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Boeing forecasts improving global demand
October 28th 2021
The recovery in the commercial aircraft market is broadening and key long-term fundamentals remain strong, Boeing Company CEO, David Calhoun, told analysts on Wednesday. Read More » His comments followed an announcement that the aerospace manufacturer had recorded a reduced third quarter net loss of US$132 million that was driven by problems with its 787 Dreamliner and the Commercial Crew Starliner spaceship. Calhoun cautioned there was still near-term pressure due to COVID-19 and the recovery remained uneven. But the market was shaping up largely as the company expected with global departures increasing slightly in the third quarter to an average of 67% of 2019 levels, up from 59% in the previous quarter, he said. “Similar to what we saw in the first half of the year, domestic traffic is leading the recovery,’’ Calhoun said. “However, traffic took a slight step back in the late [northern hemisphere] summer due to the Delta variant and increased travel restrictions, resulting in global August domestic traffic of approximately 30% below 2019 levels. Since then, there have been signs of improvement, most notably in the domestic China market. The U.S. domestic market continues to be a bright spot in the recovery, with Transportation Security Administration screenings resuming upward weekly trends since mid-September and peak travel days reaching 80% to 85% of 2019 volumes.” The travel recovery accelerated in more parts of the world with reduced travel restrictions and coordinated protocols, Calhoun said. He pointed to accelerated domestic traffic growth in Japan after it recently dropped its COVID-19 state of emergency. “Passenger traffic in other parts of the world, particularly Southeast Asia, remains significantly lower due to continued travel restriction uncertainty and case rates,’’ he said. “Even there, however, there is increasing momentum for air travelers as vaccination rates climbed.” Boeing estimates the active aircraft fleet is now 85% of its previous size with single aisle activity slightly above that of twin aisle aircraft. It calculates airlines have retired, or announced plans to retire, 1,500 airplanes because of the pandemic. “With utilization rates and load factors still below historic levels, airlines are flying around 60% of their normal global capacity,’’ Calhoun said. “Recent changes to government policies could accelerate this to 70% by year-end. However, we have seen continued variability in capacity due to supply chain and logistics challenges our customers are facing.” Calhoun revealed work was underway on systems to build a new commercial aircraft. “This quarter, we stood up an integrated product team to bring together a digital environment, where the next commercial new airplane and production system can be designed together,’’ he said. “While we have not launched a new airplane, this is an important step in our digitization journey and our development journey to evaluate how we holistically design, build, test, certify and support the airplane and production system.” Of the problems plaguing production of the 787, Calhoun said the company was conducting inspections and rework while it continued to discussions with the U.S. Federal Aviation Administration about actions required to resume deliveries of the type. It is building the 787 at a rate of two per month but expected to return to five a month “over time” after deliveries resumed, he said. The final cost of fixing the 787’s problems would be about US$1 billion, Boeing said.
