Boeing Sees Single-Aisle Plane as Growth Driver for Future

American aerospace giant Boeing ( BA ) released its outlook for 20 years on June 20. The company said plane makers would roughly deliver 41,000 vehicles through 2036, which indicates annual average delivery of more than 2,000 aircraft.

Single-aisle carriers to dominate the sky

As per Boeing, narrow-body single-aisle jets will dominate the future with around 29,530 aircraft deliveries. The company says it would be a herculean task to stimulate the sales of so-called very large aircraft as airlines opt for single-aisle jets.

In the recently concluded Paris Air Show, Boeing and Airbus ( EADSY ) couldn't bag orders for their 747 and A380. As far as other long-range wide-body planes are concerned, they accounted for less than 10% of the total sales at the annual showcase in Le Bourget.

Boeing's growth strategy in the next two decades

The company projects that, of the total aircraft delivered through 2037, 57% will be fresh demand due to market growth and the remaining 43% will be replacement demand.

Boeing is bullish on Asia, saying that growth in the Asian markets in the next 20 years looks stunning. The company claims that air traffic in the Asian market would surge to 38.4% in 2020 from 18.4% in 2000. Boeing forecasts frequent air travel within the Asian continent.

The company has made assessments of several of its models for the next 20 years. Demand for 787-sized planes should come in around 5,050 units over the next two decades. Deliveries of 777- and 747-sized passenger airplanes add up to only 3,160 through 2037. In addition, freighter deliveries are projected to be 960 over the next 20 years.

Future of jumbo jets looks bleak

The double-decker jumbo jets struggled to attract attention at the Paris Air Show as Airbus and Boeing couldn't win orders for their A380 and 747. The jumbo jets don't seem to be a feasible option for airlines, thanks to the massive fuel consumption besides the exorbitant price tags. Airlines are able to serve the air traffic optimally with a combination of the existing narrow-body and wide-body planes that are far more fuel efficient and operationally more lucrative.

Randy Tinseth, Boeing's vice president for marketing, commented: "We don't see much demand for really big aircraft going forward.'' In fact, doubting the viability of jumbo jets, he added, "We find it hard to believe that Airbus will deliver the rest of its A380s in backlog.''

Airbus remains optimistic regarding the potential of jumbo jets, estimating delivery of 1,400 planes worth $454 billion in the next 20 years. Boeing also released its 20-year forecast with regard to the four-engine aircraft, estimating dispatch of not more than 80 jets. Considering the bleak outlook, Boeing says it might altogether halt or limit the production of its 747 jumbo jets.

Last word

There's no doubt the single-aisle planes will dominate the skies for the next two decades. Boeing has also opened up a new segment called the New Midsize Airplane. Boeing made its assessments regarding NMA claiming that airlines would show interest in buying the midsized airplane carrying 200 to 270 passengers. Boeing looks to deliver 4,000 to 5,000 midsized aircraft to its customers through 2037.

Disclosure : I do not hold any position in the stocks mentioned in this article.

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This article first appeared on GuruFocus .

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

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

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