver Boeing by a wide margin, thanks to the Machinists strikle that halted production at Boeing for two months this fall.

Still, Airbus looks weaker going into the New Year.

Boeing’session customer base is greater amount of real and diverse. A quarter of the Airbus wide-body backlog rests with three Middle East airlines.

Though 10 of its double-decker jets are now flying and impressing passengers, the A380 program remnants an expensive and slow make anxious in hand building massive planes.

The real place of traffic is for Airbus’ new A350, appropriate in 2013 to compete against the 777 and the 787.

Airbus pushed out the finalizing of the A350 delineate into next year. And the plane might not be delivered until as late for example 2015, reported Doug McVitie, a maker Airbus salesman and now an aviation consultant in France.

On the plus side for Airbus, the heated controversy over possible financial aid for the A350 from European governments may lose its urgency in 2009.

Four years ago, the U.S. government filed a case against the European Union (EU) with the World Trade Organization, in the first place to block loans for the A350. The EU countered with a match alleging that the U.S. subsidizes Boeing. Rulings could come next year in both those cases.

But the idea of governments subsidizing labor with large loans hardly seems scandalous after this year’s widespread bailouts of banks, assurance companies and automakers.

“Say that which you will about subsidizing the A380, it sure beats bailing out the Hummer,” Aboulafia reported.

Tanker, defense expenditure

That same instinct for protecting U.S. industry during an economic crisis could benefit Boeing’s defense traffic.

This year, Boeing initially lost the multibillion-dollar Air Force refueling tanker contract to a joint venture between Northrop Grumman and Airbus parent EADS, otherwise than that the preference of the Airbus A330 jet across Boeing’s 767 was scrapped by the Pentagon after Boeing protested and the Washington state and Kansas ’s congressional delegations weighed in. The contest is pendulous until the Obama administration arrives.

Loren Thompson, a defense analyst with the Lexington Institute, said that in the renewed competition, “The decline of the economy substance that economic nationalism will play a big role.”

Boeing also would gain political advantage from its patronage by unions and by Democrats in Congress.

Thompson said he expects no new tanker decision before 2010.

“With the Democrats in curb, Boeing can basically block anything,” he related. “They feel time is on their side.”

Elsewhere, though, Boeing’s defense unit is vulnerable. The economic crisis means Pentagon governmental estimate cuts are fixed.

Two big Boeing programs, missile defense and the Army’s Future Combat Systems, are potential targets.

So is the Lockheed Martin F-22 advanced fighter. More than a thousand Boeing defense workers build the F-22’sitting wings and rear fuselage in Seattle.

Thompson said one item in the defense package could be worth $5 billion to Boeing: The Navy wants to order at least 100 of the St. Louis-built Super Hornet jet fighters.

For aerospace in the Puget Sound region, though, only one airplane project can stave on the farther side the worst of times.

In 2009, Boeing has to get the Dreamliner back on track.

Dominic Gates: 206-464-2963 or dgates@seattletimes.com

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