regional director of marketing boeing commercial airplanes ......e.g. all in-production models plus...
TRANSCRIPT
Market Outlook
Kevin BruceRegional Director of MarketingBoeing Commercial Airplanes
November 2002
Market Outlook
Kevin BruceRegional Director of MarketingBoeing Commercial Airplanes
November 2002
Agenda
! Current Situation
! Market Evolution
! 2002 Current Market Outlook
The Underlying Dynamics of Our Industry
Air Travel Has Become Disconnected from Economic Growth
-2.5
0
2.5
5
7.5
-5
0
5
10
15Percent change in RPKsPercent change in GDP
World GDP
World RPKs
Asian economicslump affected primarily Asian
airline traffic
Terrorism threat duringGulf War affectedworldwide traffic
Terrorism in U.S.has affected
worldwide traffic
1990 1995 2000
2002 World Outlook
$0 $2,000 $4,000 $6,000 $8,000
Eastern Europe*
Mexico*
India*
Australia
Russia*
Canada
China* (mainland)
Britain
South America*
Other Asia*
Japan
United States
Euro Area
World Growth 1.5% 2003 2.5%
GDP, Billions U.S. Dollars
SatisfactoryCautionaryMajor Concern
G
RY
0.8%""""
* All Markets based on The Economist consensus forecasts.Major markets updated monthly; emerging markets quarterly.
4.5%
-1.4%
7.8% ➡➡➡➡
4.0% ➡➡➡➡
4.8%
1.5%
1.9%
2.4%""""
-0.7%""""
1.6%
3.3%
3.8%""""
-30
-20
-10
0
10
20
30
J S N J M M J S N J M M J S N J M M J S N J M M J S N J M M J S N
Mo. % Change - HistoryMo. % Change - Forecast12-Mo. Avg. - History12-Mo. Avg. - ForecastLatest Estimate
Latest 12-month Average = -10.8%Long-term Forecast = 4.9%
Source: ROM Associates
Monthly Percentage
Change Over
Prior Year
1998 1999 2000 2001
World Air Traffic Recovering Slowly
2002 2003
Major World Markets, Revenue Passenger Miles
-40
-30
-20
-10
0
10
20
30
40
J S N J M M J S N J M M J S N J M M J S N J M M J S N J M M J S N
Mo. % Change - HistoryMo. % Change - Forecast12-Mo. Avg. - History12-Mo. Avg. - ForecastLatest Estimate
U.S. Domestic Traffic Remains WeakSept. shows growth over 2001; but still well below 2000
Monthly Percentage
Change Over
Prior Year
Latest 12-month Average = -12.7%Long-term Forecast = 3.5%
Source: ROM Associates, ATA, and Airline Reports
U.S. Domestic, Revenue Passenger Miles
1998 1999 2000 2001 2002 2003
-30
-20
-10
0
10
20
30
J S N J M M J S N J M M J S N J M M J S N J M M J S N J M M J S N
Mo. % Change - HistoryMo. % Change - Forecast12-Mo.Avg. - History12-Mo. Avg. - ForecastLatest Estimate
Major Airline International Revenue Passenger Miles
Source: ROM Associates, AEA, and Airline Reports
Latest 12-month Average = -10.0%Long-term Forecast = 4.7%
European Traffic is Slow to Improve
1998 1999 2000 2001 2002 2003
Monthly Percentage
Change Over
Prior Year
-30
-20
-10
0
10
20
30
J S N J M M J S N J M M J S N J M M J S N J M M J S N J M M J S N
Mo. % Change - HistoryMo. % Change - Forecast12-Mo. Avg. - History12-Mo. Avg. - ForecastLatest Estimate
Major Airline International Revenue Passenger Miles
Source: ROM Associates and AAPA
Latest 12-month Average = -4.8%Long-term Forecast = 6.2%
Asian Traffic is Improving Faster Than Expected
1998 1999 2000 2001 2002 2003
Monthly Percentage
Change Over
Prior Year
World Air Cargo Is Recovering
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
1998January
1999January
2000January
2001January
2002January
M M J S N
Mo. % Change - History12-Mo. Avg. History
12-Mo. Avg. ForecastMo. % Change - Forecast
Sources: U.S. Department of Commerce, AAPA, AEA, ATA and the Boeing World Cargo Forecast.
Monthly Percentage
Change Over
Prior Year
Latest 12-Month Moving Average = -7.0%Long-Term Forecast = 6.4%
1998 1999 2000 2001 2002
About 4,000 Airplanes Are Closing Inon Retirement
Period I Period II Period III
Scrapped1,200
Parked100
Active100 Scrapped
2,000
Parked1,300
Active2,600
Parked580
Active11,600
e.g. 707, DC-8 e.g. 727, 737-100/200, 747-100/200/300, DC-9, DC-10, A300
e.g. All in-production models plus MD-11, MD-80, 737 Classic
• Three flight crew• Stage I noise• Turbojets, early turbofans• 4-engines• High fuel burn
• Two/Three flight crew• Stage II noise (later hushkits)• Early turbofans• Tri-jets, short-haul twins• ~30% lower fuel burn
• Two flight crew• Stage III noise and quieter• High-efficiency turbofans• Twinjets dominate• ~70% lower fuel burn
1,400 Airplanes 5,900 Airplanes 12,300 Airplanes
Scrapped120
Growth in Parked Fleet Has Stabilized
-500
0
500
1000
1500
2000
2500
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 9/11 12/31 1/14 2/12 3/14 4/12 5/14 6/13 7/11 8/13 9/13-5%
0%
5%
10%
15%
20%
25%Period IPeriod IIPeriod IIIWithdrawn from ServicePercent of Fleet
Number of Parked Airplanes (Worldwide)
Western-built, commercial jet fleet. Source: Airclaims Ltd. (through September 13, 2002).
