Boeing raises jetliner demand forecast

Boeing raises jetliner demand forecast

Boeing upgraded its 20-year forecast for airplane demand as aerospace firms heading to next week's Paris Airshow look beyond the financial crisis to pin their hopes on Asia.

The US planemaker said on Tuesday airlines, lessors and freight firms would need 35,280 new jets worth $4.8 trillion as the world's fleet doubles over the next two decades — raising by 3.8 per cent the company's previous 20-year outlook.

The bullish new forecast anticipates a surge in Asia-Pacific travel that will keep production rates at jet factories rising, but includes a downward revision of forecasts for Europe and North America where prospects for recovery are uncertain. "By 2032, Asia-Pacific will be by far the world's largest travel market," Randy Tinseth, vice-president for marketing at Boeing Commercial Airplanes told a news conference.

"There is no doubt the industry's centre of gravity is moving from the US to Asia. Right now, 37 per cent of all traffic touches Asia — by 2032 it will approach 50."

Boeing said passenger and cargo traffic, both indicators of economic activity, are expected to grow 5 per cent annually.

The increase in Boeing's forecast reflects strong demand for the most popular category of airliner, 150-seat medium-haul planes like the Boeing 737 and Airbus A320 where the dominant planemakers face new competition from Canada, China and Russia.

The rise of Asian low-cost carriers such as Malaysia's AirAsia or Indonesia's Lion Air has pushed up orders.

Worldwide, airlines will need 24,670 of these single-aisle jets worth $2.29 trillion at list prices, according to the latest forecast, up from 23,240 forecast last year.

To cope with the demand, Airbus and Boeing are once again discussing the prospect of increasing output to whittle down large backlogs after adopting a wait-and-see attitude during the economic downturn.

"There is room for us to grow in terms of (production) rate, there is room for Airbus (EAD.PA) to grow in terms of rate and frankly there is probably also room for a third competitor. We do have some upside in terms of long-term rates," Tinseth said.

Airbus sales chief John Leahy told Reuters last week it was studying an increase in production once the latest model of A320 enters the market in 2015.

Boeing Chief Executive Jim McNerney told investors last month there was "upward bias" in jetliner production.

Boeing dismissed concerns that aircraft makers are churning out too many planes, creating oversupply.

Among larger and smaller planes, the trend is for less or flat demand compared with previous forecasts, Boeing said.

The forecast for twin-aisle planes such as the Boeing 777 and 787 and the Airbus A330 and A350 fell 1.5 per cent to 7,830, compared with last year's forecast, Boeing said.

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