Current Market Outlook
C
t M k t O tl k
2013-2032
Randy Tinseth
R d Ti
th
Vice President, Marketing
Boeing Commercial Airp...
Agenda
A focus on efficiency
20-year traffic and airplane forecast
Boeing product strategy & development
Copyright © 2013 ...
Oil prices expected to remain elevated and volatile
¢/Gallon

Spot $/Barrel (Brent Crude Oil / Rotterdam Jet Fuel)
180

45...
Fuel has doubled as a percentage of airline
costs* over the past 10 years
15%
25%

2003
Fuel price:

US $0.82/gal

Single-...
Cents per seat-mile

New technology and intense competition continue
to
t push airline yields d
h i li
i ld downward
d

Co...
Airlines are focused on efficiency

Operations

Copyright © 2013 Boeing. All rights reserved.

Network / revenue

New airp...
Impacts of efficiency push on the future

Efficient use of assets

Copyright © 2013 Boeing. All rights reserved.

Modest u...
Agenda
A focus on efficiency
20-year traffic and airplane forecast
Boeing product strategy & development
Copyright © 2013 ...
Why the Current Market Outlook (CMO)?

Product
strategy

Copyright © 2013 Boeing. All rights reserved.

Long-range
busines...
Boeing forecast accuracy
Fleet consists of all jet aircraft with at least 90 seats

• Accurate despite market
dynamics

10...
Market forecast drivers and considerations
Market
liberalization

Airplane
capabilities

Economic
growth

Infrastructure
I...
Air travel and economic growth are directly related
16

Percent annual change passenger traffic

Real GDP growth

8

14

7...
Drivers of air travel
Economic
growth

Global
trade

Traveler
values

60-80%

20-40%

Travel
demand

Additional
travel dem...
World air travel has grown 5% per year since 1980
6.0

RPKs (tr
rillions)

5.0
50
4.0
3.0

•
•
•
•
•
•

4 recessions
2 fin...
20-year forecast: strong long-term growth
2012 to 2032
World
economy
(GDP)
Number
of airline
passengers

3.2%

4.1%

Airli...
Air travel growth has been met by increased
frequencies and nonstops
Index 1992=1.00

2.5

2.0

World
Air Travel
Growth
Fr...
Airlines will need more than 35,000 new airplanes
valued at $4 8 t illi
l d t $4.8 trillion
Airplane deliveries: 35,280

M...
Older, less efficient airplanes will be replaced with
more efficient, newer generation airplanes
Units
45,000

41,240
40,0...
Fleet composition will change
p
g

2032
2%
9%
6%

2012
4%
7%

13%
13%

12%

41,240

20,310
airplanes

airplanes
70%

64%
L...
Emerging markets are driving the economic growth
Annual GDP growth
2012 – 2032
South
Asia

6.6

China

6.4

Southeast
Asia...
Air travel growth varies by market
Added traffic
2013-2032

2012 traffic

Annual
growth %

6.2%

Within Asia Pacific*
With...
Air travel becoming more diverse geographically
Air traffic RPKs (billions)
traffic,

16,000
14,000

Other

12,000

Middle...
Market for new airplanes to become even more
geographically b l
hi ll balanced
d
New airplane deliveries by region

Market...
World air cargo traffic has grown 5.3% per year
since 1980
250

RTKs (billio
ons)

200

150

100

50

0
1980

1984

* Reve...
New f i ht d
N
freighter demand -- 850 new, 1 450 converted
d
1,450
t d
Share of fleet

Delivery units

100%

130

80%

La...
Future freighter deliveries will be led by demand for
large widebodies
l
id b di
New freighter deliveries: 850

Market val...
Agenda
A focus on efficiency
20-year traffic and airplane forecast
Boeing product strategy & development
Copyright © 2013 ...
More value to our customers in all markets
Efficiency designed-in from the start

• Environmentally progressive

• Passeng...
The Boeing Edge
Aviation industry’s largest portfolio of integrated services and customer support
industry s
Acquire

