China Driving Boeing Aircraft Demand
SEATTLE (
) -- Not only did the world continue to exist following the 2008 financial collapse, but also it still needs aircraft -- lots of them.
In fact, over the next 20 years, that need will total 29,000 aircraft valued at $3.2 trillion, says
Boeing
(BA) - Get Report
, one of only two companies that competes in the market segments that will generate the vast majority of those sales.
The Asia Pacific region will demand nearly 9,000 of those, or 31%, said Drew Magill, director of marketing for Boeing Commercial Airplanes, at an investment conference Thursday. North America will demand 26% or 7,690 aircraft, while European demand will be 25%.
Growth will be most rapid in China, which "will add the capacity of North America today over the next 20 years," Magill said.
He said the current economic slowdown reduced world GDP by 2.6%, taking $1.3 trillion out of the 2009 economy. Air traffic capacity has fallen by 5.7% worldwide, led by a 15% decline in Asian-Pacific traffic, and airlines will lose money this year, including an estimated loss of about $1 billion by U.S. airlines.
However, capacity reductions have mitigated the losses. "These numbers are bad, but they are not as bad as you might expect from where the economy is," Magill said. "We saw larger losses after 2001."
Boeing believes the world GDP will have a slow recovery that will restore the 2008 level in 2010, with more rapid growth in successive years. Magill said U.S. airline capacity growth will restore 2008 levels by 2012, but restoration will be more rapid in Asia, Africa and the Middle East, with 2008 capacity restored by 2010.
Despite the 2 1/2-year delay in the schedule for the delivery of its first 787, and an anticipated decline in defense spending, Boeing shares have risen about 18% this year.
On Thursday afternoon, shares were trading at $50.36, down 17 cents.
-- Written by Ted Reed in Charlotte, N.C.
.
