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2010 farnborough presentation

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  • 1. CURRENT MARKET OUTLOOK Randy Tinseth Vice President, Marketing Boeing Commercial Airplanes July 2010BOEING is a trademark of Boeing Management Company. The statements contained herein are based on good faith assumptions and provided for general information purposes only.Copyright © 2010 Boeing. All rights reserved. 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.
  • 2. Agenda  Current Market Outlook (CMO)  Market trends and realities  20-year forecast COPYRIGHT © 2010 THE BOEING COMPANY
  • 3. Long-term forecast reflects today’s marketrealitiesBoeing has publicly issued its Current Market Outlook for more than 40years. During that time, the Outlook has reflected both sizeable upturnsand downturns. Our industry has faced significant market challenges,including the Asian Financial Crisis, SARS, terrorist acts, three majorworld recessions, two Gulf wars….all clearly with their own dynamics andtheir own impact on global air travel. What we have learned is that ourindustry, which is based on the need to transport passengers and freightvia our global aviation system, is extremely resilient.Based on that perspective, as we always do, we have developed theforecast in a manner that considers today’s market environment but, justas importantly, takes a long-term view of the market and the fundamentalsthat drive commercial aviation. These drivers include economic growth,world trade, market liberalization, new aircraft capabilities, etc.So, while acknowledging our near-term challenges, let’s take a longer-view look. Over the next 20-years, the basic factors underlying newairplane demand are strong. COPYRIGHT © 2010 THE BOEING COMPANY
  • 4. Boeing Current Market Outlook Published since 1964 All jets 30 seats and above  No turbo props  No business jets Scheduled and nonscheduled flying Freighters COPYRIGHT © 2010 THE BOEING COMPANY
  • 5. Entirely web-based CMOhttp://www.boeing.com/commercial/cmo/  Real-time  Interactive  Downloadable  Popular (last 12 months)  Visits: 710,122  Downloads: 259,971 COPYRIGHT © 2010 THE BOEING COMPANY
  • 6. Boeing product forecast in-line with therealities of the market 100% Large Large 3% 5% Twin-aisle Twin-aisle 21% 21% 75%Size category Large Twin-aisle 50% Single-aisle Single-aisle Single-aisle 55% 62% Regional jet 25% Regional Jet Regional 19% Jet 14% 0% Boeing forecast Airplane demand 2000 – 2019 2000 – Present* 22,315 units 17,796 units *Deliveries 2000 thru May 14, 2010 plus backlog COPYRIGHT © 2010 THE BOEING COMPANY
  • 7. Different view of the market has led todifferent strategies 100% Large 2% Large 4% A380 9% Twin-aisle 23% Twin-aisle 25% 75% Twin-aisle 35%Size category A380 Large 50% Twin-aisle Single-aisle Single-aisle 75% Single-aisle 71% Single-aisle 55% 25% 0% Airplane demand Boeing forecast Airbus forecast 2000 – Present* 2000 – 2019 2000 – 2019 14,698 units 17,318 units 14,661 units * Deliveries 2000 thru May 14, 2010 plus backlog (passenger jets only, excluding RJs) COPYRIGHT © 2010 THE BOEING COMPANY
  • 8. Agenda  Current Market Outlook (CMO)  Market trends and realities  20-year forecast COPYRIGHT © 2010 THE BOEING COMPANY
  • 9. Single-aisle* demand exceeding expectations 10-year forecast, 2000 - 2009 7,000 Growth driven by: 6,000 5,000  Low Cost Carriers 4,000  Emerging 3,000 markets 2,000  Replacement 1,000 demand 0 Boeing Airbus Airplane forecast forecast** deliveries 5,228 4,726 6,084 *Single-aisle defined as all single-aisle aircraft >90 seats ** Airbus forecast estimated by Boeing from GMF COPYRIGHT © 2010 THE BOEING COMPANY