Tran...
Substantial, balanced backlog validates Boeing’s
product strategy
Backlog ($B)

Model
747

350

319

Large
4%

777

295

3...
Things to remember
Airline customers continue to focus on efficiency
Strong demand for new, efficient aircraft; emerging e...
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Boeing Market Forecast 2013-2032

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Boeing Market Forecast 2013-2032

  1. 1. Current Market Outlook C t M k t O tl k 2013-2032 Randy Tinseth R d Ti th Vice President, Marketing Boeing Commercial Airplanes June 2013 The statements contained herein are based on good faith assumptions and provided for general information purposes only. These statements do not constitute an offer, promise, warranty or guarantee of performance. Actual results may vary depending on certain events or conditions. This document should not be used or relied upon for any purpose other than that intended by Boeing. Boeing is a trademark of The Boeing Company. Copyright © 2013 Boeing. All rights reserved.
  2. 2. Agenda A focus on efficiency 20-year traffic and airplane forecast Boeing product strategy & development Copyright © 2013 Boeing. All rights reserved.
  3. 3. Oil prices expected to remain elevated and volatile ¢/Gallon Spot $/Barrel (Brent Crude Oil / Rotterdam Jet Fuel) 180 450 160 400 140 350 Jet Fuel 120 300 100 250 80 200 150 60 40 Brent C d Oil B t Crude 20 2003 2004 2005 Historical data source: EIA Copyright © 2013 Boeing. All rights reserved. 2006 2007 2008 2009 2010 2011 2012 2013
  4. 4. Fuel has doubled as a percentage of airline costs* over the past 10 years 15% 25% 2003 Fuel price: US $0.82/gal Single-aisle Wide-body 30% 2013 Fuel price: US $2.73/gal *Cash operating cost, typical rules, representative aircraft Copyright © 2013 Boeing. All rights reserved. 50%
  5. 5. Cents per seat-mile New technology and intense competition continue to t push airline yields d h i li i ld downward d Copyright © 2013 Boeing. All rights reserved.
  6. 6. Airlines are focused on efficiency Operations Copyright © 2013 Boeing. All rights reserved. Network / revenue New airplanes, technologies g
  7. 7. Impacts of efficiency push on the future Efficient use of assets Copyright © 2013 Boeing. All rights reserved. Modest up-gauging Continued replacement demand p
  8. 8. Agenda A focus on efficiency 20-year traffic and airplane forecast Boeing product strategy & development Copyright © 2013 Boeing. All rights reserved.
  9. 9. Why the Current Market Outlook (CMO)? Product strategy Copyright © 2013 Boeing. All rights reserved. Long-range business plan Suppliers and airline customers
  10. 10. Boeing forecast accuracy Fleet consists of all jet aircraft with at least 90 seats • Accurate despite market dynamics 10,000 8,000 6,000 • Long-term forecasts have been more conservative b ti Medium-term 2003 CMO Forecast Actual 4,000 2,000 2 000 0 2003-2012 • Single-aisle segment has exceeded expectations 20,000 Long-term Long term 16,000 • Large aircraft and regional jet segments have underperformed 12,000 12 000 Actual 1994 CMO Forecast 8,000 4,000 0 Sources: CMO 1994, CMO 2003, ASCEND Copyright © 2013 Boeing. All rights reserved. 1994-2012
  11. 11. Market forecast drivers and considerations Market liberalization Airplane capabilities Economic growth Infrastructure I f t t Current Market Outlook 2013-2032 Copyright © 2013 Boeing. All rights reserved. Airline strategies & business models Emerging markets Fuel price i High speed rail Environment
