When an Ethiopian Airlines Boeing 787 caught fire at Heathrow Airport on July 12, the manufacturer’s shares took a tumble on the stock market. Fears arose that the battery fires that had grounded the entire fleet for three months earlier this year were back. Despite extensive tests and receiving approval to fly again from the Federal Aviation Administration of the United States, there is still some hesitation about Boeing’s Dreamliner. However, airlines confirmed their confidence in the wide-body jet despite the new problems, with no order cancellations since the incidents happened.
And through it all, the company has not lost its vision and ability to offer new jets. At the recent Paris Air Show, it recorded a large number of orders for all its jet models from customers around the world. And even as rival Airbus shopped its new wide-body A350, Boeing maintained its position as an aircraft manufacturer that is here to stay.
Large jets emerged as the winners at the Show, with the two rival airplane manufacturers, Airbus and Boeing, scoring big by the end. Although Airbus beat Boeing in the total number of orders at the Show, the US planemaker has beat its European rival in the number of deliveries made during the first half of the year. This comes despite the setback at the beginning of 2013 with the grounding of the superjumbo Dreamliner and the ensuing investigations in the US and Japan. While emerging from these issues, Boeing also surprised the industry by announcing the brand new version in the 787 family and recorded 102 commitments for the jet from a variety of customers. All in all, Boeing won firm and provisional orders for 442 aircraft valued at more than $66 billion at the Paris Air Show. Airbus, on the other hand, scored a total of 466 orders worth $69 billion at the show.
Another battleground at the Paris Air Show came over the market for large twin-engine airplanes at or above 350 sets, known as mini-jumbos. That is a profitable niche for Boeing, with its popular 365-seat 777-300ER. Airbus successfully carried out the first test flight of its 350-seat A350-1000, which aims to compete with the 777-300ER and is due to enter service in 2017. In response, Boeing has started marketing a revamped version with up to 406 seats, tentatively known as the 777X, which will enter service by the end of the decade. “Today the 777 is the best-selling twin engine, twin aisle airplane of all time,” says Randy Tinseth, vice president of marketing at Boeing Commercial Airplanes. “It has had a great run, but it is time to start looking at the next step. We have been working with our customers for the new 777X. It will be slightly larger with more room for passengers and retain its long-range abilities.” Boeing also added that the 777X is 20% more efficient per seat compared to the competition. The result of this competition will now be decided at the Dubai Air Show in November, where Emirates, one of the largest operators of the 777, is expected to be a major customer as it looks to replace up to 175 current 777s.
Boeing has thus far emerged the winner in terms of deliveries for the first six months of 2013. It delivered 306 planes in the first half, including 218 737NGs, 47 777s and 17 787s. The manufacturer is behind on deliveries of the Dreamliner, of which it only delivered one in the first quarter of 2013 due to battery problems. It expects to deliver 60 by the end of the year. Airbus delivered a total of 295 planes in the first six months of 2013, including 233 A320s. It delivered eight superjumbo A380s, but has not booked any new orders for the plane yet.
However, Airbus soared past Boeing in the number of orders. The European manufacturer reported 722 net orders (758 gross orders with 36 cancellations) in the first six months, compared to Boeing’s 692 orders reported through July 2. Airbus is planning to book 800 orders for the entire year and the half yearly total brings it close to this figure.
Despite this, Boeing still expects to remain the leader in the market in the long run. It projects a demand for more than 35,000 new airplanes over the next 20 years, valued at $4.8 trillion. Both passenger traffic and cargo traffic are expected to grow 5% annually over the period. “This forecast gives us confidence as we increase our production rates and invest in new products like the 777X and 787-10X,” says Tinseth. “Airlines are demanding more efficiency and that is exactly what we’ll be giving them.”
The single-aisle market, served by the Next-Generation 737 and the future 737 MAX, is the main driver of the forecast and continues to show strength. In this segment, 24,670 new airplanes will be needed due to the growth of low-cost carriers and airlines from emerging markets. Widebodies, such as Boeing’s 747-8, 777 and 787 Dreamliner, also make up a large part of the forecast. In this segment, 8,590 new airplanes will be needed, fueled in part by airlines replacing their older fleet with new, more fuel-efficient airplanes.
The market for new airplanes will continue to become more geographically balanced over the next two decades. Asia-Pacific, including China, will lead the way in total airplane deliveries with 12,820 aircraft. The Middle East is forecast to take deliveries of 2,610 aircraft during that period, valued at $550 billion at current prices. “The Middle East is a very important region for us,” Tinseth says. “Last year we delivered 48 airplanes in the region of the total 601 deliveries we made.”
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