1.
Global aerospace: 2016 outlook
George Ferguson, Ian McFarlane
Bloomberg Intelligence analysts

2.
Aircraft sales slow as production, revenue rise

3.
Production rates, revenue and profit pose little risk to the
aerospace industry in 2016 as backlogs are full. Rather,
planemakers ponder the risk and reward of spending money to
raise future production rates.
Twin-engine wide-body and narrow-body aircraft have the longest
backlogs, though there are risks of some production-rate cuts.
Slowing emerging markets may trim growth in air travel. Long
backlogs, low fuel prices and higher interest rates likely hurt sales,
leaving book-to-bill rates below 1x.

4.
Boeing, Airbus orders fall on low fuel, growth

5.
Aircraft orders will likely fall in 2016 on large backlogs, lower fuel
prices, rising interest rates and slowing economic growth. Large
backlogs, especially for narrow-body aircraft, mean it takes more
than five years for delivery.
Airlines that need planes sooner must buy on the secondary
market or lease. Interest rates and fuel prices boost the cost of
new aircraft and decrease the benefit of lower fuel burn, making
used planes more desirable. Slowing emerging markets likely trim
growth in demand for air travel.

6.
Airplane lines hum on backlogs, drive earnings

7.
Large backlogs are likely to keep aircraft assembly lines moving in
2016, though wide-body lines could be slowed on weaker sales to
prevent production gaps between current and refreshed versions.
Revenue will rise on increased throughput, though profit will be
challenged by rising production of low-margin, new aircraft such as
the Airbus A350, Boeing 787 and Bombardier C Series. The supplier
base benefits from increased throughput as well, although risks
increase as narrow-body rates approach 50 a month.

8.
Boeing, Airbus deferrals rise, wide-body risks

9.
Slowing growth and excess capacity in developing markets raises
the risk of aircraft deferrals and production-rate cuts in 2016. These
factors, especially in Asia, which has a large number of Airbuses
and Boeings on backlog, increase the risk that aircraft purchases are
deferred to later years.
Narrow-body backlogs are large, and deferrals easily managed.
Yet wide-body backlogs are smaller, with the Boeing 777 and 747,
and Airbus A330 and A380 likely requiring rate cuts with sizeable
deferrals or cancellations.

10.
Light-jet demand rises on currency, commodity rout

11.
Demand for light jets is making a comeback as improving U.S. and
European economies and lower oil prices favor entry-level buyers
such as small business owners. Large-jet demand likely suffers as
emerging-market incomes fall due to slowing growth from lower
commodity demand and energy prices.
Demand for large jets was driven in part by sales to oil barons and
wealthy entrepreneurs from the developing world. The strong dollar
hurts too, as jets -- sold in dollars -- are more expensive in most
foreign currencies.

12.
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