Boeing raises 20-year forecast for jet deliveries
Record-high fuel prices drive demand for new, more fuel efficient aircraft
By Aude Lagorce, MarketWatch
Last update: 11:17 a.m. EDT July 9, 2008Comments: 1
LONDON (MarketWatch) - Boeing Co. on Wednesday raised its 20-year forecast for global commercial airline deliveries by 2.8% to 29,400, saying continued air travel growth and record-high fuel prices are boosting demand for new, more fuel efficient aircraft.
Boeing now expects 29,400 new jets worth $3.2 trillion to be delivered over the next two decades compared to 28,600 in its 2007 forecast.
The company said its forecast, which is updated every year, takes into account the short-term pressures on the industry from the deteriorating economic outlook, record-high oil prices and slowing traffic growth in some markets.
It assumes that the oil price will remain "high and volatile" in the near term before falling back to between $70 and $80 a barrel.
"We're facing a very dynamic situation today in the commercial aviation industry," Boeing's head of marketing for commercial airplanes Randy Tinseth told journalists at a meeting in London. "This forecast is rooted in today's realities, but also recognizes the nature of the long-term outlook."
Around 43% of the jets will be used to replace older aircraft. At the time of last year's forecast Boeing expected just 36% of the new jets to be replacement aircraft, but the spike in the oil price has increased pressure on airlines to retire their older gas guzzlers.
The new aircraft will consist of 19,160 single aisle planes, worth a total $1.36 trillion, 6,750 twin aisles, worth $1.47 trillion, 2,510 regional jets, worth $80 billion, and 980 larger aircraft of the Boeing 747 or Airbus A380 type, worth $290 billion.
Demand for single-aisle aircraft -defined as jets carrying between 90 and 200 people--will be driven by strong growth in domestic and intra-regional traffic in emerging Asia-Pacific markets and the continued expansion of low-cost airlines worldwide.
Boeing expects the global fleet at the end of the 20-year period to be made up of 35,800 jets, fewer than the 36,400 previously forecast
Boeing shares rose 1.2% in early trading.
In the past few months airlines around the world have unveiled plans to reduce capacity in an effort to protect profitability, grounding or retiring older aircraft and deferring or canceling orders for new jets placed years ago. Ahead of the Farnborough International Airshow in England next week, which traditionally sees Boeing and European rival Airbus announce a flurry of new orders, analysts are fretting about the potential for more cancellations.
Tinseth on Wednesday declined to be drawn on what proportion of Boeing's backlog could be at risk but stressed it's only had one cancellation and a handful of deferrals so far this year
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