Breakfast in (North) America

MONTREAL - Nothing like waking up to a breakfast of cold cereal and juice together with a dose of hot, muggy end-of-summer weather. It’s been in the low 30s Celsius here this week (around 90 F) - and coming from the chilly Pacific Northwest, that’s quite a change.

It was my first time back to Montreal in nearly a decade. I used to come here quite frequently when I supported Boeing sales for Air Canada.

This time I was here was to release the 2010 market outlook for North America along with taking the opportunity to spend the better part of my Thursday morning here with journalists.

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I had a lively roundtable session with Montreal-based reporters.

North America is obviously a huge aviation market, comprised of Canada and the United States. One point I made with reporters here in Montreal (and in Calgary) this week is that while Canada makes up a little less than 10% of the North America forecast for new airplane deliveries, that’s only because it’s in comparison with the even larger U.S. market.

Canada taken by itself ranks among the top-20 countries worldwide for airplane demand.

In terms of the regional forecast, the key numbers are these: North American airlines will take delivery of about 7,200 new commercial airplanes between now and 2029 - a $700 billion investment.

Now the interesting thing about this particular region is that the deliveries will be driven largely by replacement demand - and predominantly in the single-aisle segment, as airlines in Canada and the U.S. retire their older, less fuel-efficient airplanes and replace them with new-generation, more fuel-efficient models.

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Fully 2/3 of North America commercial airplane deliveries will be for replacement - with the region’s fleet growing from 6,590 airplanes today to about 9,000 airplanes by 2029.

Our forecast predicts that nearly 3/4 of the new deliveries in this region over the next 20 years will be single-aisles.

Of course it wouldn’t be a media roundtable in Montreal without a lot of questions around another aspect of the single-aisle market - future competition, specifically from the hometown airplane maker, Bombardier.

In response to some pointed questions, basically asking for my views on the CSeries, I mentioned to reporters that Bombardier has entered the detailed design phase of the development process - this is the beginning of the real hard work. I said that ultimately the CSeries would be a good airplane, but I’m not sure it will be as good as advertised.

I got a lot of questions as well about Boeing’s plans in this segment. Will we continue with the incremental improvements on the Next-Generation 737, will we re-engine the airplane or will we do an all-new airplane?

It’s something we’re looking at closely right now - as is Airbus with the A320 - and there’s a lot of speculation about who will make the first move. What I said today just about sums up the challenge: There are advantages to being the first mover. There are advantages to being the second mover. But at the end of the day what you want to be is the best mover.

Earlier in the week, as I mentioned, we stopped in Calgary to meet with media there. It was actually the first chance I’ve ever had to spend any time on the ground in Calgary - a booming western Canada city and the home of our good Boeing customer, WestJet.

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You see lots of construction cranes around Calgary - a fast-growing market.

It’s an interesting mix of cowboys, “the great outdoors” (one of the main freeways into town is called Deerfoot Trail) and modern business where skyscrapers are going up so fast you’d never know we’d been through an economic downturn.

Finally, I want to point out, as I did during my visit this week, that we have a long and deep relationship with Canada. Boeing Commercial Airplanes works with more than 500 suppliers and partners here. Boeing imports Canadian parts and services amounting to more than a billion U.S. dollars a year - more than $625 million of which is associated with Commercial Airplanes.

So, it’s been an enjoyable week in Canada, but for now, I’m looking forward to a long holiday weekend - a time to recharge my batteries before resuming a busy travel schedule the rest of the year - and inevitably, a lot of breakfasts not in America.

Comments (9)

Chris C (South Africa):

Clearly, the new, highly-efficient 747-8F will secure additional business within North America.

With Boeing predicting that this market will require only 40 airplanes in the 747-size and larger market, and with demand being predicted only for freighters, the -8F is uniquely positioned to effectively soak up all the demand. Whilst Atlas Air is poised to operate up to 26 747-8Fs, and Guggenheim AP has two on order to be leased to Korean Air, there’s still ample business opportunities for the -8F in North America. Perhaps UPS, with its fleet of 747-400BCFs and -400Fs, will be a prime candidate for additional North American -8F sales?

Kalitta Air may also be a candidate for the -8F with their large 747Freighter fleet, as well as Southern Air eventually. There’s certainly good sales prospects for the -8F in North America, and worldwide for that matter.

On another note, here's some interesting reading regarding the 747-8 family: http://www.boeing.com/commercial/aeromagazine

Blaine Harris:

What? No link to Supertramp? :-)

Ron Bresher (Everett, Washington 98208):

With the 50-70 seat regional jet market taking a dive due to poor operating economics etc... This should help boost single aisle airplane sales in the North American market. With Mexicana Airlines in bankruptcy. I assume they will re-emerge from this or some other airline will fill the void. That restructuring should be beneficial to the sale of Single aisle airplanes as well. Mexico is part of North America but maybe it is not part of this sales forecast. Best of luck on 737 upgrades, but it appears an all new ultra modern/efficient single aisle jet is what the Airline market is desiring.

Sean (Seattle):

Does "North America" not include Mexico?

Randy Tinseth:

@ Blaine:

Couldn't find a good one!

Randy Tinseth:

@Sean and Ron,

For our purposes, Mexico is included in our forecast for Latin America.

Norman (Long Beach, California, United States):

Older 777s will make for a great cargo plane at it can replace older MD-11s, 747s and DC-10s. Airlines that have operated the older 777 have their planes in good shape and they have more volume than an MD-11 and better economics than the above mentioned aircraft. The 777-200ERs can operate on the traditional routs that the MD-11s fly as the newer 777-200LR cargo aircraft will handle the longer selected routs that the plane was made for. Fed Ex Express and Emirates Cargo as an example can fly both the converted models and new models and use them on different routs.

Tim K (Ont Canada):

Whenever I read someone's prediction I become a little skeptical. Sports announcers always try to predict the outcome of the next game and have a dismal average no better than anyone else, weather forecasts are only accurate up to 24 hours but they still try to forecast 5 - 7 days ahead and we all know what happens and yet Airbus and Boeing seem to have found this magical crystal ball and can forecast orders two decades away.

When we compare forecasts from both companies we see that Airbus and Boeing read their crystal balls a little differently, Airbus says that between now and 2028 there will be 5,451 orders in North America while Boeing states there will be 7,200 orders. Frankly I prefer Boeing's forecast as it is more optimistic and better for the industry but why the big difference?

TC (Mt. Vernon, WA):

I can see the C-jet in a 99 seat configuration being a strong contender. More airports, more point to point routes, and more convenience wins economically against the cost of driving, parking, and extra travel time.

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