A glass half full

Next week, I’ll be in Paris to unveil our new Current Market Outlook. The CMO is a comprehensive report Boeing has put out since 1964 forecasting where we believe the aviation industry is headed over the next 20 years. But before we look ahead to the next two decades, let me offer some guidance on where I think the industry is headed for the rest of this year.

There’s been an interesting mix of reaction to the new forecast the International Air Transport Association (IATA) released just a few days ago. In it, IATA predicted an airline industry profit of $4 billion in 2011. While that may sound good, it’s a 54% drop compared to the $8.6 billion profit IATA forecasted back in March. IATA blames high oil prices, the disaster in Japan and unrest in the Middle East and North Africa.

I’ve always been a “glass is half full” kind of guy, so IATA’s forecast doesn’t have me too worried. I see a lot of good things in the market right now. Despite the high fuel prices and multiple shocks in demand, we’re still seeing airlines that are profitable. It speaks volumes about the airlines in how they’re handling all of the challenges and working through them by managing their costs, capacity and revenue.

Coming into 2011, we here at Boeing expected economic growth to moderate—especially in the first half of the year. But we see it picking up in the second half of the year—with the momentum continuing into 2012, 2013 and 2014. We expect both passenger and cargo traffic to grow at or above long term trend. Supply and demand will also be in balance. Bottom line—I’m confident that airlines can ride through all this turbulence.

Be sure to check back here next Thursday (6/16) when I’ll unveil the new Current Market Outlook and show you a video featuring our new airplanes.

Comments (7)

Paulo M (Johannesburg, RSA):

IMHO, Boeing sales have matched its CMO fairly well over the years. Looking forward to a stream of good pictures & good news. Cheers

Daniel (Hong Kong):

Hi Randy,

Are you going to attend the ANA 787 ZA002 SROV test media day in Tokyo in early July?

I'm going there and I look forward to seeing you again since March's Asian Aerospace in Hong Kong!

Norman (Long Beach, California, United States ):

Though things are tough in here and around the world right now I see a good outlook for Boeing. I think 787 orders will pick up as soon the planes are in delivery to the airlines and the 777-300ER will maintain future orders even in the face of the A350. I am a little concerned about the future of the current 737 line verses the new A320neo series but I think 737 sales will maintain.

Randy Tinseth:

Hi Daniel,

I'd love to go to Japan for SROV, but won't be able to make it due to other commitments.

Nick Cook (Oss, the Netherlands):

When you said new airplanes did you mean new types (797?) variation (787-10) or something else?

regards

Barun Majumdar (Seattle, WA, USA):

I believe that now is the time to look at the adage reversely as "glass is half empty". In a couple of decades, The Boeing Company and EADS will be facing an uphill battle with emerging China in the commercial aviation market to have their pie shared with the big brothers. Innovation is the ultimate key to the success of TBC.

Imagination is more important than knowledge. Knowledge is limited. Imagination encircles the world. -Albert Einstein

Randy Tinseth:

Hi Nick,

I'm talking about the 747-8 Intercontinental and Freighter, as well as the Dreamliner. We taped different parts of the video with these beautiful airplanes behind me. They really do steal the show.

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