  • 10. Air travel becoming more diverse geographicallyAir traffic, RPKs (billions) 14,000 12,000 Other Middle East 10,000 China 8,000 Asia (excl. China) 6,000 Europe 4,000 45% 2,000 58% North 72% America 0 1990 2009 2029 COPYRIGHT © 2010 THE BOEING COMPANY
  • 11. Emerging business models are growing andgaining market shareAir traffic, RPKs (billions) 14,000 12,000 Emerging 38% business 10,000 models 8,000 6,000 Network 4,000 25% 62% & other 2,000 14% 75% 86% 0 1990 2009 2029 *Emerging business models include LCCs, 6th Freedom Gulf carriers and Chinese carriers COPYRIGHT © 2010 THE BOEING COMPANY
  • 12. Passengers wanting– and getting– morefrequencies and nonstop service World Index 2000=1.00 1.5 1.4 Nonstop Markets Air Travel 1.3 Growth Frequency Growth 1.2 1.1 1.0 Average Airplane Size 0.9 0.8 00 01 02 03 04 05 06 07 08 09 20 20 20 20 20 20 20 20 20 20 All routes August OAG COPYRIGHT © 2010 THE BOEING COMPANY
  • 13. Long-range twins dominating as airlines meetthe demands of their customers 2000-2009 Year-end 2009 Deliveries Backlog 8:1 7:1 2,200 2,200 2,000 2,000 1,800 1,800 1,600 1,600 1,400 1,400 1,200 1,200 1000 1,000 800 800 600 600 400 400 200 200 0 0 Twin-aisles Large Twin-aisles Large All jets COPYRIGHT © 2010 THE BOEING COMPANY
  • 14. Volatile fuel prices impacting the industry Spot $/Barrel (Brent Crude Oil / Rotterdam Jet Fuel) 180 Average annual  Ended economic 160 prices viability of small 2000 $29 regional jets 2001 $24 140 2002 $25  Forced airlines to 2003 $29 120 2004 $38  Accelerate fleet 2005 $55 renewal 100 2006 $65 Jet Fuel 2007 $72  Improve non-fuel 80 2008 $97 cost management 2009 $62 60  Streamline fleet Crude Oil operations 40  Encouraging 20 development of alternative fuel 0 sources 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Historical data source: EIA COPYRIGHT © 2010 THE BOEING COMPANY
  • 15. Market trends and realities summary Single-aisle airplane demand stronger and more resilient than expected Emerging markets and business models creating a more diverse and balanced marketplace Passengers getting what they want-- more frequencies and nonstop service-- spurring strong demand for long-range twins Rising and volatile fuel prices will continue to change our industry COPYRIGHT © 2010 THE BOEING COMPANY
  • 16. Agenda  Current Market Outlook (CMO)  Market trends and realities  20-year forecast COPYRIGHT © 2010 THE BOEING COMPANY
  • 17. Market forecast drivers and considerations Traffic forecast Network development Annual growth, 2009 - 2028 WORLD 4.9 Northeast Asia 4.3 Europe 4.1 North America 3.2 Oceania 5.1 Central America 5.6 South America 7.0 Middle East 6.6 CIS 5.1 Southeast Asia 6.6 Africa 5.8 Southwest Asia 7.5 China 7.8 0 2 4 6 8 PercentageEconomic growth Market liberalization Airplane capabilities Fuel price Infrastructure $70-90/barrel Airline strategies & Environment High speed rail business models COPYRIGHT © 2010 THE BOEING COMPANY
  • 18. World air travel has grown 5% per yearsince 1977 6.0 5.0RPKs (trillions) 4.0 nd Tre 3.0 2.0 1.0 0.0 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010F RPKs = Revenue Passenger Kilometers Sources: ICAO Scheduled Traffic COPYRIGHT © 2010 THE BOEING COMPANY
  • 19. 20-year forecast:strong long-term growth 2009 to 2029 World economy 3.2% (GDP) Airplane fleet 3.3% Number of airline 4.2% passengers 4.9% Airline traffic 5.3% (RPK) 5.4% Cargo traffic 5.9% (RTK) 20-year traffic growth rates are higher than last years forecast because they are calculated off a lower base year COPYRIGHT © 2010 THE BOEING COMPANY
