Boeing raises its demand forecast as deals roll in
Boeing raised its rolling 20-year industry forecast for passenger and cargo aircraft on Tuesday, as a steady flow of deals on day two of the Farnborough Airshow underscored the industry’s resilience to rising global trade tension.
The world’s biggest aircraft manufacturer predicted 42,700 industry deliveries over the next two decades, up 3% from its estimate of 41,030 a year ago. That would be worth $6.3-trillion at list prices versus last year’s $6.1-trillion forecast.
The US group and European rival Airbus continued to rack up deals at the airshow in southern England after a brisk opening day on Monday.
Russian airline Volga Dnepr committed to buying Boeing freighters worth $11.8bn at list prices, while US leasing company Air Lease committed to buying as many as 78 Boeing aircraft worth $9.6bn.
In the meantime, Airbus bagged a provisional deal with an unidentified customer for 100 single-aisle A320 family jets, worth $11.5bn at list prices.
But analysts cautioned many deals firmed up provisional ones, disclosed previously unidentified buyers or changed existing orders, making it hard to gauge the level of demand.
Rising oil prices and interest rates, trade tension and uncertainty over Britain’s departure from the EU all pose a risk to an eight-year boom in civil aviation, which has boosted industry order books and share prices.
Boeing’s forecasts underscored the sector’s reliance on emerging markets in general and China in particular, making the US aircraft manufacturer especially vulnerable should trade tension between Washington and Beijing escalate into a full trade war.
Boeing, which calls itself the US’s biggest exporter, delivered more than one out of every four jetliners it made in 2017 to customers in China, one of the world’s fast-growing aircraft markets.
Boeing’s vice-president of commercial marketing, Randy Tinseth, told a news briefing that China looked set to overtake the US as the biggest domestic air travel market in 10 to 15 years. But he declined to be drawn into commenting on US trade policy, saying: “We are going to focus on what we can control.”
Dominating Boeing’s upbeat outlook was a 5% increase in the forecast for single-aisle aircraft, such as the Boeing 737 and Airbus A320 families, underpinned by an unchanged prediction for average global traffic growth of 4.7%. Boeing now sees 31,360 deliveries in the medium-haul, single-aisle category, the cash cow of the world’s top two aircraft manufacturers and popular with low-cost airlines.
Two weeks ago, Airbus raised its own rolling forecast for industry deliveries by more than 7% and revamped the way it predicts demand, introducing new plane categories and blurring the traditional boundaries between aircraft types.
Tinseth said that while Airbus sought to show it was winning a sizable share of the aircraft market, “our wide-bodies are winning”.
CHINA LOOKS SET TO OVERTAKE THE US AS THE BIGGEST DOMESTIC AIR TRAVEL MARKET IN 10 TO 15 YEARS