2013-2031 aviation and aerospace market outlook by boeing

C t M k t O tl kR d Ti th

Current Market Outlook2013-2032

Randy TinsethVice President, MarketingBoeing Commercial Airplanes

June 2013

Copyright © 2013 Boeing. All rights reserved.

The statements contained herein are based on good faith assumptions and provided for general information purposes only. These statements do not constitute an offer, promise, warranty or guarantee of performance. Actual results may vary depending on certain events or conditions. This document should not be used or relied upon for any purpose other than that intended by Boeing.

Boeing is a trademark of The Boeing Company.

A focus on efficiencyAgenda

Copyright © 2013 Boeing. All rights reserved.

A focus on efficiency20-year traffic and airplane forecast

Boeing product strategy & development

Oil prices expected to remain elevated and volatile

Spot $/Barrel (Brent Crude Oil / Rotterdam Jet Fuel) ¢/Gallon

450

160

180

400

350

300120

140

160

Jet Fuel 300

250

20080

100

120

150

40

60

B t C d Oil

Historical data source: EIA

202003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Brent Crude Oil

Copyright © 2013 Boeing. All rights reserved.

Historical data source: EIA

Fuel has doubled as a percentage of airline costs* over the past 10 years

2003

15%25%

2003Fuel price:

US $0.82/gal

Single-aisle Wide-body

2013

Single-aisle Wide-body

30%

50%Fuel price:US $2.73/gal

50%

Copyright © 2013 Boeing. All rights reserved.

*Cash operating cost, typical rules, representative aircraft

New technology and intense competition continue t h i li i ld d dto push airline yields downward

er s

eat-m

ileC

ents

p

Copyright © 2013 Boeing. All rights reserved.

Airlines are focused on efficiency

Operations Network / revenue New airplanes, technologies

Copyright © 2013 Boeing. All rights reserved.

g

Impacts of efficiency push on the future

Efficient use of assets Modest up-gauging Continued replacement demand

Copyright © 2013 Boeing. All rights reserved.

p

A focus on efficiencyAgenda

Copyright © 2013 Boeing. All rights reserved.

A focus on efficiency20-year traffic and airplane forecast

Boeing product strategy & development

Why the Current Market Outlook (CMO)?

Product strategy

Long-range business plan

Suppliers and airline customers

Copyright © 2013 Boeing. All rights reserved.

Boeing forecast accuracyFleet consists of all jet aircraft with at least 90 seats

• Accurate despite market dynamics

Fleet consists of all jet aircraft with at least 90 seats

8,000

10,000

2003 CMO

Medium-term

Actualdynamics

• Long-term forecasts have b ti 2 000

4,000

6,000

2003 CMOForecast

been more conservative

• Single-aisle segment has

0

2,000

2003-2012

Long termexceeded expectations

• Large aircraft and regional 12 000

16,000

20,000Long-term

1994 CMOActual

Large aircraft and regional jet segments have underperformed

4,000

8,000

12,000 1994 CMOForecast

Copyright © 2013 Boeing. All rights reserved.

01994-2012Sources: CMO 1994, CMO 2003, ASCEND

Market forecast drivers and considerations

Highspeed

railEnvironmentAirplane

capabilitiesMarket

liberalization

Fueli

Airlinestrategies &

business

rail

Emergingmarketsprice business

models

I f t t Economic

markets

Infrastructure Economicgrowth

CurrentMarket

Outlook2013-2032

Copyright © 2013 Boeing. All rights reserved.

Air travel and economic growth are directly related

16 8Percent annual change passenger traffic Real GDP growth

8

10

12

14

4

5

6

7

2

4

6

8

1

2

3

4

Long-term traffic growth

-4

-2

0

-2

-1

0

1971 1976 1981 1986 1991 1996 2001 2006 2011

Pax airline traffic growth GDP

Copyright © 2013 Boeing. All rights reserved.

