Boeing has slashed its expectations for global passenger jet demand over the next decade by 11 per cent, representing a loss to the industry of an estimated $200bn in potential revenue, as airlines shrink fleets and accelerate the retirement of older aircraft.
The US aircraft maker signalled a long, slow road to recovery for the aviation sector in its annual outlook for commercial jet demand over the next two decades. The cut in the forecast takes the value of 10-year demand from $3.1tn to $2.9tn at list prices.
In particular, Boeing has significantly scaled back expectations for twin-aisle aircraft used in long-haul travel, casting a cloud over the outlook for its own new 777X and Airbus’s A350-1000 wide-body.
“We see it taking five years or longer to recover to the long term trend,” said Darren Hulst, Boeing’s vice-president of commercial marketing. “Wide-body demand is taking the largest impact.”
But recovery would come, he insisted. “Over 10 years, 20 years [passenger traffic] will return to the long-term growth trend of 4.5 per cent a year.”
Predicting a gradual return to capacity growth of about 3 per cent a year, Boeing’s forecast for global demand over 20 years to 2039 was cut by just 2 per cent to 43,110 aircraft.
Boeing’s forecast is the first significant industry assessment of the longer-term impact on the aerospace sector of the coronavirus pandemic, which has paralysed global air travel and led to multibillion-dollar bailouts for airlines around the world.
Its forecast has tended to be more bullish than that of European rival Airbus and the outlook will be closely studied for signs that either group might have to scale back production further after radical cuts this year.
It comes just days after Airbus’s chief operating officer Michael Schoellhorn warned in an interview with Germany’s Handelsblatt that the outlook for aviation had deteriorated after the summer.
The resurgence of the virus in many countries has led to new travel restrictions, with airlines being forced to cancel recently reinstated flights.
Iata, the global aviation industry trade body, last week warned of a worsening situation, downgrading its expectations for passenger traffic this year by 3 per cent.
In its assessment of demand, Boeing has cut its 20-year forecast for deliveries of the large twin-aisle aircraft used on long-haul international flights by 10 per cent to 18,350 aircraft.
This segment has been devastated by the collapse in international air travel and is expected to take significantly longer to recover than the short-haul aircraft used on domestic routes.
Predictions for deliveries of narrow-body aircraft — a segment dominated by Airbus’s A320 family — have hardly changed at just 0.5 per cent down at 32,270 aircraft.
Mr Hulst refused to be drawn on expectations for Boeing’s 737 Max, which has been grounded for 18 months after two fatal crashes. The aircraft has been overhauled and is expected to be recertified by regulators in the coming months.
Boeing still expects the global fleet of commercial aircraft to grow substantially over 20 years from the current 25,900 in service last year to 48,400 by 2039.
However, this is 5 per cent lower than forecast last year, with implications for the multibillion-dollar after-market for parts and services. Asian operators would account for 40 per cent of the global fleet in 2039, up from 30 per cent today.
The forecast for the value of combined commercial and defence aerospace markets over the next decade, including services, over the next decade was cut from $8.7tn to $8.5tn due to the impact of the pandemic
Mr Hulst said the industry had a record of returning “in short order” to longer-term trends of growth after crises such as the Sars outbreak and the 9/11 terror attacks. If that did not happen this time, it “will be the first time in history it hasn’t returned to trend”.
In the meantime Boeing expected an accelerated rate of retirement for older aircraft. Nearly 60 per cent of deliveries in the first decade would be for replacements, Mr Hulst said, up from an average of 35 per cent over the past 10 years.
However over the 20-year forecast this would fall to 48 per cent, with 52 per cent of deliveries in that period dedicated to the expansion of airline networks.
Demand for cargo aircraft was expected to remain strong, particularly in the first decade, with an average annual growth rate of 4 per cent a year to 2039. “The freighter fleet is actually operating at higher levels than before the virus,” Mr Hulst said, due to the absence of passenger aircraft, which carry roughly half of all air cargo.