Singapore Air Show

Boeing Puts Brave Face on Asia-Pac Narrowbody Prospects

 - February 7, 2020, 12:01 AM
Malindo Air took delivery of its first Boeing 737 Max 8 in May 2017. Painted in its Batik Air Malaysia livery, the airplane now sits grounded among some 400 more of the model worldwide. (Photo: Boeing)

While the continued grounding of the 737 Max will no doubt cast a shadow over Boeing’s presence at the Singapore Airshow, company vice president of marketing Randy Tinseth sees reason for optimism in generally sanguine projections for narrowbody demand in the Asia-Pacific region in particular. Speaking with a group of reporters ahead of the show in mid-January, Tinseth discounted any notion that the Max crisis had cost Boeing an opportunity to whittle away at Airbus’s leading position in the region’s narrowbody segment, preferring instead to stress the need to return the airplane to service and allowing its performance to restore the sales momentum it had gained before the grounding.

“Airbus would be the first to tell you that they’ve had some challenges in production this year and they're sold out as well,” said Tinseth. “Market share is market share and I completely understand where we’re at in the fact that we weren’t able to deliver as many airplanes last year and this year as expected. But we’re going to have to let market share play out where it does. Our focus has to be getting the airplanes into service and getting them into the hands of our customers.”  

Addressing the potential in the region for the yet-certified Max 10, the largest member of the Max family scheduled for imminent first flight, Tinseth pointed to the order-rich launch of the airplane and a healthy appetite for large narrowbodies in the region as further reasons for optimism. Boeing projects a demand for 3,650 narrowbodies over the next 20 years in Southeast Asia alone, and Tinseth expressed little doubt that the Max 10 will take a sizeable portion of that total.  

“We’ve seen up gauging in that marketplace; we’ve seen the A321 do well in the market, especially in Asia,” he conceded. “We were off to a very good start in terms of order and customer development on the 10…It won’t match the range of the A321 but from a cost and economics [perspective] it gives a little bit more to our customers. So I think it’s well-positioned and for those customers that are operating NGs today, that are operating Maxs today, I think it’s a perfect growth vehicle.”

Widebody Demand Diminishes

Unfortunately for Boeing, its projections for a need for 820 widebodies in Southeast Asia over the next 20 years suggest less robust demand for the segment of the market it has consistently dominated there. Happily for the company, though, the recent signing between China and the U.S. of the first phase of a new trade agreement that calls for China to buy $200 billion worth of American goods includes a provision for commercial aircraft. China hasn’t placed an order with Boeing since late 2017, just as the U.S. began a tariff war with its biggest trading partner at the time.

Since then Boeing cut its production rate for the 787 from 14 to 12 airplanes a month, due primarily to the loss of Chinese sales. Although Tinseth expressed optimism about the potential effects of the trade deal, he wouldn’t venture a definitive projection on when Boeing would see the benefits.  

“When we look at the economy today, I think there are many more questions than answers because of the many geopolitical challenges we’ve seen,” he noted. “Who would have expected us to be where we are in terms of trade and with the situation between the U.S. and China and the geopolitical tensions they created? They have impacted the market and the question is how they will impact the market in the future. Of course, we’re very excited that President Trump and the Chinese government signed the first phase of a trade agreement. That’s a very positive step moving forward.”

While Tinseth attributed much of the lull in widebody demand to the trade tensions and China’s de facto embargo on U.S.-built airplanes, he also pointed to 13 straight months of declines in the freighter traffic—much of it associated with slowing economic growth in the People’s Republic—as a factor.

As the 787 suffered directly from China’s decision to halt Boeing passenger-jet purchases, the weak demand for widebody freighters also threatened Boeing’s 777F, a program on which the company partly relies to build the so-called production bridge between the 777-300ER and the 777X. Boeing last year met its sales goal for the current 777; whether it can do the same this year might depend on its ability to sell freighters in a decidedly down market.

“Our focus coming into 2019 was to strengthen the bridge between the 777 and the 777X; we had a really good year last year in accomplishing that,” said Tinseth. “I think we have some more airplanes to sell this year, but we see the opportunity. So we’ll continue to work on that bridge and it’s going to be a combination of freighter and passenger airplanes without question.”