  12. 12. Air travel and economic growth are directly related 16 Percent annual change passenger traffic Real GDP growth 8 14 7 12 6 10 5 8 4 6 4 3 Long-term traffic growth 2 2 1 0 0 -2 -1 -4 -2 1971 1976 1981 1986 1991 1996 Pax airline traffic growth Sources: Traffic growth – ICAO/IATA GDP growth – IMF (PPP) Copyright © 2013 Boeing. All rights reserved. 2001 GDP 2006 2011
  13. 13. Drivers of air travel Economic growth Global trade Traveler values 60-80% 20-40% Travel demand Additional travel demand Copyright © 2013 Boeing. All rights reserved.
  14. 14. World air travel has grown 5% per year since 1980 6.0 RPKs (tr rillions) 5.0 50 4.0 3.0 • • • • • • 4 recessions 2 financial crises 2 Gulf wars 1 oil shock 1 near pandemic (SARS) 9/11 2.0 20 1.0 0.0 1980 1984 1988 RPKs = Revenue Passenger Kilometers Source: ICAO scheduled traffic Copyright © 2013 Boeing. All rights reserved. 1992 1996 2000 2004 2008 2012
  15. 15. 20-year forecast: strong long-term growth 2012 to 2032 World economy (GDP) Number of airline passengers 3.2% 4.1% Airline traffic (RPK) 5.0% Cargo traffic (RTK) 5.0% Copyright © 2013 Boeing. All rights reserved.
  16. 16. Air travel growth has been met by increased frequencies and nonstops Index 1992=1.00 2.5 2.0 World Air Travel Growth Frequency Growth Nonstop Markets 1.5 1.0 Average Airplane Size 0.5 August OAG Copyright © 2013 Boeing. All rights reserved. All routes
  17. 17. Airlines will need more than 35,000 new airplanes valued at $4 8 t illi l d t $4.8 trillion Airplane deliveries: 35,280 Market value: $4.8T 2013 - 2032 2013 - 2032 24,670 , 25,000 25 000 2,500 2 500 20,000 2,000 15,000 $2,290B 1,500 1,000 10,000 4,530 5,000 2,020 0 $1,100B $1,090B $1 100B $1 090B Regional jets 6% 500 3,300 760 Singleaisle 70% Copyright © 2013 Boeing. All rights reserved. Small Medium Large wide-body wide-body wide-body 13% 9% 2% 0 $280B $80B Regional jets 2% Singleaisle 47% Small Medium Large wide-body wide-body wide-body 23% 22% 6%
  18. 18. Older, less efficient airplanes will be replaced with more efficient, newer generation airplanes Units 45,000 41,240 40,000 35,000 30,000 , 20,930 Growth 59% 25,000 35,280 20,310 20,000 20 000 15,000 10,000 5,000 0 2012 Copyright © 2013 Boeing. All rights reserved. 14,350 Replacement 41% 5,960 Retained fleet 2032
  19. 19. Fleet composition will change p g 2032 2% 9% 6% 2012 4% 7% 13% 13% 12% 41,240 20,310 airplanes airplanes 70% 64% Large wide-body Copyright © 2013 Boeing. All rights reserved. Medium wide-body Small wide-body Single-aisle Regional jet Data source: Ascend & Boeing CMO
  20. 20. Emerging markets are driving the economic growth Annual GDP growth 2012 – 2032 South Asia 6.6 China 6.4 Southeast Asia 4.7 Asia Pacific 4.5 Africa 4.4 Latin America 4.0 Middle East 3.8 38 3.4 CIS World 3.2 Oceania 2.6 North America Europe Northeast Asia 2.5 1.8 1.6 Copyright © 2013 Boeing. All rights reserved. Source: IHS Global Insight
  21. 21. Air travel growth varies by market Added traffic 2013-2032 2012 traffic Annual growth % 6.2% Within Asia Pacific* Within North America 2.3% Within China 6.9% 3.6% Within Europe 5.5% 5 5% Europe - Asia Pacific 3.5% North Atlantic 7.3% Middle East - Asia Pacific 6.9% 6 9% Within Latin America 4.5% Trans-Pacific 4.8% Within/to CIS 5.0% 5 0% North America - L ti A N th A i Latin America i 4.7% Europe - Latin America 4.8% Africa - Europe 0 *Does NOT include within China Copyright © 2013 Boeing. All rights reserved. World Average Growth: 5.0% 500 1,000 1,500 RPKs, billions 2,000 2,500 3,000
