Tag Archives: Current Market Outlook

Review of Boeing Current Market Outlook 2016

Last week, on the first day of Farnborough air show, Boeing Commercial published its yearly update of the Current Market Outlook (CMO) for the next 20 years of commercial aircraft market (2016-2035).

I have just compared the figures for passenger aircraft of the last two years’ CMOs:

CMO 2016 vs 2015 comparison

CMO 2016 vs. 2015 comparison.

Some comments to it:

  • You can see that the total number of new aircraft delivered has slightly increased from 37,130 to 38,690, a 4.2%, which is consistent with the 4.8% traffic increase (1) that Boeing predicts (2).
  • The volume (Bn$) increases by a larger percentage, 7.2% (380Bn$) up to 5.66 Trn$… this is due mainly to the increase in (3):
    • single-aisle aircraft expected sales in volume (8%, +230M$) and aircraft (+1,410), and
    • small wide-body segment with 220 more aircraft (+5%) and an increase in volume of 80 Bn$ (+7%).
  • Three years ago, I wrote about a sudden change between CMO 2013 and CMO 2012 of the mix in wide-bodies; in this respect, CMO 2015 is consistent with last year’s one, showing simply an  increase in demand for both sub-segments.
  • It is interesting to note how Boeing continues to downplay the large aircraft segment at the moment when a A380 is discussed, however this year’s figures are increased in relation to CMO 2014 in terms of both aircraft and volume.

This year study’s figures and presentation focus again on single-aisle (737 MAX 8, “Medium-size aircraft are at heart of single-aisle market“) and small wide-bodies (787, “opening new markets”), the products to be pushed by the sales force.

Find below the nice infographic [PDF, 464 KB] that the guys from Boeing have put up together:

Boeing Commercial Aviation Market Forecast 2016-2035 infographic.

Boeing Commercial Aviation Market Forecast 2016-2035 infographic.

As always, I recommend going through the CMO, as you can learn a lot about the business: from global numbers, to growth, traffic figures, fleet distributions, forecasts, etc… You may find the presentation [PDF, 4.7 MB], a file [XLS, 0.6 MB] with all the data or the full CMO report [PDF, 4.1 MB].

This year again, together with the CMO, Boeing provides two interesting papers from a couple of years ago: Key Findings on Airplane Economic Life [PDF, 0.3MB, dating from August 2013] and A Discussion of the Capacity Supply -Demand Balance within the Global Commercial Air Transport Industry [PDF, 0.6MB, dating from August 2013].

(1) Traffic increased measured in RPKS (revenue passenger kilometers) in billions.

(2) These two ratios, 4.2% fleet demand and 4.8% traffic growth, point to an implicit increase in the average size of the aircraft in fleet and / or a higher utilization of the aircraft (higher availability).

(3) These two segments (single-aisle and small wide-body) saw as well the largest increases in number of aircraft and volumes in the CMO of 2015 in relation to 2014.

(4) Find the reviews I wrote comparing 2015 CMO with 2014 CMO2014 CMO with 2013 CMO and 2013 CMO with 2012 CMO.

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Twin-aisle aircraft deliveries 20-year forecast (update 2015)

In a previous post I shared a graphic with the “Commercial wide-body airplanes’ deliveries per year, 1969-2015” (see below). I then commented:

“Looking backwards it’s clear that 2015 was a peak in wide-bodies deliveries. Looking forward it may have been a short-term peak, but looking further ahead it is not so clear.”

Commercial wide-body airplanes' deliveries per year, 1969-2015.

Commercial wide-body airplanes’ deliveries per year, 1969-2015.

Last November, I published a post, “Airbus vs. Boeing, comparison of market forecasts (2015)“, with the following table that compares Airbus’ Global Market Forecast and Boeing’s Current Market Outlook:

Comparison of Airbus GMF and Boeing CMO 2015-2034.

Comparison of Airbus GMF and Boeing CMO 2015-2034.

