Boeing's Current Market Outlook

Boeing (BA - Analyst Report) just released its latest "Current Market Outlook" (CMO), which analyzes the past and future demand for commercial jet aircraft with 30 seats or more. One of the first things you find as you flip through the pages is that Boeing didn't agree with Airbus (imagine that)!

According to Boeing, its 2000 forecast indicated that the demand for aircraft through 2019 would be split -- 4% Large, 25% Twin-aisle and 71% Single-aisle, while Airbus believed it would be 9% Large (hence the A-380), 35% Twin-aisle and 55% Single-Aisle. So far the actual demand (according to Boeing) has been 2% Large, 23% Twin-aisle and 75% Single-aisle.

For the aforementioned forecast period -- 2000 through 2019 -- Boeing believed that demand would total 17,318 units, while Airbus -- with more larger aircraft in its forecast -- thought it was going to be 14,661 units. Either way, that's still a lot of airplanes, as the average deliveries/year ranges from 733 for Airbus to 866 for Boeing (these numbers are not just for Airbus and Boeing aircraft, however; they also include appropriate types from Bombardier and Embraer (ERJ - Analyst Report) and later Comac, Mitsubishi and Sukhoi...plus others reckless enough to join the fray).

Here, now, are some one-liners from the CMO for the next 20 years:

• Since 1978, world-wide air travel has grown at 5.3% per annum.
• The 20-year forecast is for the world economy to grow at 3.1%, the number of passenger miles to climb at 4.1%, airline traffic to expand at 4.9% and cargo traffic to weigh in at 5.4%.
• Since 1988, air travel has climbed by over 2.5%, frequency has grown by more than 2.0%, non-stop markets have expanded by almost exactly 2.0% and the average airplane size has shrunk just a smidgen.
• Between 2009 and 2028, the airlines will need some 29,000 aircraft -- equaling 1,450/year, of which 2,100 will be regional jets, 19,460 will single-aisle, 6,700 will be twin-aisle and 740 will be large. All of this translates into revenues of $3.2 trillion over a score of years, for an average of $160 billion/annum.
• At end of the 20-year period, 16,800 aircraft will have been delivered to take care of growth in demand, 12,200 will be replacements and there will still be 6,600 aircraft that are older than 20 years.
• Over the 20 years, the percentage shift in the makeup of the world-wide fleet will be that Regional goes from 16% to 6%, Single-aisle goes from 60% to 68%, Twin-aisle goes from 19% to 23% and Large goes from 5% to 3% (of course, Airbus probably doesn't agree with this).
• Over the last 20 years, there have been dramatic improvements in airplane efficiency: the number of seats/airplane are up 5.4%, the stage length soared by 87.3%, utilization rose by 31.5% and the number of revenue passenger miles climbed by 117.0%.
• The emerging markets are driving economic expansion, with China leading the way at 7.2% GDP growth, followed by Southwest Asia (6.1%), Africa (4.9%), Southeast Asia (4.6%) and Asia-Pacific (4.4%); again, for comparative purposes, the World is at 3.1% (and North America is at just 2.1%); all this translates into World average air travel growth of 4.9%, of which Asia-Pacific -- including China -- will experience growth in air travel of 6.9%.

Seems reasonable!