2010 farnborough presentation

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  • 1. CURRENT MARKET OUTLOOKRandy TinsethVice President, MarketingBoeing Commercial AirplanesJuly 2010BOEING is a trademark of Boeing Management Company. The statements contained herein are based on good faith assumptions and provided for general information purposes only.Copyright 2010 Boeing. All rights reserved. These statements do not constitute an offer, promise, warranty or guarantee of performance. Actual results may varydepending on certain events or conditions. This document should not be used or relied upon for any purpose other thanthat intended by Boeing.

2. Agenda Current MarketOutlook (CMO) Market trendsand realities 20-year forecast COPYRIGHT 2010 THE BOEING COMPANY 3. Long-term forecast reflects todays marketrealitiesBoeing has publicly issued its Current Market Outlook for more than 40years. During that time, the Outlook has reflected both sizeable upturnsand downturns. Our industry has faced significant market challenges,including the Asian Financial Crisis, SARS, terrorist acts, three majorworld recessions, two Gulf wars.all clearly with their own dynamics andtheir own impact on global air travel. What we have learned is that ourindustry, which is based on the need to transport passengers and freightvia our global aviation system, is extremely resilient.Based on that perspective, as we always do, we have developed theforecast in a manner that considers todays market environment but, justas importantly, takes a long-term view of the market and the fundamentalsthat drive commercial aviation. These drivers include economic growth,world trade, market liberalization, new aircraft capabilities, etc.So, while acknowledging our near-term challenges, lets take a longer-view look. Over the next 20-years, the basic factors underlying newairplane demand are strong.COPYRIGHT 2010 THE BOEING COMPANY 4. Boeing Current Market Outlook Published since1964 All jets 30 seatsand above No turbo props No business jets Scheduled andnonscheduledflying FreightersCOPYRIGHT 2010 THE BOEING COMPANY 5. Entirely web-based CMOhttp://www.boeing.com/commercial/cmo/ Real-time Interactive Downloadable Popular (last12 months) Visits:710,122 Downloads:259,971COPYRIGHT 2010 THE BOEING COMPANY 6. Boeing product forecast in-line with therealities of the market100% LargeLarge 3%5%Twin-aisleTwin-aisle21%21% 75%Size category Large Twin-aisle50% Single-aisle Single-aisle Single-aisle 55%62% Regional jet 25% RegionalJet Regional 19% Jet14% 0%Boeing forecast Airplane demand 2000 20192000 Present* 22,315 units17,796 units *Deliveries 2000 thru May 14, 2010 plus backlogCOPYRIGHT 2010 THE BOEING COMPANY 7. Different view of the market has led todifferent strategies100% Large 2% Large 4% A380 9%Twin-aisle23% Twin-aisle25% 75% Twin-aisle 35%Size category A380 Large 50% Twin-aisle Single-aisle Single-aisle 75%Single-aisle71% Single-aisle55% 25% 0% Airplane demand Boeing forecast Airbus forecast 2000 Present*2000 20192000 201914,698 units17,318 units14,661 units * Deliveries 2000 thru May 14, 2010 plus backlog (passenger jets only, excluding RJs)COPYRIGHT 2010 THE BOEING COMPANY 8. Agenda Current MarketOutlook (CMO) Market trendsand realities 20-year forecast COPYRIGHT 2010 THE BOEING COMPANY 9. Single-aisle* demand exceeding expectations 10-year forecast, 2000 - 20097,000Growth driven by:6,0005,000 Low Cost Carriers4,000 Emerging3,000 markets2,000 Replacement1,000 demand 0 BoeingAirbusAirplaneforecast forecast**deliveries5,2284,726 6,084*Single-aisle defined as all single-aisle aircraft >90 seats** Airbus forecast estimated by Boeing from GMF COPYRIGHT 2010 THE BOEING COMPANY 10. Air travel becoming more diverse geographicallyAir traffic, RPKs (billions)14,00012,000 Other Middle East10,000 China 8,000 Asia (excl. China) 6,000 Europe 4,000 45% 2,00058%North72%America01990 2009 2029 COPYRIGHT 2010 THE BOEING COMPANY 11. Emerging business models are growing andgaining market shareAir traffic, RPKs (billions)14,00012,000Emerging 38%business10,000models 8,000 6,000Network 4,00025%62%& other 2,00014%75%86%019902009 2029*Emerging business models include LCCs, 6th Freedom Gulf carriers and Chinese carriers COPYRIGHT 2010 THE BOEING COMPANY 12. Passengers wanting and getting morefrequencies and nonstop serviceWorldIndex 2000=1.00 1.5 1.4 Nonstop Markets Air Travel 1.3 Growth Frequency Growth 1.2 1.1 1.0 Average Airplane Size 0.9 0.800 01 02 03 040506070809 2020202020 20 20 20 20 20 All routes August OAGCOPYRIGHT 2010 THE BOEING COMPANY 13. Long-range twins dominating as airlines meetthe demands of their customers2000-2009Year-end 2009DeliveriesBacklog 8:17:1 2,200 2,200 2,000 2,000 1,800 1,800 1,600 1,600 1,400 1,400 1,200 1,200 10001,000800 800600 600400 400200 200 00 Twin-aisles Large Twin-aislesLargeAll jets COPYRIGHT 2010 THE BOEING COMPANY 14. Volatile fuel prices impacting the industry Spot $/Barrel (Brent Crude Oil / Rotterdam Jet Fuel) 180Averageannual Ended economic 160 prices