Bombardier Lower Forecasts Reflect Global GDP, High Oil Prices
Bombardier Aerospace’s latest annual 20-year forecast of the market for single-aisle airliners and business jets generally sees these sectors “trending positively” as they continue to recover from the downturn in deliveries that began in 2009. Broadly speaking, the Canadian airframer’s forecasters see the commercial aircraft market (up to 145 seats) taking a hit from dips in global domestic product (GDP) around the world and inflated oil prices. At the same time, they expect business jet deliveries to hold steady before increasing again.
Getting specific, Bombardier’s forecast for the 20- to 149-seat commercial aircraft market, which includes both turboprops and jets, calls for 12,800 deliveries from 2012 to 2031 that will generate more than $630 billion in sales revenue. This is a decrease of 300 aircraft (2.3 percent) compared to the company’s 2011 forecast, caused primarily by a lower forecast (by IHS Global Insight) of global GDP and a sharp increase in forecast oil prices.
Breaking the forecast into more specific categories, Bombardier predicts 300 aircraft deliveries in the 20- to 50-seat category (worth $180 billion); 5,600 deliveries in the 60- to 99-seat category and 6,900 deliveries in the 100- to 149-seat category ($449 billion).
Bombardier expects North America to lead the way in aircraft deliveries over the forecast period, taking in an expected 4,730 new aircraft, followed by China (2,220 aircraft) and Europe, including Russia and the CIS (2,240 aircraft).
In the business aviation segments in which Bombardier competes, the forecast predicts a total of 24,000 business jet deliveries from 2012 to 2031, representing about $648 billion in industry revenues.
In the short term, the forecast predicts that deliveries will lag orders as manufacturers attempt to maintain backlog levels. Business jet industry deliveries this year will likely remain on par with last year.
Bombardier expects business jet deliveries to return to sustained growth starting in 2013, with the large aircraft category demonstrating the fastest growth.
Over the forecast period, Bombardier predicts that North America will continue to lead the world in business jet deliveries with 9,500 aircraft, followed by Europe with 3,920. China will become the third largest market for business jet deliveries, with 2,420 deliveries from 2012 to 2031.
Key growth markets foreseen by the 20-year forecast include Brazil, India, Russia and the Commonwealth of Independent States (CIS), Indonesia, Mexico, South Korea and Turkey.
As with most forecasts in these unsettled economic times, there is good news and bad news, with some news falling on both sides of the equation. An example of the latter is the increasing emphasis on “green” initiatives and regulations, explained Mairead Lavery, Bombardier Aerospace’s vice president, strategy, business development and structured finance. On the one side, more fuel-efficient engines and airplanes reduce aircraft operating costs and are arguably better for the earth’s climate, but countering this are the increasing cost of operations in the form regulations, such as Europe’s emissions trading scheme.
Most factors influencing the forecast, however, fall clearly on the positive or negative side, if one’s viewpoint is increasing sales, deliveries and utilization of aviation products in Bombardier’s portfolio over the next 20 years. On the positive side are the increasing numbers of billionaires around the world (business aviation), the increasing middle class (commercial aircraft), replacement of current airline fleets and expansion of scope clauses in the U.S.(commercial aircraft) and (for both) the acceleration of economic trade and technological breakthroughs. Lowering sales, deliveries and utilization of all aircraft are, or can be, higher fuel prices, geopolitical events, terrorism, economic protectionism, world recession and natural disasters.