1. Boeing lifts 20-year industry demand forecast to $6 trillion

Boeing lifts 20-year industry demand forecast to $6 trillion

Boeing raised its 20-year industry forecast for passenger and freight plane deliveries by 4 percent on Tuesday, though executives at the world's biggest airshow in Paris expect demand this year to cool from recent red-hot levels.

By: | Paris | Published: June 20, 2017 7:22 PM
The U.S. planemaker continued to rack up orders at the Paris Airshow for a new model of its best-selling 737 aircraft. (Source: Reuters)

Boeing raised its 20-year industry forecast for passenger and freight plane deliveries by 4 percent on Tuesday, though executives at the world’s biggest airshow in Paris expect demand this year to cool from recent red-hot levels. The U.S. planemaker continued to rack up orders at the Paris Airshow for a new model of its best-selling 737 aircraft, which was launched on Monday amid a flurry of deals. Leasing firm Aviation Capital Group (ACG), for example, said it had placed an order for 20 of the new 737 MAX 10 jets, worth a total of $2.5 billion at list prices. “It is getting a big endorsement from airlines and that is leading to more lessons endorsing it too,” Ihssane Mounir, Boeing vice president of sales and marketing, told reporters. But analysts expect demand at the June 19-25 event in Paris to fall short of recent years, and some aviation companies have cut back on staff and hospitality at the show.

Over the longer term, though, Boeing sees an industry in rude health, forecasting 41,030 plane deliveries worth more than $6 trillion over the next two decades, up from 39,620 in a similar projection a year ago. Boeing’s projection includes a 5 percent increase in the 20-year forecast for deliveries of single-aisle aircraft such as the Boeing 737 and Airbus A320 families, the cash cows of the world’s two largest aircraft manufacturers. Boeing now expects 29,530 deliveries in the medium-haul single-aisle category, which is popular with low-cost airlines. Aircraft leasing company Avolon announced a provisional deal on Tuesday to buy 75 Boeing 737 MAX 8s worth $8.4 billion at list prices and said it would have a “hard look” at possible orders for the MAX 10. Airbus, meanwhile, agreed a provisional $5 billion deal with low-cost carrier Viva Air Peru for 50 A320 jets, confirming a Reuters report.

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Air travel has been on a sharp uptrend, led by emerging economies as China looks set to replace North America as the world’s biggest transport market in the coming years. But China’s economic expansion is slowing, even though it remains above 6 percent a year. Boeing trimmed its 20-year forecast for average global traffic growth to 4.7 percent from 4.8 percent. Airbus took a similar step with its 20-year forecast released earlier this month, though it raised its projection for total deliveries by 6 percent from last year to 34,899 aircraft. Boeing’s overall tally is higher partly because it counts aircraft with 90 seats or more, whereas Airbus starts at 100. With demand for new jets cooling, plane makers are seeing greater opportunities in aviation services. Boeing forecast that market could be worth $8.5 trillion over 20 years, growing at an average 4 percent a year. Airbus launched a digital services platform on Tuesday, which it said could crunch data to help airlines improve maintenance, reduce fuel burn and optimise routes.

In a symbolic change likely to rankle with its European rival, Boeing ditched its forecast for very large four-engined airplanes such as the Airbus A380 and it is 747-8. For the first time, it lumped these models with large two-engined jets such as the Boeing 777 and the largest Airbus A350.Boeing has long argued that the “very large” category is on its way out as airlines switch to smaller twinjets. Both manufacturers have had to cut output of four-engined jumbos. “Frankly, we look at the demand for really big airplanes and we find it hard to believe that Airbus will be able to deliver the rest of their A380s in backlog,” Boeing Marketing Vice-President Randy Tinseth said in a briefing. Airbus insists the double-decker A380 has a future due to airport congestion and predicts 5 percent of aircraft delivered over the next 20 years will be very large people carriers or freighters, even though it lowered its forecast.

“They would do that, the 747-8 isn’t selling,” Airbus sales chief John Leahy said of Boeing’s decision to ditch its separate forecast for the biggest planes. “We have no intention of sharing that market with them, albeit a smaller market than we might have thought.” “Traffic is doubling,” he said. “(Boeing’s) the explanation is we’ll fly more flights. I’m sorry, but you can’t do it. You have to have bigger aircraft.” Boeing predicted demand for 920 cargo planes, down 1 percent from its previous forecast. Much air cargo nowadays goes in the belly of wide-body passenger planes rather than freighters.

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