Global Volatility Steadies the Climb
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WORLD AIRLINER CENSUS Global volatility steadies the climb Cirium Fleet Forecast’s latest outlook sees heady growth settling down to trend levels, with economic slowdown, rising oil prices and production rate challenges as factors Narrowbodies including A321neo will dominate deliveries over 2019-2038 Airbus DAN THISDELL & CHRIS SEYMOUR LONDON commercial jets and turboprops across most spiking above $100/barrel in mid-2014, the sectors has come down from a run of heady Brent Crude benchmark declined rapidly to a nybody who has been watching growth years, slowdown in this context should January 2016 low in the mid-$30s; the subse- the news for the past year cannot be read as a return to longer-term averages. In quent upturn peaked in the $80s a year ago. have missed some recurring head- other words, in commercial aviation, slow- Following a long dip during the second half Alines. In no particular order: US- down is still a long way from downturn. of 2018, oil has this year recovered to the China trade war, potential US-Iran hot war, And, Cirium observes, “a slowdown in high-$60s prevailing in July. US-Mexico trade tension, US-Europe trade growth rates should not be a surprise”. Eco- tension, interest rates rising, Chinese growth nomic indicators are showing “consistent de- RECESSION WORRIES stumbling, Europe facing populist backlash, cline” in all major regions, and the World What comes next is anybody’s guess, but it is longest economic recovery in history, US- Trade Organization’s global trade outlook is at worth noting that the sharp drop in prices that Canada commerce friction, bond and equity its weakest since 2010. Putting aviation firmly started in July 2018 corresponded roughly markets volatile, global recession forecast. So, into that context, Cirium adds: “With fuel with broader concerns that recession – possi- within the limted sphere of civil aviation, no- comprising a quarter of airline costs, oil price bly global and possibly severe – looms on the body will be surprised to learn that the key volatility also continues to be a concern.” horizon. News that Chinese economic growth theme running through the airliner business Volatility is certainly an issue for airlines – has been at its slowest in a generation will only today is: slowdown. any business is more comfortable when it can stoke those concerns. However, there is up- That, anyway, is the message coming from make medium-term plans based on some ward pressure, too. One investment strategist the 2019-2038 Cirium Fleet Forecast. But notion of cost stability – but absolute price is quoted by the Financial Times reckons prices while by most metrics the market for also a factor that warrants attention. After are being held down by aggressive US trade 24 | Flight International | 30 July-5 August 2019 flightglobal.com ANALYSIS Top 10 fleets: mainline aircraft Airliner in-service fleet by region Asia-Pacific 8,991 Type 2019 2018 Change 7% 5% 4% North America Airbus A320ceo 7,065 7,056 0% family 8,590 Boeing 737- 6,407 6,325 1% 600/700/800/900 Europe 7,236 Boeing 777 1,424 1,404 1% Airbus A330ceo/ 25% 30% 1,391 1,406 -1% 29,534 Latin America A340 family Total 1,966 Airbus A320neo 848 353 140% family 807 661 22% Middle East Boeing 787 1,423 Boeing 737- 754 770 -2% 200/300/400/500 Africa 729 736 -1% 29% 1,328 Boeing 767 Source: Cirium’s Fleets Analyzer, July 2019 Boeing 757 658 660 0% Boeing 747 462 445 4% Source: Cirium’s Fleets Analyzer data, 1 July 2018 vs 1 July 2019 Narrowbodies: order backlog market share Airbus A320neo family 5,685 3% 1.5% 0.9% 4.2% Boeing 737 Max Top 10 fleets: regional aircraft 0.2% 4,403 Type 2019 2018 Change Airbus A220 474 Embraer 170/175/190/195 1,414 1,343 5% ATR 42/72 1,006 955 5% Comac C919 305 Bombardier 772 769 0% 11,179 CRJ700/900/1000 39.4% Total Irkut MC-21 Embraer ERJ-135/140/145 546 531 3% 50.8% 175 De Havilland Canada 508 506 0% Airbus A320ceo family Dash 8-400 111 Bombardier CRJ100/200 487 502 -3% Beechcraft 1900 406 415 -2% Boeing 737NG Source: Cirium’s Fleets Analyzer, July 2019 26 Bombardier Dash 8 344 358 -4% Q100/200/300 De Havilland Canada Twin 319 328 -3% Widebodies: order backlog market share Airbus A350 Otter 601 Fairchild Swearingen 255 266 -4% 3% Metroliner 4% 3% 2% Boeing 787 573 Source: Cirium’s Fleets Analyzer data, 1 July 2018 vs 1 July 2019 1% 12% Boeing 777X 344 policy, but expects oil to go higher, citing Airbus A330neo OPEC supply restraint, risks to production in 232 Boeing 777 Libya and Venezuela, and tension in