Planemakers shrug off economy worries as travel demand grows


Airbus and Boeing raised their long-term forecasts for new aircraft demand on Monday, betting that rising wealth in Asia would continue to boost air travel and offset any short-term hits to the global economy.

The world’s two biggest planemakers also announced a flurry of multi-billion dollar jet deals at the biennial Farnborough Airshow, which opened on Monday 45 miles (72 km) southwest of London.

Airbus and Boeing have enjoyed years of strong sales, with rising air travel and demand for new fuel-efficient planes raising the industry’s order backlog to a record 13,500 planes at the end of 2015, or near 10 years of production at current rates.

Some analysts have cautioned that economic risks from slowing growth in China to Britain’s decision to leave the European Union could see orders start to dry up or be canceled, particularly for larger twin-aisle jets.

The planemakers remain bullish, however.

Boeing forecast airlines will need 39,620 new aircraft worth $5.9 trillion over the next 20 years, up 4.1 percent from its estimate last year.
“Despite recent events that have impacted the financial markets, the aviation sector will continue to see long-term growth with the commercial fleet doubling in size,” said Randy Tinseth, vice president of marketing at Boeing Commercial Airplanes.

Boeing forecast airline passenger traffic would increase by 4.8 percent per year over the next two decades.

Airbus raised its 20-year demand forecast to 30,070 new aircraft, up 500 from its previous estimate, and saw passenger traffic rising by an average 4.5 percent per year.
“Middle classes in emerging markets will double to 3.5 billion people by 2035,” Airbus said in a statement, predicting particularly strong demand in China and India.

Some industry executives sounded more cautious, however.

David Joyce, chief executive of aero engines maker GE Aviation, said he did not see any need for further increases in planned airliner production which Airbus and Boeing are both considering as they strive to meet their order backlogs.


Opening the Farnborough event, British Prime Minister David Cameron finalised multi-billion dollar deals with Boeing to buy nine P-8A Poseidon maritime patrol planes and to upgrade 50 Apache helicopters.

Britain’s shock decision in a referendum last month to leave the EU is providing the latest jolt to the global economy.

However, the Pentagon’s chief arms buyer said he didn’t think the decision would fundamentally alter Britain’s ties with the U.S. military or weapons-related trade.

Among the civil aircraft deals announced at Farnborough, Virgin Atlantic ordered 12 of Airbus’s biggest twin-engined plane, the A350-1000, in a deal worth $4.4 billion at list prices.

That was a shot in the arm for the 366-seat jet whose sales have slowed as Boeing develops a larger version of its 777 model.

Virgin Atlantic said it still had options to buy six of Airbus’s A380 superjumbos, although industry sources have told Reuters that long-deferred deal is likely to be canceled.

Both Airbus and Boeing said demand for single-aisle jets, rather than twin-aisled planes or four-engined superjumbos, were behind the increases in their 20-year forecasts.

In a sign of mounting competition in the single-aisle market, Boeing said it would redesign the smallest version of its 737 MAX plane, increasing seating to 150 by adding 12 seats.

Boeing also said China’s Donghai Airlines and Xiamen Airlines had signed memorandums of understanding for potential multi-billion dollar plane deals.

Bloomberg reported Malaysia’s AirAsia was close to a $12.6 billion deal for Airbus A321 jets, citing sources. Industry sources told Reuters on Sunday that AirAsia was lining up a deal with Airbus.