If we focus on the twin-aisle segment, we see that both companies are very closely forecasting between 7,500 and 7,600 passenger aircraft deliveries (with less than 90 aircraft of difference, a 1.2% deviation). The forecast for the freighters is not shown in the table but it is also very similar for the segment, between 718 (Airbus’ view) and 800 (Boeing’s) freighter aircraft. In combination, each company foresees between  8,290 (Boeing view) and 8,297 (Airbus’) airplanes’ deliveries in the segment. Remarkably similar and definitely converged from years ago.

In the very large aircraft segment both forecasts do not converge. But since the figures of deliveries are an order of magnitude lower, I will focus on what they define as “twin-aisle” segment.

Let’s put forward again the question: was 2015 a peak year in terms of twin-aisle deliveries?

Quick math: if we take those ~8,300 aircraft to be delivered in the next 20 years, we arrive at an average of 415 aircraft per year. That figure excludes the very large aircraft. In 2015, there were 367 deliveries of twin-aisles (excluding A380 and 747):

  • A330: 103
  • A350XWB: 14
  • 767: 16
  • 777: 98
  • 787: 135
  • IL-96: 1

Thus, in 2015 we would have been far from the peak. If we simply linearized those 8,300 deliveries from 2015 levels up to 2034, we would get the following profile:

Twin-aisle deliveries historic and 20-year forecast.

Twin-aisle deliveries historic and 20-year forecast.

The reader may correctly think that market forecast figures are not engraved in stone and are rather optimistic. Fair enough.

Both forecast have been rather accurate in the past forecasting traffic growth. Not necessarily in forecasting the number of aircraft in each specific segment. See the post, “Aircraft market forecasts accuracy (update 2014)“,  in which I analyzed Boeing CMO forecast of 1999 with the actual fleet at the end of 2013. See the result below:

Comparison of aircraft fleet at year-end 2013: 1999 forecast vs. actual (sources: Boeing CMO 1999 and 2014).

Comparison of aircraft fleet at year-end 2013: 1999 forecast vs. actual (sources: Boeing CMO 1999 and 2014).

Thus, in 2013 there were 27% less twin-aisle aircraft than what had been predicted in 1999.

If 2015 market forecasts were off the mark in the same proportion (27%), that would mean that instead of 8,300 airplane deliveries in the next 20 years we would see about 6,050… meaning ~300 airplanes per year in the 20-year span.

In that case, we might have seen the peak.

Let’s take a look at current backlogs at the end of 2015:

  • Airbus: 1,112 a/c
    • A330 family: 350 a/c
    • A350: 762 a/c
  • Boeing: 1,383 a/c
    • 767: 80 a/c
    • 777 family: 524 a/c
    • 787: 779 a/c

Thus, at the end of 2015 the combined backlog (firm) stood at ~2,500 airplanes. That is a 30% of the 8,300 forecast, and a 41% of the 6,050 aircraft (i.e. forecast reduced in 27%).

The sceptic reader could still have doubts of the quality of the backlog (i.e., some customers may go through troubled waters and cancel orders).

Last year, I published a post, “Boeing 787 orders, cancellations, deliveries & backlog through 2014“, in which I showed the orders and cancellations of the 787 programme since its launch. See the summary graphic below:

787 orders, cancellations, deliveries and backlog through 2014.

787 orders, cancellations, deliveries and backlog through 2014.

The 787 programme experienced serious delays and industrial issues from 2009 to 2013 in the midst of the worst financial and economic crisis since the Great Depression of the 1930s. Through 2014, the programme had suffered 247 cancellations out of 1,318 gross orders, that is almost 19% of cancellations.

I believe that 19% can be considered an upper ceiling of how much of the current 2015 twin-aisle backlog (~2,500 a/c) could be considered as dubious. Thus, at least about 2,000 firm orders could be seen as rather secured.

Let’s see at the question (was 2015 a peak year?) from a different perspective: in the immediate coming years, what are the announced production rates?

Thus, according to the announced production rates and targets, in 2016 we should see about 380 twin-aisle combined deliveries, higher than the 367 we saw in 2015.