Sources: Traffic growth – ICAO/IATAGDP growth – IMF (PPP)

Drivers of air travel

Economicgrowth

Globaltrade

Travelervaluesgrowth trade values

60-80%Travel

20-40%Additional

Copyright © 2013 Boeing. All rights reserved.

demand travel demand

World air travel has grown 5% per year since 1980

5 0

6.0• 4 recessions• 2 financial crises

4.0

5.0

rillio

ns)

• 2 Gulf wars• 1 oil shock• 1 near pandemic (SARS)

2 0

3.0

RPK

s (tr • 9/11

1.0

2.0

0.01980 1984 1988 1992 1996 2000 2004 2008 2012

Copyright © 2013 Boeing. All rights reserved.

RPKs = Revenue Passenger KilometersSource: ICAO scheduled traffic

20-year forecast: strong long-term growth

World

2012 to 2032

3.2%World

economy(GDP)

Numberof airline

passengers4.1%

5.0%Airlinetraffic

(RPK)

5.0%Cargotraffic(RTK)

Copyright © 2013 Boeing. All rights reserved.

(RTK)

Air travel growth has been met by increased frequencies and nonstops

2.5 Air Travel Growth

WorldIndex 1992=1.00

2.0

Frequency GrowthNonstop Markets

1.5

1.0Average Airplane Size

0.5

Copyright © 2013 Boeing. All rights reserved.

August OAG All routes

Airlines will need more than 35,000 new airplanes l d t $4 8 t illivalued at $4.8 trillion

Airplane deliveries: 35,2802013 - 2032

Market value: $4.8T2013 - 2032

25 000 2 50024,670

15,000

20,000

25,000

1,500

2,000

2,500,$2,290B

$1 100B $1 090B

0

5,000

10,000

0

500

1,000

2,0204,530

7603,300

$80B

$1,100B

$280B

$1,090B

Copyright © 2013 Boeing. All rights reserved.

0Regional

jets6%

Single-aisle70%

Small wide-body

13%

Largewide-body

2%

Mediumwide-body

9%

0Regional

jets2%

Single-aisle47%

Smallwide-body

23%

Largewide-body

6%

Medium wide-body

22%

Older, less efficient airplanes will be replaced with more efficient, newer generation airplanes

40,000

45,000Units

41,24041,240

30,000

35,000

20,930Growth

35,28035,28020,31020,310

20 000

25,000

, Growth59%

15,000

20,000

14,350Replacement

41%

5,000

10,000

5,960Retained fleet

41%

Copyright © 2013 Boeing. All rights reserved.

02012 2032

Retained fleet

Fleet composition will change2032

p g2012

2032

13%7%4% 6%9%

2%

20,310airplanes

13%

12%

7%13%

41,240airplanes

airplanes

64%70%

Copyright © 2013 Boeing. All rights reserved. Data source: Ascend & Boeing CMO

Large wide-body Medium wide-body Single-aisle Regional jetSmall wide-body

Emerging markets are driving the economic growthAnnual GDP growth2012 – 2032

SouthAsia 6.6

4.7

4.5

SoutheastAsiaAsia

Pacific

China 6.4

4.4

3 8

4.0LatinAmerica

Middle

Africa

3.2

3.4

3.8

World

CIS

East

1.8

2.5

2.6

Europe

NorthAmerica

Oceania

Copyright © 2013 Boeing. All rights reserved.

1.8Source:

IHS Global Insight1.6NortheastAsia

Air travel growth varies by market

Within Asia Pacific*

Within North America 2.3%

6.2%2012 traffic

Added traffic2013-2032

Annualgrowth %

Within China

Within Europe

Europe - Asia Pacific

3.6%

5 5%

6.9%

Europe Asia Pacific

North Atlantic

Middle East - Asia Pacific

Within Latin AmericaWorld

Average

5.5%

6 9%

3.5%

7.3%Within Latin America

Trans-Pacific

Within/to CIS

N th A i L ti A i

Average Growth:

5.0%

6.9%

4.5%4.8%

5 0%North America - Latin America

Europe - Latin America

Africa - Europe

5.0%4.7%

4.8%

Copyright © 2013 Boeing. All rights reserved.

