Tue, 10/06/2020 – 12:22
Boeing Chief Strategy Officer Marc Allen wrote in the report that “this year has been unprecedented in terms of its disruption to our industry, we believe that aerospace and defense will overcome these near-term challenges, return to stability and emerge with strength.”
While the BMO projects that the total commercial and defense aerospace industry will see its market value reach $8.5 trillion over the next decade (a forecast that factors in demand for aerospace products – like planes – and services), its latest numbers are notably lower than last year’s estimate of $8.7 trillion, as Boeing factors in the virus-induced downturn has crushed global travel and tourism industry.
Boeing “projected demand for 18,350 commercial airplanes in the next decade – 11% lower than the comparable 2019 forecast – valued at about $2.9 trillion. In the longer term, with key industry drivers expected to remain stable, the commercial fleet is forecasted to return to its growth trend, generating demand for more than 43,000 new airplanes in the 20-year forecast time period.”
“Commercial aviation is facing historic challenges this year, significantly affecting near- and medium-term demand for airplanes and services,” said Darren Hulst, vice president, Commercial Marketing.
“Yet history has also proven air travel to be resilient time and again. The current disruption will inform airline fleet strategies long into the future, as airlines focus on building versatile fleets, networks, and business model innovations that deliver the most capability and greatest efficiency at the lowest risk for sustainable growth,” Hulst said.
Boeing’s commercial aviation outlook includes:
- Over the next 20 years, passenger traffic growth is projected to increase by an average of 4% per year.
- The global commercial fleet is expected to reach 48,400 by 2039, up from 25,900 airplanes today. During this period, Asia will continue to expand its share of the world’s fleet, accounting for nearly 40% of the fleet compared to about 30% today.
- Single-aisle airplanes such as the 737 MAX will continue to be the largest market segment, with operators projected to need 32,270 new airplanes in the next 20 years. Single-aisle demand will recover sooner due to its key role in short-haul routes and domestic markets as well as passenger preference for point-to-point service.
- In the widebody market, Boeing forecasts demand for 7,480 new passenger airplanes by 2039. Widebody demand will be affected by a slower recovery in long-haul markets – typical after air-travel shocks – as well as uncertainties from COVID-19’s impact on international travel.
- Air cargo demand, a relative bright spot in 2020, is expected to grow 4% annually and generate further demand for 930 new widebody production freighters and 1,500 converted freighters over the forecast period.
To make matters worse for Boeing, the nationwide airline layoffs suggest that airlines will slim down routes and cut jet orders as demand for their services decreases.
Now it’s up to Washington to save the airline industry with another massive bailout.
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Author: Tyler Durden