Iran. 30% For aviation – and thus civil airliner orders 17% 2,004 87 Total Boeing 767 and output – it amounts to much the same 59 thing either way. All bets would be off if war Airbus A320ceoA380 family breaks out in the Gulf – but even without 1%52 such dramatic disruption, rising oil prices or Airbus A330ceo recession would both put airline finances 28% 36 Boeing 747 under severe strain, hence the relatively cau- Source: Cirium’s Fleets Analyzer, July 2019 tious tone of Cirium’s 20-year forecast: “The 20 airline industry continues to grow, but at a rate closer to the long-term average.” Order backlog for Airbus A320 and Boeing 737 families 2010-2019 Cirium also notes that aircraft manufactur- ers are grappling with significant challenges. 12,000 Airbus is phasing out its A380 – a move that 10,000 will force the European champion to articu- 8,000 late and deliver a new product strategy – while it absorbs the A220, the narrowbody 6,000 formerly known as Bombardier’s CSeries. Air- 4,000 bus is also pushing its single-aisle family into new long-haul territory with the launch of its 2,000 A321XLR – a programme that complicates 0 arch-rival Boeing’s launch-or-not delibera- 2010 2011 2012 2013 2014 2015 2016 2017 2018 Jul-19 tions over the New Mid-market Airplane con- Source: Cirium’s Fleets Analyzer cept, which it hopes will replicate its success A320ceo A320neo 737NG 737 Max with the 757 and 767. Meanwhile, Boeing is flightglobal.com 30 July-5 August 2019 | Flight International | 25 WORLD AIRLINER CENSUS also getting ready to start testing its 777-X – all while seeking the formula that will get its Airliner in-service fleet by region 2010-2019 737 Max back in the air, and hence back in 30,000 production and delivery. Other players are all about change and 25,000 adaptation. Bombardier is exiting both the 20,000 turboprop and regional jet businesses, having sold its Q400 and CRJ programmes to Viking 15,000 Air owner Longview Aviation Capital and 10,000 Mitsubishi, respectively. Embraer’s regional jets business is going to Boeing. Chinese and 5,000 Russian airliner projects have yet to impact 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 Jul-19 markets, but development continues. Source: Cirium’s Fleets Analyzer OUTPUT CONSTRAINTS Asia-Pacific China North America Europe Latin America Middle East Africa For fleets, while the firm backlog remains excluding China close to its all-time high at more than 14,000, Cirium questions any plans to boost monthly Global order backlog by region 2010-2019 output beyond currently announced rate in- creases intended to take Airbus and Boeing to 16,000 63 and 57 narrowbodies per month, respec- 14,000 tively. Those plans, it says, “do not appear to 12,000 be sustainable unless traffic growth continues 10,000 to be above-trend and/or retirements increase 8,000 faster than forecast”. 6,000 Cirium’s long-term expectation is that traf- 4,000 fic growth will add 25,000 aircraft to the glob- 2,000 al commercial fleet, meaning 54,500 aircraft 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 Jul-19 in service at the end of 2038. Of that total, Source: Cirium’s Fleets Analyzer 46,800 will be passenger jets. The global fleet will thus grow at 3.4% Asia-Pacific EuropeNorth America Unassigned Middle East Latin America Africa yearly, with the single- and twin-aisle fleets including China gaining 4% versus slower growth of just 2% for freighters and 1% for regional aircraft. Airbus/Boeing commercial order backlog by region The value of all those deliveries should total $3.1 trillion, based on Ascend by Ciri- 4,000 um’s 2019 Full-Life Base Values data. Of all 3,500 deliveries, Airbus and Boeing will account for 3,000 79% of aircraft and 87% of value up to 2038. 2,500 But Cirium notes this leaves $400 billion for 2,000 other players. The Comac C919 and Irkut 1,500 MC-21 narrowbodies could take one-quarter 1,000 of that non-Airbus-Boeing market. 500 Overall, single-aisle jets will account for 0 two-thirds of deliveries, but just a bit more Asia-Pacific Europe North America Middle East Latin America Africa Unknown area than half of value. The core of this $1.6 tril- Source: Cirium’s Fleets Analyzer July 2019 lion market will continue to be the 150-seat Airbus Boeing size typified by the A320neo and 737 Max 8. But while these centreline types will see al- most twice as many deliveries as larger sib- Order backlog for Airbus and Boeing 2010-2019 lings, the bigger variants – 180-seaters like the A321neo and Max 10 – will take a grow- 8,000 ing share, of nearly a third of deliveries and 7,000 36% of value.