  • 20. Air travel growth has been met by increasedfrequencies and nonstops World Index 1988=1.00 3.0 Air Travel 2.5 Growth Frequency 2.0 Growth Nonstop Markets 1.5 1.0 Average Airplane Size 0.5 95 97 99 01 03 89 91 93 05 07 09 19 19 19 20 20 19 19 19 20 20 20 All routes August OAG COPYRIGHT © 2010 THE BOEING COMPANY
  • 21. Airlines will need 30,900 new airplanesvalued at $3.6 trillion Airplane deliveries: 30,900 Market value: $3.6T 2010 - 2029 2010 - 2029 25,000 1,800 Market value, $ billions 20,000 1,600Airplane units 15,000 1,200 10,000 800 5,000 400 0 0 1,920 21,160 7,100 720 $60B $1,680B $1,630B $220B regional jets single-aisle twin-aisle large regional jets single-aisle twin-aisle large 6% 69% 23% 2% 2% 47% 45% 6% COPYRIGHT © 2010 THE BOEING COMPANY
  • 22. Older, less efficient airplanes will be replacedwith more efficient, newer generation airplanes Units 40,000 36,300 30,000 17,410 Growth 56% 20,000 30,900 18,890 13,490 Replacement 10,000 44% 5,400 Retained fleet 0 2009 2029 COPYRIGHT © 2010 THE BOEING COMPANY
  • 23. World fleet will nearly double by 2029 2029 2019 3% 2009 3% 10% 6% 23% 4% 20% 16% 19% 18,890 27,060 36,300 airplanes airplanes airplanes 61% 67% 68% Large Twin-aisle Single-aisle Regional jet COPYRIGHT © 2010 THE BOEING COMPANY
  • 24. Emerging markets are driving theeconomic growth Annual GDP growth 2010 – 2029 China 7.3 South Asia 6.1 Asia 4.6 Pacific Africa 4.4 Southeast Asia 4.3 Middle East 4.0 Latin America 4.0 CIS 3.3 World 3.2 Oceania 2.7 North America 2.7 Europe 1.9 Source: Northeast 1.4 Global Insight Asia COPYRIGHT © 2010 THE BOEING COMPANY
  • 25. Air travel growth varies by market Added traffic Annual 2009 traffic 2010-2029 growth% Asia Pacific* 7.1% Within North America 2.8% Within Europe 4.1% Within China 7.9% Europe – Asia Pacific 5.6% North Atlantic 4.3% Middle East – Asia Pacific 7.5% World Average Transpacific 4.8% Growth: Within Latin America 7.1% 5.3%North America – Latin America 5.3% Europe – Latin America 4.6% Africa – Europe 4.6% Within CIS 4.8% 0 500 1,000 1,500 2,000 2,500 3,000 3,500 *includes within China RPKs, billions COPYRIGHT © 2010 THE BOEING COMPANY
  • 26. Market for new airplanes set to becomeconsiderably more geographically balancedNew airplane deliveries by region Market value by region2010–2029 2010–2029Region Airplanes 3% 2% Region $B 3% 2% 7% 6% Asia Pacific 10,320 Asia Pacific 1,320 8% 11% North America 7,200 34% North America 700 37% Europe 7,190 Europe 800 Middle East 2,340 30,900 Middle East 390 $3.6T Latin America 2,180 Latin America 210 C.I.S. 960 23% C.I.S. 90 22% Africa 710 Africa 80 23% 19%World Total 30,900 World Total $3,590B COPYRIGHT © 2010 THE BOEING COMPANY
  • 27. Integrated top-down/bottom-up freighter fleetforecast methodology World Air Cargo Forecast Total cargo lift Projected traffic Demand minus Current Market Outlook Lower-hold lift Passenger and combi airplane forecast Supply equals Freighter airplane Needed freighter lift requirement Supply COPYRIGHT © 2010 THE BOEING COMPANY
  • 28. Future freighter deliveries will be led bydemand for large widebodiesNew freighter deliveries: 740 Market value: $180 billion2010–2029 2010–2029 600 150 70% 77% 500 125 Market valueAirplane units 400 100 300 75 29% 200 50 23% 100 25 1% <1% 0 0 520 210 10 $140B $40B $1B Large Medium Standard Large Medium Standard More than 40 to 80 Less than More than 40 to 80 Less than 80 tonnes tonnes 45 tonnes 80 tonnes tonnes 45 tonnes COPYRIGHT © 2010 THE BOEING COMPANY
  • 29. Future freight740 new and 1,750 converted Market value: $180 billion 520Size category Large More than 80 tonnes 1,070 Medium 250 40 to 80 tonnes Standard Less than 45 tonnes 210 430 10 2009 2029 Freighters Freighters 2010 to 2029 1,750 2,980 freighters 2,490 COPYRIGHT © 2008 THE BOEING COMPANY
