Farnborough Air Show

Boeing still bullish on airliner market prospects

 - July 14, 2008, 10:55 AM

Despite the prospective onset of possible economic recession triggered by the credit crunch and record-high oil prices, demand for new jetliners remains robust, according to Boeing Commercial Airplanes chief executive Scott Carson. He sees present circumstances as offering airlines a double-edged sword. “We expect present oil price trends to continue. But if [fuel] price becomes predictable, airlines will respond more appropriately [by acquiring more-efficient aircraft].” There is a risk the credit crunch will hit the aerospace industry, but “we are not seeing that yet.”

Asked if the newly launched 100- to 130-seat Bombardier C-Series (supported by a Lufthansa “letter of interest” potentially covering 60 aircraft) posed a threat, Carson said that rising fuel prices would see operators of smaller aircraft with fewer than 100 seats “upgauging.” Boeing has not ruled out continuing to offer aircraft in the smallest (100-seat) sector, said the official.

Carson said Boeing continued to watch the market and could respond “very quickly” to competitors’ developments. Airlines are moving to fewer services with bigger aircraft and are “moving away from 90 seats,” so the question remains as to what this will mean for 100- to 130-seat designs.

Boeing said it would continue to improve the 737 until it could be replaced. The pacing technology was powerplant technology, with the required improvements likely to become available in the second half of the next decade in 2017-18.

He said there had been no airliner order cancellations, but there had been requests for deferrals of “a year or two,” which had been offset by some customers seeking earlier delivery of aircraft. Boeing’s current $271 billion backlog comprises 61 percent twin-aisle, 31 percent single-aisle and 8 percent 747 aircraft–“as balanced [an orderbook] as we have ever seen,” said Carson.

The large demand for replacement aircraft in the next 20 years, 43 percent of a predicted 29,400 aircraft, made the manufacturer “bullish” about market prospects. Carson said current industry backlog was balanced in unit numbers between Airbus and Boeing, but in dollar value is “biased toward the foreign product.”

Looking to short-term prospects, Carson said the 777F cargo aircraft likely would fly “in the first part of this week” and that assembly of the first 747-8F cargo aircraft would begin “next month.” Although Boeing’s recently published new forecast included a 2-percent increase in predicted demand for 747-or-larger models, the very-large aircraft market had “not changed dramatically,” according to Carson.

Boeing understands airline requirements and is working with engine manufacturers regarding prospective technology and what could be offered in future, said Carson. “We have a great track record of improvement over the past 50 years and the next target is to improve our approach [noise] footprint.”

 The U.S. manufacturer also is talking with its global suppliers about market requirements and encouraging them to establish appropriate production capacity, said Carson, who declined to discuss manufacturing rates. “We believe [suppliers] can go higher but we want to establish stability before increasing rates.”