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Wide-body mix in 17 years of Boeing CMOs

Two years ago, I wrote a post showing the puzzling change in Boeing’s predicted mix of twin-aisle sales, between small and medium wide-bodies (“Wide-body mix in 15 years of Boeing CMOs”) (1). A few days ago I wrote a post about the publishing by Boeing of its Current Market Outlook for 2015-2034.  As I noted in that post, this year’s CMO is consistent with last year’s figures, i.e., the larger share of the forecasted market corresponds to small wide-bodies (787s from Boeing’s perspective). Recall the numbers:

  • small wide-bodies: 4,500 a/c in CMO2015 (passenger aircraft only),
  • medium wide-bodies: 2,990 a/c in CMO2015 (same figure as in CMO2014).

In the sub-segment of the medium wide-bodies passenger aircraft figures for  have remained constant and there is a slight increase in freighters (60 a/c); whereas for small wide-bodies the main increase is seen in the passenger aircraft (+230 a/c).

Since I keep a collection of CMOs from many years, I will include again a comparison going 17 years back…

Twin-aisle mix distribution (Boeing CMO 1998-2015, includes both passenger and freighter aircraft).

Twin-aisle mix distribution (Boeing CMO 1998-2015, includes both passenger and freighter aircraft).

Seeing at the graphic, made using Boeing’s forecasts’ figures:

  • During the first 5 years (1998-2003) the trends are quite constant, seeing medium wide-bodies a slightly higher demand.
  • From 2003 to 2007, the mix is reverted, possibly to favour the launch of the 787.
  • In 2008 the CMO did not provide the split.
  • From 2009 to 2013, you can see that both trends in the forecasts are erratic… why? Only Boeing knows. (2)
  • From 2013 to 2015, it seems that the trends are stabilized again in a higher demand for 787-size aircraft.

(1) Last year, I made an update of that post with the consolidated view of the last 16 years, find it here.

(2) A speculation: a Boeing-internal need to sell the concept of the 777X?

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Review of Boeing Current Market Outlook 2015

Just ahead of Paris air show, Boeing Commercial published its yearly update of the Current Market Outlook (CMO) for the next 20 years of commercial aircraft market (2015-2034).

I have just compared the figures for passenger aircraft of the last two years’ CMOs:

CMO 2015 vs 2014 comparison.

CMO 2015 vs 2014 comparison.

Some comments to it:

  • You can see that the total number of new aircraft delivered has slightly increased from 35,930 to 37,130, a 3.3%, which is consistent with the 4.9% traffic increase (1) that Boeing predicts (2).
  • The volume (Bn$) increases by a larger percentage, 6% (320Bn$)… this is due mainly to the increase in:
    • single-aisle aircraft expected sales in volume (8%, +210Bn$) and aircraft (+210), and
    • small wide-body segment with 230 more aircraft (+5%) and an increase in volume of 100Bn$ (+9%).
  • Two years ago, I wrote about a sudden change between CMO 2013 and CMO 2012 of the mix in wide-bodies; in this respect, CMO 2015 is consistent with last year’s one, showing simply a slight increase in demand for both sub-segments.
  • Interesting to note how Boeing continues to downplay the large aircraft segment (-16% in terms of number of aircraft) at the moment when a A380neo is discussed.

This year study’s figures and presentation focus on single-aisle (737 MAX, “fuelling forecast”) and small wide-bodies (787, “re-shaping long-haul marketplace”), the products to be pushed by the sales force.

Find below the nice infographic [PDF, 2.1MB] that the guys from Boeing have put up together:

Boeing Commercial Aviation Market Forecast 2015-2034 infographic.

Boeing Commercial Aviation Market Forecast 2015-2034 infographic.

As always, I recommend going through the CMO, as you can learn a lot about the business: from global numbers, to growth, traffic figures, fleet distributions, forecasts, etc… You may find the presentation [PDF, 3.8 MB], a file [XLS, 0.6 MB] with all the data or the full CMO report [PDF, 6.5MB].

For a comparison between this CMO and the respective Airbus’ GMF we will have to wait until after the summer, when Airbus publishes its update. Until then, find here the comparison based on 2014 market studies.