viability of small2000 $29regional jets2001 $24 1402002 $25 Forced airlines to2003 $29 1202004 $38 Accelerate fleet2005 $55 renewal 1002006 $65Jet Fuel2007 $72 Improve non-fuel802008 $97 cost management2009 $6260 Streamline fleet Crude Oil operations40 Encouraging20development ofalternative fuel0 sources 20002001 2002 2003 2004 2005 20062007 2008 2009 2010Historical data source: EIA COPYRIGHT 2010 THE BOEING COMPANY 15. Market trends and realities summary Single-aisle airplane demand stronger andmore resilient than expected Emerging markets and business modelscreating a more diverse and balancedmarketplace Passengers getting what they want-- morefrequencies and nonstop service-- spurringstrong demand for long-range twins Rising and volatile fuel prices will continueto change our industryCOPYRIGHT 2010 THE BOEING COMPANY 16. Agenda Current MarketOutlook (CMO) Market trendsand realities 20-year forecast COPYRIGHT 2010 THE BOEING COMPANY 17. Market forecast drivers and considerationsTraffic forecastNetwork developmentAnnual growth, 2009 - 2028 WORLD4.9 Northeast Asia 4.3Europe4.1 North America 3.2 Oceania5.1Central America 5.6 South America7.0Middle East 6.6 CIS5.1Southeast Asia6.6 Africa 5.8Southwest Asia7.5 China7.80 2 4 6 8PercentageEconomic growth Market liberalization Airplane capabilities Fuel price Infrastructure$70-90/barrel Airline strategies &Environment High speed railbusiness models COPYRIGHT 2010 THE BOEING COMPANY 18. World air travel has grown 5% per yearsince 1977 6.0 5.0RPKs (trillions) 4.0 ndTre 3.0 2.0 1.0 0.0197719781979198019811982198319841985198619871988198919901991199219931994199519961997199819992000200120022003200420052006200720082009 2010F RPKs = Revenue Passenger Kilometers Sources: ICAO Scheduled TrafficCOPYRIGHT 2010 THE BOEING COMPANY 19. 20-year forecast:strong long-term growth 2009 to 2029 Worldeconomy 3.2% (GDP) Airplane fleet 3.3%Number of airline 4.2% passengers4.9% Airline traffic5.3% (RPK)5.4% Cargo traffic 5.9% (RTK)20-year traffic growth rates are higher than last years forecast because they are calculated off a lower base yearCOPYRIGHT 2010 THE BOEING COMPANY 20. Air travel growth has been met by increasedfrequencies and nonstops WorldIndex 1988=1.00 3.0 Air Travel 2.5 Growth Frequency 2.0 Growth Nonstop Markets 1.5 1.0 Average Airplane Size 0.5 9597 9901 03 89 919305 0709 1919 1920 20 19 191920 2020 All routes August OAGCOPYRIGHT 2010 THE BOEING COMPANY 21. Airlines will need 30,900 new airplanesvalued at $3.6 trillion Airplane deliveries: 30,900Market value: $3.6T 2010 - 20292010 - 2029 25,000 1,800 Market value, $ billions 20,000 1,600Airplane units 15,000 1,200 10,0008005,00040000 1,92021,1607,100 720$60B$1,680B$1,630B $220Bregional jets single-aisletwin-aisle largeregional jets single-aisle twin-aislelarge 6%69%23% 2% 2%47%45% 6%COPYRIGHT 2010 THE BOEING COMPANY 22. Older, less efficient airplanes will be replacedwith more efficient, newer generation airplanesUnits40,000 36,30030,000 17,410Growth 56%20,000 30,90018,89013,490Replacement10,00044%5,400Retained fleet020092029COPYRIGHT 2010 THE BOEING COMPANY 23. World fleet will nearly double by 20292029 2019 3%2009 3% 10% 6%23%4% 20% 16%19%18,89027,060 36,300 airplanes airplanesairplanes 61%67% 68%Large Twin-aisle Single-aisleRegional jetCOPYRIGHT 2010 THE BOEING COMPANY 24. Emerging markets are driving theeconomic growthAnnual GDP growth2010 2029 China7.3 SouthAsia6.1 Asia4.6 Pacific Africa 4.4Southeast Asia 4.3 MiddleEast4.0 Latin America4.0CIS 3.3World 3.2 Oceania2.7 North America2.7Europe1.9Source:Northeast 1.4Global Insight AsiaCOPYRIGHT 2010 THE BOEING COMPANY 25. Air travel growth varies by market Added trafficAnnual 2009 traffic 2010-2029 growth% Asia Pacific*7.1%Within North America 2.8% Within Europe 4.1% Within China 7.9% Europe Asia Pacific5.6%North Atlantic 4.3%Middle East Asia Pacific7.5%World AverageTranspacific4.8% Growth: Within Latin America7.1% 5.3%North America Latin America5.3%Europe Latin America4.6%Africa Europe4.6%Within CIS 4.8%05001,000 1,500 2,0002,5003,000 3,500 *includes within ChinaRPKs, billions COPYRIGHT 2010 THE BOEING COMPANY 26. Market for new airplanes set to becomeconsiderably more geographically balancedNew airplane deliveries by region Market value by region20102029 20102029Region Airplanes 3% 2%Region$B 3% 2%7%6%Asia Pacific10,320Asia Pacific1,3208%11%North America7,20034% North America700 37%Europe 7,190Europe 800Middle East2,340 30,900 Middle East390$3.6TLatin America2,180Latin America210C.I.S.960 23% C.I.S.9022%Africa710 Africa8023%19%World Total 30,900World Total $3,590BCOPYRIGHT 2010 THE BOEING COMPANY 27. Integrated top-down/bottom-up freighter fleetforecast methodologyWorld Air Cargo Forecast Total cargo liftProjected trafficDemand minus Current Market OutlookLower-hold lift Passenger and combi airplane forecast Supply equals Freighter airplaneNeeded freighter liftrequirement SupplyCOPYRIGHT 2010 THE BOEING COMPANY 28. Future freighter

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