Friday, July 11, 2008

Airplane Manufacturing Update

In what amounts to another rebuke for the Air Force, Defense Secretary Robert Gates is taking over  the process of buying a new fleet of aerial tankers, and partially opening it for rebidding. Last month, several comparatively small errors were found  in the original Northrop Grumman-Airbus joint venture's figures, switching the total cost calculus on the huge deal a few million dollars in Boeing's favor.
The original announcement of Airbus getting a piece of the deal, supplying the airframes, riled up many antagonists. This move, with political accountability involved, looks like a big victory for Boeing.

The global aircraft market will be boosted in the next two decades by demand for fuel-efficient jets as airlines replace old fleets to combat high oil prices, US plane maker Boeing forecast on Wednesday.The Chicago-based manufacturer made the prediction at a London press conference as it unveiled a 20-year outlook for the commercial aviation sector.
"We see a bigger demand for replacing older, less efficient aircraft," Randy Tinseth, vice president of marketing, told reporters.
Boeing said airlines were eager to replace their older fleets with new fuel-efficient aircraft -- such as Boeing's Dreamliner jet and the Airbus A380 and A350 -- amid record high oil prices that are pushing up the cost of jet fuel or kerosene.

Call it an understatement, or call it an overstatement, but we do seem to be in unprecedented times right now. The airlines are under pressure as we’re facing a weakening worldwide economy, surging oil prices, and slowing traffic growth.
It’s an extremely dynamic period for the commercial aviation industry. And it’s also, shall we say, an interesting and challenging time to be releasing our latest 20-year forecast.
I’ve just presented to journalists here in London the 2008 Current Market Outlook (CMO). And the bottom line is that the worldwide market for commercial airplanes is shifting to new, more efficient jetliners, as airlines replace older and less efficient airplanes.
In fact we’re seeing a much greater share of demand for replacement airplanes in the forecast: 43% in this year’s outlook compared to 36% in last year’s CMO. In a tough, competitive environment, airlines are looking for ways to cut costs. With high fuel prices, it certainly makes more and more sense for airlines to replace their old aircraft with new, fuel efficient airplanes, and we have reflected that trend in our analysis.
Boeing -- Randy's Journal

Boeing Has Released its market outlook that includes a review of their last projections and they seemed to do a pretty good job at it:

How’d we do? As you can see, our 2000 market outlook accurately projected the demand distribution by airplane type. The quantity of aircraft ordered is also in line with our projection. But we did slightly under-forecast the number of single-aisles needed and also under-forecasted the popularity of twin-aisles, while over-estimating the large airplane (747, A380) demand.

Boeing -- Randy's Journal

That all looks pretty solid for Boeing.


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