This year together with the CMO, Boeing provides two interesting papers from a couple of years ago: Key Findings on Airplane Economic Life [PDF, 0.3MB, dating from August 2013] and A Discussion of the Capacity Supply -Demand Balance within the Global Commercial Air Transport Industry [PDF, 0.6MB, dating from August 2013].

(1) Traffic increased measured in RPKS (revenue passenger kilometers) in billions.

(2) These two ratios, 3.3% fleet demand and 4.9% traffic growth, point to an implicit increase in the average size of the aircraft in fleet and / or a higher utilization of the aircraft (higher availability).

(3) Find the reviews I wrote comparing 2014 CMO with 2013 CMO and 2013 CMO with 2012 CMO.

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Airbus vs. Boeing, comparison of market forecasts (2014)

Yesterday, Airbus released the new figures of the 2014-33 Airbus’ Global Market Forecast (GMF, PDF 7.5MB).

In previous years, I have published comparisons of both Airbus’ and Boeing’s forecasts (Current Market Outlook, CMO, PDF 5.3MB). You can find below the update of such comparison with the latest released figures from both companies.

Comparison of Airbus GMF and Boeing CMO 2014-2033.

Comparison of Airbus GMF and Boeing CMO 2014-2033.

Some comments about the comparison:

  • Boeing sees demand for 9% more passenger aircraft (excluding regional a/c) with a 10% more value (excluding freighters). The gap is closing, as in previous years Boeing forecasted up to 14% more aircraft.
  • In relation to last year studies, Airbus has increased demand by ~2,000 aircraft whereas Boeing by ~1,000.
  • Boeing continues to play down A380 niche potential (59% less a/c than Airbus’ GMF). This year, both companies have reduced in about 100 units their forecasted demand for the VLA segment.
  • Both companies’ forecast for the twin aisle segment is nearly identical: 7,260 aircraft. The mix between small and intermediate twins varies, 700 units up and down. However, Boeing’s wide-bodies mix is not to be taken as engraved in stone, see the erratic trend in the last years here.
  • On the other hand, Boeing forecasts about 3,600 single-aisle more than Airbus (the gap has closed in 800 units this year). The largest part of the difference comes in the single-aisles over 175 seats (A321, 737-9).
  • In terms of RPKs (“revenue passenger kilometer”), that is, the number of paying passenger by the distance they are transported, they see a similar future: Airbus forecasts for 2033 ~14.5 RPKs (in trillion) while Boeing forecasts 15.5 RPKs.

The main changes from last year’s forecasts are:

  • Both manufacturers have increased their passenger aircraft forecast, ~2,000 a/c Airbus and 1,000 a/c Boeing,.
  • Both manufacturers have increased the value of RPKs in 2033  (about 5-7%).
  • Both manufacturers have increased the volume (trn$) of the market in these 20 years, about 6.7% Airbus (to 4.4trn$) and 5.7% Boeing (to 4.86trn$) (excluding regionals and freighters).

Some lines to retain from this type of forecasts:

  • Passenger world traffic (RPK) will continue to grow about 4.7% per year (5.0% according to Boeing). This is, doubling every ~15 years.
  • Today there are about 16,855 passenger aircraft around the world (according to Airbus), this number will nearly double in the next 20 years to above 30,555 a/c in 2033 (over 33,000 as seen by Boeing).
  • Most deliveries to go to Asia Pacific, 39% or over 12,200 passenger aircraft
  • Domestic travel in China will be the largest traffic flow in 2033 with over 1,500bn RPK, or 11% of the World’s traffic.
  • Over 12,000 aircraft will be retired to be replaced by more eco-efficient type.
Trips per capita vs. GDP per capita (source: Airbus GMF).

Trips per capita vs. GDP per capita (source: Airbus GMF).

As I do every year, I strongly recommend both documents (GMF and CMO) which provide a wealth of information of market dynamics.

