Boeing Sees Jetliner Market Surging to $5.2 Trillion - Analyst Blog

By
A A A

The world's leading commercial aircraft maker The Boeing Co. ( BA ) 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 by 2033.

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 planes, respectively.

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. ( LMT ), Northrop Grumman Corp. ( NOC ) and Huntington Ingalls Industries, Inc. ( HII ). While Lockheed carries a Zacks Rank #1 (Strong Buy), Northrop and Huntington hold a Zacks Rank #2 (Buy).


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

NORTHROP GRUMMN (NOC): Free Stock Analysis Report

BOEING CO (BA): Free Stock Analysis Report

LOCKHEED MARTIN (LMT): Free Stock Analysis Report

HUNTINGTON INGL (HII): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: NOC , BA , LMT , HII

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

Most Active by Volume

28,565,410
  • $38.77 ▲ 0.31%
23,381,588
  • $17.12 ▲ 0.53%
16,433,805
  • $101.845 ▲ 0.78%
15,302,130
    $13.65 unch
14,425,851
  • $87.60 ▼ 2.55%
12,650,768
  • $5.14 ▲ 0.59%
11,619,049
  • $3.545 ▲ 0.71%
10,944,258
  • $77.0987 ▲ 0.39%
As of 9/23/2014, 10:46 AM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com