Boeing Current Market Outlook 2008

July 9th, 2008

Boeing today released its Current Market Outlook 2008 (CMO).

The full details can be found by clicking here. At a media briefing earlier today in London, Boeing’s VP Marketing, Randy Tinseth covered a range of issues on the CMO and detailed the position the company is gearing toward whilst fuel costs pressurise airlines and demand tapers off.

 

All images courtesy of Boeing

One of the key points raised was the size of the Chinese market overtaking that of North America over the next two decades, in a global marketplace worth some $3.2 trillion. The Current Market Forecast 2008-2027 calls for 29,400 new airplane deliveries. Of those deliveries, both single aisle and twin aisle (non A380/747) dominate both the fleet renewal and expansion for airlines, constituting almost $2.9 trillion.

With many carriers flocking to the 787 Dreamliner, Tinseth pointed out the validation for product strategy the company currently employs, with emphasis on increased flight frequencies to complement traffic growth while seeing overall airplane size decrease.

A few of the key points raised by Randy follow below:

• Company faced with slowing economy
• Industry resilient during increased fuel/oil costs
• Profitable airlines making airplane purchases
• Previous Current Market Outlook forecasts remain accurate
• Confidence in the right product strategy
• GDP growth forecast at 3.2% over the next 20 years
• More flights, decreased airplane size overall, increase in non-stop/P2P flights
• Above trend to continue over forecast period
• World fleet growth to 35,800 airplanes
• Envisage 29,400 new airplanes by 2027
• 57% of these jets for growth, 43% required for replacement of existing fleet
• Approximately 82% of world fleet in 2027 will be new build airplanes
• Market requirement for single/twin aisle airplanes to double
• 90% of flights made up of single aisle airplanes, 9% by twin aisle, 1% by VLA (A380/747-8)
• Aiming for carbon neutral industry, producing 2% of global CO2 emissions at present
• 737 splits market with A320 - continual 737 improvement until time is right to replace model
• 777 popularity/demand remains strong, with 777-300ER/777-200LR/777F amassing bulk of family orders
• 787 has “unprecedented” demand, validates product strategy, working through production issues
• 747-8 seen as best 747-400 replacement, complements A380
• 30% of all new airplanes already factored into current backlog

I asked Tinseth about the 777-300ER and how the company plans to respond to the so-called threat posed by the A350-1000. He noted that while design freeze for the overall A350 family is scheduled to be completed by the end of this year, Boeing still has yet to see what, if any action it should or needs to take in order to remain competitive. It appeared by his comments that the “wait and see” approach has slightly broadened. He noted that the company could leave the airplane as it is or modify it to better compete against the largest A350 model. Of interest was the point made about perhaps addressing the issue with an all new airplane.

This is the first indication the company has given that an all new model could feature as part of its long term strategy to replace the 777 family (777-200LR/777-300ER) and possibly the stalwart 747 family too. Boeing’s study into the often referred to “Y3″ arena remains in flux as the company concentrates on the 787 and 747-8 production, as well as taking the first 777 Freighter to the air within the next few days.

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