The great divide

A lot of us were surprised when Airbus unveiled its version of the long range market forecast during the Paris Air Show. They typically hold that for later in the year, and what they shared at Le Bourget was clearly lacking in detail.

The one thing that was clear - the great divide between our forecast and Airbus’ when it comes to the very large airplane segment.

Over the next 20 years, Boeing forecasts the need for 540 new airplanes like the 747-8 and the A380. Our new Current Market Outlook reflects a continued shift from very large airplanes to twin-engine airplanes like the 787, 777X and A350.

But Airbus actually raised its very large airplane forecast by almost 50 units from last year, saying it expects a demand for 1,550 of these big airplanes. They make this prediction despite the fact that the A380 hasn’t received a single order all year.

On a side note, we also believe Airbus is forecasting too low on the single-aisle side. Take their forecast of 22,927 airplanes. That equals combined production rates of 95 per month over the next 20 years. Even if the market was split equally between Boeing and Airbus, which is unlikely since there are other single aisle competitors coming into the market, a production rate of about 48 per month wouldn’t match up to the higher production rates they’re talking about.

When Airbus launched the A380 in 2000, it predicted the demand for 1,235 very large passenger airplanes alone through the year 2019. Fast forward to today— and the total number of passenger VLA’s actually ordered is only 371. You do the math.

We use our forecast as a key part of our production rate decisions. This week, we announced that we’re lowering our 747-8 production rate again—this time to 1 airplane per month starting next March. While the very large airplane market continues to be challenging, we’re optimistic this adjustment and some good news on the cargo front will allow us to keep the program healthy.

With four firm 747-8 orders so far this year— and an MOU from Volga-Dnepr for 20 additional 747-8 Freighters — things are looking up.

In our view, the market for big airplanes is small—but viable. However, every trend and signal points to airlines moving toward small and medium widebodies as travelers demand more frequent point to point routes.

Comments (8)

V V (Montréal, Québec):

I noticed that the numbers are diverging seriously, especially in the VLA segment.

The difference of VLA forecast between Boeing's CMO and Airbus' GMF this year is just stunning, 540 vs 1,550. And all that is on top of the 90 747-8 and 162 A380 delivered until end of May 2015.

My humble blog has a short discussion on the same topic too (click here).

Andrew Boydston (Boise ID USA):

Randy I enjoyed your assessment for the VLA segment. I too was encouraged by the 20 just committed 747-8F by Volga-Dnepr. I am a proponent that the VLA market will locate the 747-8i again. The reality of travel finds a corrected airport constraint in place, which would exclude the A-380 class aircraft. Airports cannot sustain an argument for expansion on too few VLA’s such as found with the Airbus class VLA. The 747-8i is an airport “no change” offering for its customers. As Airbus ponders committing to a VLA NEO it finds its own pride pushing the concept further than any sensible conclusion will allow.

I don’t have specific data supporting my own notions, but I do have common sense coming from the history of Boeing’s very large aircraft. The 747-8 is waiting until the market plays out its own notions on immensity with its aircraft. The next big airplane is “the 747-8” type.
The only logical evolution for a sea change is going with a notion of a VLA twin engine, which would require some frame design enhancements coming from the 777-9X, adding an additional 60 Passengers to a 10X frame. A 777X-10 could total out with 465 seats and folding wings to boot.

Frequent Traveller (Toulouse):

Boeing's WACF predicts 500 VLAF sold in the next 20 years. Combining your right hand's CMO with your left hand's WACF, Boeing are actually predicting Airbus will sell 40 units VLAP (A380 Series) in the next 20 years, or two units/annum. Except if you yourself hope to sell a number of 747-8i VLAP too ?

Aren't you a bit hard-handed upon your rival, Randy ?

Tim K (Ont. Canada):

Your comments are interesting considering that forecasts are just that, forecasts which by definition are just estimates or predictions of future events. Forecasts can be used in many ways, internally they determine and drive budgets, financial estimates etc. but when released to the public they are usually very well crafted low key sales tools designed to get future customers to accept their point of view of products which they are currently trying to sell.

Airbus needs to sell more A380's so their presentation makes sense and Boeing wants to sell the 787 and 777x planes so your forecast also makes sense. The best thing we the public can do is take both forecasts and simply average them out and that should give us a more realistic picture of future sales.

Manos (Greece):

It 's true that Airbus' forecast doesn't seem reasonable and, taking this train of thought, next station becomes: why do they invest such capitals in A350 versions?
I can't say that they don't see large twinjets dominating in long haul market, leaving just a little room for x-tra large airplanes.
Although an exceptional plane, 747-8 doesn't seem to sell so good as Intercontinental, as its freighter variant. Why? The answer is that carriers are -nowadays- used to the economics provided by large twins such as 777s and A330s. By the day that ETOPS expanded to present limitations, allowing large twinjets fly over Pacific with "affordable" economically restrictions, four engine large jets seem to have a secondary role. That's the truth. That's the present. Taking the above plan in mind, it's not surpising the Lufthansa's intention/interest for the 777X (Lufthansa is the largest user of 747-8I). Something tells me that the Intercontinental will not be a part of Lufthansa's fleet for so long as pre-estimated 4-5 years ago, by the company itself.
After all these, is twice surprising that Airbus insists in this forecast!!! Do they know sthg we can't see? I don't think so...

Gonzaga12 (Jakarta):

I think there are several reasons why Airbus put 1550 VLA forecasts because it's impossible for them to launch a re-engine A380 if their own forecasts would not convince their investors and 550 is surely discouraging such prospects. In other words, Airbus is obliged to present such figure because they need to proceed the A380 re-engining program.. To comfort those who will fund the project.

The airbus's own figure might also reflects for what they have put in faith about the life of the re-engined and stretched A380 in the future.. Also they're trying to assume that the newer A380 will gain more share over the 777X segment.

About the narrowbody figure, I'm not sure.. My guess is just there are some order books that are not really firm.. So expectation is not high.

Dr Dorothy (USA):

Congratulations to Boeing in the great competitive advancing aerospace era! From USA investors as well as group of investors of UK, Europe, Canada, Australia, NZ, Russia!

Norman Garza (Long Beach, CA):

I think for a plane the size of the A380 the market is limited . Boeing in the log run likely made the right choice in cancelling the early nineties' the double deck NLA and later nineties' 747-500/600/700X in the time of the Asian Economic Crisis. Airbus went ahead and found out the hard way. I think the big problem of the A380 is it's massive wingspan the infrastructure that airports need and the money involved to help accommodate the aircraft's upper deck. It also takes a long time to load and unload an 860 passenger aircraft. I think these issues and others have prevented the Airbus A380 from very large sales. I think the biggest plane that will sell well is the 777-9X as it is single deck and within size and weight of most international airport's facilities.

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