Airlines are ordering an unprecedented number of commercial aircraft, motivated by the launch of key new planes, strong demand from low-cost carriers and the rapid growth of aviation in Asia. The high price of oil is also boosting demand for fuel-efficient aircraft.

The two leading aircraft manufacturers combined secured 2,140 new orders for aircraft of 100 seats or more last year, compared with an all-time high of 1,528 in 1989 and 1,138 at the peak of the last cycle in 2000. As recently as 2003, orders touched a cyclical low of 524. Other commercial markets of interest to EADS are also in an upswing. Civil helicopter deliveries were up 15% globally measured by volume, and 30% by value.

Several new-generation planes were launched during the year. The aircraft manufacturers are taking advantage of new materials such as composite and other technologies to design planes that are more fuel-efficient, while at the same time improving comfort. In addition, these aircraft cost less to maintain. New-generation aircraft can be between 40% and 55% more fuel-efficient than older-generation aircraft, depending on model and type of operation. According to the Air Transport Association, US airline fuel efficiency has tripled since 1971. New-generation aircraft will improve efficiency still further.

But the price of fuel and the rise of competition, mainly through the low-cost business model, is eating relentlessly into the higher revenue earned from ongoing traffic recovery. As oil prices have rallied, so jet fuel has risen still more, averaging approximately US$60 in 2005, against roughly US$30 in 2002. Forecasters do not see significant falls from these levels. In order to counter this, airlines are reducing workforces and the weight of on-board equipment through, for example, removing on-board phones, galley equipment and excess water. They are also using more precise navigation. At the lower end of the commercial market, higher fuel prices are encouraging a sales boom for turboprop planes, which are both fuel-efficient and have low CO₂ emissions.

Airline profitability varies widely across the world. While the International Air Traffic Association (IATA) estimates losses totalled US$6 billion in 2005, this is concentrated in the United States (US$10 billion losses). Three US airlines are currently in Chapter 11 bankruptcy as they seek to reorganise their affairs. US legacy airlines are beleaguered by high labour and welfare costs. They have succeeded in reducing labour costs, but fuel price rises have wiped out the savings.