0 500 1,000 1,500 2,000 2,500 3,000RPKs, billions*Does NOT include within China

Air travel becoming more diverse geographicallyAir traffic RPKs (billions)Air traffic, RPKs (billions)

16,000

12,000

14,000 Other

Middle East

8,000

10,000 China

Asia Pacific( l Chi )

4,000

6,000(excl. China)

Europe

0

2,000

1992 2012 2032

NorthAmerica

39%

52%73%

Copyright © 2013 Boeing. All rights reserved.

1992 2012 2032

Source: Boeing 2013 CMO

Market for new airplanes to become even more hi ll b l dgeographically balanced

New airplane deliveries by region2013–2032

Market value by region2013–2032

R i $BR i Ai l

39%11%

6%3%

3%

37%7%

8%3%

3%

$

Region $BAsia Pacific 1,890Europe 1,020North America 810

Region AirplanesAsia Pacific 12,820Europe 7,460North America 7,250

17%

21%

21%

21%

35,280 $4.8TMiddle East 550Latin America 300C.I.S. 140Af i 130

Middle East 2,610Latin America 2,900C.I.S. 1,170Af i 1 070

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Africa 130

World Total $4,840BAfrica 1,070

World Total 35,280

World air cargo traffic has grown 5.3% per year since 1980

250

150

200

ons)

100

RTK

s (b

illio

50

01980 1984 1988 1992 1996 2000 2004 2008 2012

Copyright © 2013 Boeing. All rights reserved.

* Revenue tonne-kilometers

N f i ht d d 850 1 450 t d130

New freighter demand -- 850 new, 1,450 convertedDelivery unitsShare of fleet

100%

940640

Large>80 tonnes

Medium40 to 80 tonnes 2,300

40%

60%

80%

210380

2013 t 20322012 2032

Standard<45 tonnes

0%

20%

40%

Converted

Copyright © 2013 Boeing. All rights reserved.

2013 to 2032Freighters

2012Freighters

1,730

2032Freighters2,810

Future freighter deliveries will be led by demand for l id b dilarge widebodies

700

New freighter deliveries: 8502013–2032

Market value: $240 billion2013–2032

250640

400

500

600

700

ane u

nits

arke

t valu

e

$200B

150

200

250640

0

100

200

300

Airp

la Ma

Medium Medium

$40B

StandardLargeStandardLarge 0

50

100210

$0B0

Copyright © 2013 Boeing. All rights reserved.

Medium 40 to 80tonnes25%

Medium40 to 80tonnes17%

StandardLess than 45 tonnes

LargeMore than80 tonnes

83%

StandardLess than45 tonnes

LargeMore than 80 tonnes

75%

A focus on efficiencyAgenda

Copyright © 2013 Boeing. All rights reserved.

A focus on efficiency20-year traffic and airplane forecast

Boeing product strategy & development

More value to our customers in all markets

• Environmentally progressive • Passenger experience

More value to our customers in all marketsEfficiency designed-in from the start

• Long-range, fast, reliable

O ti l lit

• Low operating cost

St d di ti

Copyright © 2013 Boeing. All rights reserved.

• Operational commonality • Standardization

The Boeing Edge Aviation industry’s largest portfolio of integrated services and customer supportAviation industry s largest portfolio of integrated services and customer support

Acquire

ReadyTransition

OperateRefresh

Maintain

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Substantial, balanced backlog validates Boeing’s product strategy

Backlog ($B)Backlog ($B) ModelModel747

777 Large4%

295

350319 323

Single-Aisle

43%

Twin-Aisle

53%

737

250 256

295

250

300

RegionRegion

53%

767787200

100

150Leasing, Gov't &BBJ

North America

ME,Central

&

0

50L.

America& Africa

Asia Pacific

&S. Asia

China, East &

SE A i

Europe&

Russia

Copyright © 2013 Boeing. All rights reserved.

02009 2010 2011 2012 2013

SE Asia

Things to rememberAirline customers continue to focus on efficiency

Strong demand for new, efficient aircraft; emerging economies leading growth

Things to remember

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“The products that provide the most efficiency will continue to be the products of choice”– Ray Conner, BCA President