  22. 22. Air travel becoming more diverse geographically Air traffic RPKs (billions) traffic, 16,000 14,000 Other 12,000 Middle East 10,000 China 8,000 Asia Pacific ( l Chi ) (excl. China) 6,000 Europe 4,000 39% 2,000 North America 52% 73% 0 1992 Source: Boeing 2013 CMO Copyright © 2013 Boeing. All rights reserved. 2012 2032
  23. 23. Market for new airplanes to become even more geographically b l hi ll balanced d New airplane deliveries by region Market value by region 2013–2032 2013–2032 Region R i Airplanes Ai l Asia Pacific Region R i 3% 8% 3% 12,820 Europe 7,460 North America 7,250 Middle East 2,610 Latin America 2,900 C.I.S. 1,170 Africa Af i 1,070 1 070 World Total 35,280 Copyright © 2013 Boeing. All rights reserved. Asia Pacific 37% 7% $B Europe 1,020 21% 21% North America Middle East 550 300 C.I.S. 140 Africa Af i 130 11% 39% 810 Latin America 35,280 3% 6% 3% 1,890 World Total $4,840B $4.8T $ 17% 21%
  24. 24. World air cargo traffic has grown 5.3% per year since 1980 250 RTKs (billio ons) 200 150 100 50 0 1980 1984 * Revenue tonne-kilometers Copyright © 2013 Boeing. All rights reserved. 1988 1992 1996 2000 2004 2008 2012
  25. 25. New f i ht d N freighter demand -- 850 new, 1 450 converted d 1,450 t d Share of fleet Delivery units 100% 130 80% Large 940 >80 tonnes 60% Medium 640 2,300 40 to 80 tonnes 40% Standard <45 tonnes 20% 0% Converted 380 2012 Freighters 1,730 Copyright © 2013 Boeing. All rights reserved. 2032 Freighters 2,810 210 2013 t 2032 to Freighters
  26. 26. Future freighter deliveries will be led by demand for large widebodies l id b di New freighter deliveries: 850 Market value: $240 billion 2013–2032 2013–2032 700 250 640 Ma arket value Airpla units ane 600 500 400 300 210 200 $200B 150 100 200 0 $40B 50 100 0 Large Medium 75% 25% More than 80 tonnes Copyright © 2013 Boeing. All rights reserved. 40 to 80 tonnes Standard Less than 45 tonnes 0 $0B Large Medium 83% 17% More than 80 tonnes 40 to 80 tonnes Standard Less than 45 tonnes
  27. 27. Agenda A focus on efficiency 20-year traffic and airplane forecast Boeing product strategy & development Copyright © 2013 Boeing. All rights reserved.
  28. 28. More value to our customers in all markets Efficiency designed-in from the start • Environmentally progressive • Passenger experience • Long-range, fast, reliable • Low operating cost • Operational commonality O ti l lit • Standardization St d di ti Copyright © 2013 Boeing. All rights reserved.
  29. 29. The Boeing Edge Aviation industry’s largest portfolio of integrated services and customer support industry s Acquire Transition Ready Refresh Operate Maintain Copyright © 2013 Boeing. All rights reserved.
  30. 30. Substantial, balanced backlog validates Boeing’s product strategy Backlog ($B) Model 747 350 319 Large 4% 777 295 300 250 323 250 SingleAisle 737 43% 256 TwinAisle 53% 787 200 767 Region 150 Leasing, Gov't & BBJ 100 ME, Central & S. Asia 50 Europe & Russia 0 2009 2010 Copyright © 2013 Boeing. All rights reserved. 2011 2012 2013 North America L. America & Africa China, East & SE Asia A i Asia Pacific
  31. 31. Things to remember Airline customers continue to focus on efficiency Strong demand for new, efficient aircraft; emerging economies leading growth “The products that provide the most efficiency will continue to be the products of choice”– Ray Conner, BCA President Copyright © 2013 Boeing. All rights reserved.

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