1,957 Airplanes(12% of Fleet)
Percent of Fleet
Parked at Year-End
Scrapped During Year
2001 2002
Monthly Updates
Economic Growth
Traffic Growth(early 2003)
Airline Profits(late 2003)
Airplane Orders
Airplane Deliveries
Capacity Requirement
Timeline for Industry Recovery
Parked Fleet
9/11(late 2003/2004)
(2004)
Passengers Drive Airline Strategies
Air Travel Growth Has Been Met By Increased Frequencies and Nonstops
AirTravel Growth
Average Airplane Size
TotalFrequencies
Nonstop flights
Index 1980 = 100
Few Choices Prior to Liberalization
Liberalization Has Led to Market Fragmentation
777 Is Fragmenting the North PacificAs 767 Did the North Atlantic
2002 Current Market Outlook
1970 1980 1990 2000 2010 2020
Air Travel Growth Varies by Region
0 500 1,000 1,500 2,000
Europe-Mid-East
Africa - Europe
Europe - L. Amer.
No. Amer. - L. Amer.
Latin America
Transpacific
Europe - Asia
No. Atlantic
Europe
Asia-Pacific
No. America
Added traffic, 2002 - 2021
RPKs (billions)
2001 traffic2002-2021
growthAnnual
growth %3.5%
6.2
4.3
5.4
5.5
7.9
5.0
4.9
4.8
5.2
4.7
4.9% World Average
Regional Market Evolution Shapes Fleet Requirements2002 - 2021
0
500
1,000
1,500
2,000
2,500
2001 2021 2001 2021 2001 2021 2001 2021 2001 2021 2001 2021
747 and largerTwin-aisleSingle-aisleSmaller regional jets
ASKs (billions)
Asia-Europe Trans-Pacific North Atlantic EuropeAsia-Pacific North America
Long-term Demand for New AirplanesRemains Strong
8,566retained fleet
6,705 replacements
17,224growth
airplanes
0
10,000
20,000
30,000
40,000 Units
15,271
32,495
23,929
20212001
Airlines Will Need Nearly 24,000New Airplanes
Nearly 24,000 Airplanes
Smaller regional jetsSmaller regional jetsSingleSingle--aisleaisleTwinTwin--aisleaisle747 and larger747 and larger
2002-2021
4%4%
21%21%18%18%
57%57%
1.8 TrillionDelivery Dollars*
* In year 2001 dollars
42%42%
5%5%
41%41%
12%12%
European Airlines Will NeedNearly 7,400 New Airplanes
2002 - 2021
7,379Airplanes
Smaller regional jetsSmaller regional jetsSingleSingle--aisleaisleTwinTwin--aisleaisle747 and larger747 and larger
2002-2021
16%16%
64%64%
3%3%17%17%
485.3 BillionDelivery Dollars*
* In year 2001 dollars
35%35%
50%50%
9%9% 6%6%
European Market
RPK share (domiciled)
Rest of theworld
Europe
! 25% of the world’s traffic originates in Europe
! Despite the current crisis, long term traffic trends are strong
0 200 400 600 800 1000 1200
Europe-Southwest Asia
Europe-China
Europe-Middle East
Europe-Central America
Europe-South America
Europe-Northeast Asia
Europe-Southeast Asia
Europe-Africa
Europe-North America
Europe-Europe
European Air Travel Growth Varies by Region
RPKs, billions
2001 Traffic Growth in 2002-2021 4.7%
3.6%
4.7%
4.8%
5.8%
5.8%
4.2%
4.2%
5.2%
6.0%
World Growth 4.9%
Current Market Segmentation
! Network Carriers account for 78% of passengers
! Leisure Carriers accounts for 13%
! Low Fare Carriers account for 8-10%
Network Carriers
Leisure Carriers
Low Fare Carriers
European Region Passengers
0% 10% 20% 30% 40%
LowFare
Network
Leisure
Passenger growth
Low Fare Carriers Have Fastest Growth
! Low Fare growing at 30%
! Network Carriers have 5% growth
! Leisure Carriers are growing slowly at 2%
European Outlook
! Many independent Network Carriers
! Fewer Network airlines! Most in strategic global
alliances! A few niche carriers
! Consolidated Tour Organizations
! Leisure and Low Fare carriers share some markets
! From no Low Fare Carriers…
! …to a shakeout of the most successful of the Low Fare Carriers
A Safe & Efficient Global Air Transport SystemAirplanes, Services and Customer Solutions
Summary
! Economic growth will return and traffic growth will rebound to long-term trend
! Passengers’ demand for shorter trip times, nonstop flights and more frequency choices will drive airline strategies and airplane selection
! Airline fleets will reflect passengers’ demands, and almost 24,000 new airplanes will be needed
! Boeing is committed to helping our customers succeed