Boeing Co. (BA:US) raised its 20-year forecast for commercial jet demand by 3.8 percent as air traffic outstrips global economic growth and airlines refresh their fleets with $4.8 trillion in new planes.
Airliner sales will total 35,280 new jets during the next two decades, compared with a 2012 projection of 34,000 planes, Boeing said today in Paris before next week’s Paris Air Show. Almost all the gain will come from purchases of the single-aisle models that are the workhorses of carriers’ fleets, Boeing said.
Boeing is betting on the durability of that expansion as it considers boosting output beyond the record pace already set for narrow- and wide-body planes. There’s no sign of a bubble, Randy Tinseth, marketing vice president for commercial airplanes at Chicago-based Boeing, said in a briefing ahead of the forecast.
“Passenger traffic has been very resilient,” Tinseth said. “Every indicator that we see in the market says that demand is real and there’s a need to increase production.”
Sales may trail Boeing’s expectations if airlines and lessors lose access to cheap financing and oil prices rise or fall dramatically, two of the drivers behind jet orders in the past decade, said Richard Aboulafia, an aerospace analyst at Teal Group, a Fairfax, Virginia-based consulting firm.
“We’re in a sweet spot where people can still make money but have an incentive to replace their jets,” Aboulafia said in a phone interview. “I don’t see that growth lasting indefinitely.”
Boeing’s 20-year forecast is presented annually and gives a snapshot of how the world’s largest planemaker views the global commercial-jet market. The Paris Air Show, which begins June 17, is the industry’s biggest forum for new-model introductions.
This year’s expo probably will net about $60 billion in orders, Peter Arment, a Birmingham, Alabama-based analyst with Sterne, Agee & Leach Inc., wrote in a research note today. That compares with $70 billion in orders at the 2012 event in Farnborough, England, and $110 billion at the last show in Paris, in 2011, he wrote.
No aircraft at next week’s event will provide the same sales jolt as Boeing’s 737 Max did in 2012 and Airbus’s A320neo generated in 2011, Arment said in a phone interview.
“We expect a healthy amount of activity,” Arment said. “We see the order activity for industry remaining quite healthy not only in 2013, but in 2014.”
Boeing’s order estimate is more important than the projected gain in value -- up 8.3 percent from last year’s estimate -- because that tally is based on list prices typically subject to discounts.
While new entrants such as Bombardier Inc. (BBD/B)’s CSeries and Commercial Aircraft Corp. of China’s C919 will change the Boeing-Airbus SAS duopoly in the coming decades, the incumbents will retain their hold on narrow-body sales in the next several years as the newcomers seek to establish themselves, said Howard Rubel, a New York-based analyst at Jefferies LLC.
“I don’t really see that as a big threat in the intermediate term,” Rubel said in a telephone interview.
Deliveries of single-aisle planes will be 24,670 over the next two decades, 6.2 percent more than in last year’s outlook, Boeing said today. Twin-aisle deliveries will be 7,830, 1.5 percent fewer than last year’s forecast. The largest planes, four-engine jumbo jets, continue to fall from favor, with the estimate of the two-decade total cut by 3.8 percent to 760.
Boeing already has felt the crimp in demand for jumbo jets, which it defines as planes carrying more than 400 people. The company said in April it would trim annual production of its 747-8 model to 21 planes from 24.
Regional-jet deliveries will be 2,020, the same as last year’s forecast.
Order backlogs running at double the normal wait time are pushing Boeing toward further production increases. The company predicts that 787 Dreamliner output will double to 10 a month by the end of this year, and the single-aisle 737 will rise to 42 a month in 2014, 33 percent faster than in 2009.
The world’s airliner fleet will more than double in two decades to 41,000 planes, including about 6,000 older jets that are kept in service, Tinseth said. More planes are needed to carry an estimated 9 billion passengers annually at the end of the 20-year period, up from 4 billion in 2012.
Boeing predicts that over the 20-year period annual average growth for both passenger and cargo traffic will be 5 percent, based on the number of airline passengers expanding 4.1 percent and the global economy at 3.2 percent.
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