The world's leading commercial aircraft maker
The Boeing Co.
) upped its 20-year forecast for jetliner demand on the back of
promising travel in Asia and the increasing need for airlines to
boost their fuel-efficient, single-aisle fleet.
Per its bullish outlook, the world will need 36,770 new planes
worth $5.2 trillion between 2014 and 2033, which is a 4.2% jump
from last year's forecast. Of the total units, 42% of all new
deliveries will replace older, less efficient airplanes. The
outlook mainly reflects rising demand from fast-growing emerging
areas of the Asia-Pacific, mainly for single-aisle jets like the
Next-Generation 737-800 and the new 737 MAX 8, which will comprise
70% of the total units in the forecast.
Asia-Pacific will likely claim roughly 40% of the total plane
deliveries and market value. The region is expected to overtake the
U.S. and lead the commercial market with 48% of all global traffic
Trailing far behind the single-aisle jetliners are small wide body
twin-aisle airplanes comprising the 787-8 and 787-9 Dreamliners.
The aerospace major expects a total of 4,520 of this class of
aircraft to be delivered in the next two decades. Asia-Pacific will
take delivery of 1,940 .
Costly medium range wide-bodies like the 777 and 777X will account
for 3,460 deliveries over the time frame. Approximately 64% of
these deliveries will go to Asia-Pacific and the Middle East. North
America and Europe will only account for 510 and 590 of these
Boeing also lifted its projection for regional jets demand to 2,490
from 2,020 forecast last year. However, Jumbo jets with four
engines are falling out of favor with airlines requiring more
fuel-efficient two engine planes.
Overall, Boeing anticipates the commercial fleet to double over the
next two decades to 42,180 airplanes. About 58% of the demand is
likely to come from emerging markets like Asia, Latin America, the
Middle East and Africa, and 42% from the U.S., Europe and Russia.
The Chicago based premier jet aircraft manufacturer recently
reported strong delivery numbers for the second quarter as well as
the first half of 2014, beating its archrival Airbus. The company
seems to have retained its title of the world's largest airplane
manufacturer given its impressive track record in both innovation
and fuel efficiency.
However, Boeing's share price movement seems to be reflecting
lurking fears of a possible shutdown of the U.S. Export-Import Bank
(Ex-Im Bank). Boeing would be the prime loser if Washington decides
to put the shutters down on Ex-Im Bank, as the company is its
single-largest beneficiary, receiving public financing for the sale
of aircraft to foreign airlines. Boeing shares have lost 7.23%
since the start of the year.
Yet, Boeing's delivery numbers continue to impress given the
strength of its Commercial Airplanes Business. Again, the upcoming
Farnborough International Airshow, to be held between July 14 and
20, is likely to fetch fresh orders for both Boeing and Airbus in
this highly duopolistic aircraft manufacturing market.
Boeing currently has a Zacks Rank #3 (Hold). Other well-placed
players in the aerospace and defense industry include
Lockheed Martin Corp.
Northrop Grumman Corp.
Huntington Ingalls Industries, Inc.
). While Lockheed carries a Zacks Rank #1 (Strong Buy), Northrop
and Huntington hold a Zacks Rank #2 (Buy).
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