Boeing, Airbus offer rosy outlooks for aircraft demand

By Danica Kirka

Associated Press

FARNBOROUGH, England — Boeing and Airbus offered upbeat forecasts Monday for the aircraft market over the next 20 years, trying to tamp down worries that a long boom in plane-making could be ending.

The world’s top plane makers see demand driven by a growth in travel, especially in Asia, leading to a doubling of the world’s aircraft fleet.

Boeing Co. said it expects demand for 39,620 new planes worth $5.9 trillion over the next 20 years, an increase of 4 percent over the company’s 2015 forecast. The Chicago-based company estimates that Asia will account for nearly 40 percent of demand.

Randy Tinseth, Boeing’s vice president of marketing for commercial planes, said aviation will grow over the long term “despite recent events that have impacted the financial markets.”

Europe’s Airbus Group SE Airbus said growing urbanization and wealth in developing countries, especially in Asia, will drive 4.5 percent annual growth in travel. The company forecast demand for more than 33,000 new planes worth $5.2 trillion and said that by 2035, the world’s fleet will have doubled from 19,500 to nearly 40,000 planes, many of them more fuel-efficient than current models.

There has been concern lately that lower oil prices and weakening economies in key markets including China could reduce the demand for new planes. Boeing and Airbus both have huge backlogs, as profitable airlines have placed big orders in recent years.

The new forecasts came on the opening day of the Farnborough International Airshow, a major industry event that is often the setting for announcements about new orders.

In the first big deal announced at the show, Britain is buying nine new Boeing P-8A Poseidon military aircraft. Defense Secretary Michael Fallon said the plane, which is based on the civilian Boeing 737, will help protect Britain’s Trident nuclear submarines and aircraft carriers.

The Defense Ministry said that the cost of delivering the deal, including training, infrastructure and necessary support, will be around 3 billion pounds ($3.88 billion) over the next decade.

The deal is part of what Boeing and the U.K. describe as a new long-term partnership that will bring 2,000 new jobs to the U.K. That’s an important boost to a government reeling from fears that jobs will be lost after Britain’s decision to leave the European Union.

“Whatever uncertainties our country faces, I want the message to go out loud and clear: the U.K. will continue to lead the world in both civil and defense aerospace,” Prime Minister David Cameron said. “We aren’t just open for investment; we are a place the global aerospace industry wants to do business —­ as Boeing’s long term partnership with the U.K. proves.”

In other developments Monday:

Virgin Atlantic Airways will buy eight A-350-1000s from Airbus in deal that also involves four new aircraft on lease terms. The A-350-1000s are scheduled for delivery starting in 2019 and four aircraft on long-term leases will start in 2020. There will be a lease option for a fifth aircraft. Terms were not disclosed.

The aircraft will be deployed initially at London Heathrow to strengthen the company’s trans-Atlantic network and subsequently at Gatwick airport on routes to the Caribbean.

“The A350-1000 plays a pivotal role in our fleet program, helping to create one of the youngest, cleanest, greenest fleets in the sky,” said Virgin Atlantic CEO Craig Kreeger.

Boeing said that Norway has committed to its GoldCare maintenance coverage for the airlines 737 Max fleet and expanded coverage for the airlines entire 787 Dreamliner fleet.

The new services agreement represents the largest commercial services order in Boeing history, the company said. The service will be launched when the first plane is delivered in May of 2017 and coverage will be provided through 2034.

Boeing and Standard Chartered Bank announced that the financial institution ordered 10 737-800s in a deal valued at $960 million.

Standard Chartered, said the deal will add to the already 110 aircraft it has on operating lease to clients globally as it grows and diversifies its client base.

The company’s key markets are Asia, Africa and the Middle East, with a focus on emerging markets.

China’s Donghai Airlines and Boeing have announced that the airline intends to purchase 25 737 MAX 8s and five 787-9 Dreamliners in a deal valued at more than $4 billion.

Shenzhen-based Donghai Airlines said its fleet expansion will help satisfy the growing travel market and help build its home base as the transportation hub in southern China.

Donghai is converting its business model from cargo services to passenger services and has already order 15 Next-Generation 737-800s and 10 737 MAX 8s in 2013.

Wong Cho-Bau, the chairman of the airline, says it is “committed to introducing new next-generation airplanes that deliver the industry-leading fuel efficiency and passenger comfort.”

Donghai Airlines currently has a fleet of 11 Boeing 737-800s serving for more than 10 cities across China.