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Aircraft market forecasts accuracy (update 2014)

About two years ago I wrote a post in which I analyzed the accuracy of commercial aircraft market forecasts. In particular, Boeing’s series of yearly Current Market Outlook (CMO). In that comparison, between the CMOs from 1997 and 2012, we could compare the predicted and the actual world fleets at 2011 year-end. Except for the twin-aisle segment and especially the large aircraft sector, the accuracy was remarkable, as the estimated global fleet only exceeded the actuals in 1%.

In this post, I just wanted to provide an update with the figures from the latest CMO (2014), released a few weeks ago, in comparison with 1999’s CMO. In that CMO from 1999 [PDF, 1.5MB], we find the following chart showing Boeing’s forecasted fleet size and distribution for 2003, 2008, 2013 and 2018 year-ends.

1999 Boeing CMO year-end fleet forecasts for 2003, 2008, 2013 & 2018.

1999 Boeing CMO year-end fleet forecasts for 2003, 2008, 2013 & 2018.

In 2014 CMO, Boeing offered figures of 2013 year-end fleet (1).

Fleet at year end 2013 - Boeing 2014 CMO.

Fleet at year-end 2013 – Boeing 2014 CMO.

And now, the comparison is immediate:

Comparison of aircraft fleet at year-end 2013: 1999 forecast vs. actual (sources: Boeing CMO 1999 and 2014).

Comparison of aircraft fleet at year-end 2013: 1999 forecast vs. actual (sources: Boeing CMO 1999 and 2014).

Some reflections:

  • The forecasts for all segment except for single-aisle (737-800) predicted higher numbers of aircraft in the fleet than the actuals have shown 15 years later (2).
  • The total fleet figure was missed by 11%, a larger deviation than the 1% from two years ago.
  • The 737 has been the model outselling the forecasts, offsetting partially the lower demand in all other segments. In particular, even if deviations per segment have been higher, the global forecasted figure for passenger aircraft has been missed by only 3%.
  • The forecast is especially off mark the twin-aisle, where there are over 1,700 less aircraft in the current fleet than forecasted (3).

For the next such comparison we will need to wait some years, as from the year 2000 Boeing provided CMOs in a different fashion, offering a view of the forecasted fleet only 20 years from the date in question, instead of a view every 5 years. Therefore, we will have to wait until 2017, when we will be able to compare the 20-year forecast from 1997 CMO with the actuals of 2016 to be provided in 2017 CMO.

(1) In order to see the detailed split per segment differentiated between passenger and freighter aircraft, until the released of the full CMO, it is needed to use the exploring data tool offered in Boeing’s site.

(2) The differences in accuracy between the lower and higher end of the small-aisle segment should not be taken into account, as they are influenced by the different consideration of the cut off number of seats between a CMO and the other.

(3) Possibly a reason why Boeing plays down on the 747-8I and A380 segment.

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Wide-body mix in 16 years of Boeing CMOs

Last year I wrote a post showing the puzzling change in Boeing’s predicted mix of twin-aisle sales, between small and medium wide-bodies (“Wide-body mix in 15 years of Boeing CMOs”). A few days ago I wrote a post about the publishing by Boeing of its Current Market Outlook for 2014-2033. This year’s CMO is more consistent with last years figures, i.e., the larger share of the forecasted market corresponds to small wide-bodies (787s from Boeing perspective). Recall the numbers:

  • small wide-bodies: 4,270 a/c in CMO2014 (passenger aircraft only),
  • medium wide-bodies: 2,990 a/c in CMO2014.

However, the trend is changed again in this year’s CMO in comparison with last year’s one: small wide-bodies market decreases while the medium wide-bodies’ one increases again. Since I keep a collection of CMOs from years back, I will include again a comparison going 16 years back…

Twin-aisle mix distribution (Boeing CMO 1998-2014).

Twin-aisle mix distribution (Boeing CMO 1998-2014).

Seeing at the graphic (made using Boeing figures):

  • During the first 5 years (1998-2003) the trends are quite constant.,
  • From 2003 to 2007, the mix is reverted, possibly to favour the launch of the 787.
  • In 2008 the CMO did not provide the split.
  • From 2009 to 2014, you can see that both trends in the forecasts are erratic… why? Only Boeing knows.

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