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Boeing Projects $700 Bln Commercial Airplanes Market In North America - Update

(RTTNews) - Thursday, Boeing Inc. (BA) said that it expects air carriers in North America to take delivery of about 7,200 new airplanes over the next 20 years at an investment of $700 billion.

The company said that new airplane deliveries in Canada and the United States will be driven largely by the need to retire older, less fuel-efficient single-aisle airplanes and regional jets, as airlines replace them with new-generation, more fuel-efficient models.

Taking retirements of airplanes into account, the North America fleet will grow from 6,590 airplanes today to about 9,000 airplanes by 2029.

Boeing forecasts that single-aisle airplanes will grow from 56% of the total North America fleet today to 71% of the fleet by 2029. Airlines are increasingly focusing on airplane age as fuel-thirsty, older airplanes weigh increasingly on earnings. Increased attention to aviation's impact on global climate change also will be a factor in selecting airplanes that produce lower carbon emissions.

Newer airplane types such as the Next-Generation 737 offer significant advantages in environmental performance as well as improved capabilities, fuel efficiency and maintenance costs.

"North America is a large, mature market, and we expect passenger traffic for the region to grow at a modest rate of 3.4 percent," said Randy Tinseth, vice president of Marketing, Boeing Commercial Airplanes. "The fast-paced lifestyles in Canada and the U.S. require rapid, frequent and reliable coast-to-coast and inter-regional transportation. Driven by this demand, nearly three-quarters of the new deliveries over the next 20 years will be single-aisle airplanes."

To help meet this demand, Boeing Commercial Airplanes will work with our more than 500 suppliers and partners in Canada. The company imports parts and services from Canada amounting to more than a billion U.S. dollars a year, more than $625 million of which is associated with Boeing Commercial Airplanes.

Additionally, the company said that twin-aisle fleets will evolve in the region as airlines continue to expand international point-to-point services to a wider range of airport pairs and frequencies. Small- and mid-sized twin-aisle airplanes will grow to represent 19% of the North America fleet by 2029.

Within the North America market, Boeing said that it sees a demand for 1,180 new, efficient twin-aisle airplanes such as the 787 Dreamliner. Twin-aisles will account for only 16% of total airplane demand in the region over 20 years but will have a proportionally higher share of delivery cost, at 37% of the overall investment.

The company expects that Large airplanes (747-size and larger) will not see significant demand in North America, with only about 40 units (all freighters), or one percent of the total investment.

It also forecasts declining demand for regional jets in North America as airlines shift to more fuel-efficient turboprops or larger jetliner models. High fuel prices, intensified competition and the superior efficiencies of larger single-aisles will take a toll on the economics of small regional jets. This category will account for just 4% of the total investment for new airplanes, with only 800 new regional jet deliveries over the next 20 years, nearly all for replacement.

BA is currently trading at $62.90, up $0.61 or 0.98%, on a volume of 1.62 million shares on the NYSE.