  • 30. European airlines business model shifts 2019 2009ASKs 2000 14% 17% 22% 20% 15% 48% 3% 54% 59% 16% 14% 18% LCC Charter/IT Broad Network Other NetworksSource: Boeing CMOs COPYRIGHT © 2010 THE BOEING COMPANY
  • 31. Europe air traffic growth varies by market Added traffic Annual 2009 traffic 2010 - 2029 growth % Within Europe 4.1% To and from North America 4.3% To and from Middle East 6.0% To and from Africa 4.6% To and fromSoutheast Asia 5.5% Europe Average To and from China 6.0% Growth: 4.4% To and from South America 5.0% Region’s Average To and from GDP Growth: 1.9% South Asia 7.1% To and fromCentral America 4.1% To and from Northeast Asia 3.7% 0 200 400 600 800 1,000 1,200 1,400 1,600 RPKs, billions COPYRIGHT © 2010 THE BOEING COMPANY
  • 32. European airlines will need 7,190 newairplanes Market value: $800 billion Share of fleet Delivery units 2% 4% 19%Size category Large Twin-aisle Single-aisle Regional jet 75% 2009 2029 2010 to 2029 Airplanes Airplanes New airplanes 4,300 7,460 7,190 COPYRIGHT © 2010 THE BOEING COMPANY
  • 33. A large demand for replacing older, less-efficient aircraft Units 8,000 7,460 6,000 3,160 Growth 44% 4,300 4,000 7,190 4,030 Replacement 56% 2,000 270 0 Retained fleet 2009 2029 COPYRIGHT © 2010 THE BOEING COMPANY
  • 34. European airlines’ environmental strategymeans more new airplanes Share of fleet 100% 96% New airplanes 75% Better for: • Environment • Passengers 50% • Airlines 25% 4% Remaining 0% airplanes 2029 Airplane fleet 7,460 COPYRIGHT © 2010 THE BOEING COMPANY
  • 35. Market-driving products and services Full market coverage from 100-500 seats Environmentally progressive Operational commonality Long-range, fast, reliable Low operating cost Standardization Passenger experience Lifecycle solutions COPYRIGHT © 2010 THE BOEING COMPANY
  • 36. Substantial, balanced backlog validatesBoeing’s product strategy Backlog $ Model 747 $ = Billions Large 8% 737300 279 777 Single- Aisle 255 250 250 32%250 Twin- Aisle 60% 767200 174 787150 Region North Leasing America100 & Govt L. America & Africa ME, 50 Central & Asia S. Asia Pacific Russia 0 Europe China, East & SE Asia 2006 2007 2008 2009 1Q 2010 COPYRIGHT © 2010 THE BOEING COMPANY
  • 37. Unmet demand provides tremendousopportunity for the future 747 747 RJ RJ 2% 2% Large Large 777 6% 777 5% Forecast Single- 737 Unsold Single- 737 Twin- Twin- aisle aisle aisle $3.6T 47% aisle $2.6T 49%787 45% 787 44% 767 767 (in 2009 $) COPYRIGHT © 2010 THE BOEING COMPANY
  • 38. Things to remember  Boeing CMO: long-term forecast reflecting realities of today’s market  Shapes our product strategy  Supports our long-range business plan  Provides valuable data in our airline planning process  Aviation industry resilient; long-term market outlook is strong  Passenger air travel will grow at 5.3%, cargo at 5.9%  Airlines will need 30,900 new airplanes valued at $3.6 trillion, European airlines will need 7,190 airplanes valued at $800 billion  Boeing’s market-driving products and services are ideally matched to the market today… and in the future COPYRIGHT © 2010 THE BOEING COMPANY
  • 39. There are 52 weeks in a year Airshow “announcements” Actual year-end net orders 1,261 to 477 4,234 to 4,263450 1,600 Airbus Airbus Boeing Boeing400 1,400350 1,200300 1,000250 800200 600150 40010050 200 0 0 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 Paris Farnborough Paris Farnborough Paris Net orders at the end of the year are what count COPYRIGHT © 2010 THE BOEING COMPANY
  • 40. For more information, please visit our CMO website: http://www.boeing.com/cmo You can also visit my blog, Randy’s Journal: http://boeingblogs.com/randy/BOEING is a trademark of Boeing Management Company.Copyright © 2009 Boeing. All rights reserved.