current market outlook Randy Tinseth Vice President, Marketing Boeing Commercial Airplanes June 2011 The statements contained herein are based on good faith assumptions and provided for general information purposes only. These statements do not constitute an offer, promise, warranty or guarantee of performance. Actual results may vary depending on certain events or conditions. This document should not be used or relied upon for any purpose other than that intended by Boeing. BOEING is a trademark of Boeing Management Company. Copyright 2011 Boeing. All rights reserved.
Agenda Current Market Outlook (CMO) 20-year traffic and airplane forecast Boeing product strategy and development
Five decades of Current Market Outlook
Agenda Current Market Outlook (CMO) 20-year traffic and airplane forecast Boeing product strategy and development
Market forecast drivers and considerations Fuel price Economic growth Market liberalization Environment Traffic forecast Network development Airplane capabilities Annual growth, 2009 2011-2030 - 2028 WORLD 4.9 Northeast Asia Europe 4.3 4.1 North America 3.2 Oceania 5.1 Central America 5.6 South America 7.0 Middle East 6.6 CIS 5.1 Southeast Asia 6.6 Africa 5.8 Southwest Asia China 7.5 7.8 Emerging markets 0 2 4 6 8 Percentage Infrastructure High speed rail Airline strategies & business models
Drivers of air travel Economic growth Global trade Traveler values 60-80% Travel demand 20-40% Additional travel demand
World air travel has grown 5% per year since 1980 6.0 5.0 4.0 3.0 2.0 1.0 0.0 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 RPKs (trillions) 2007 2008 2009 2010 2011F 4 recessions 2 financial crises 2 Gulf wars 1 oil shock 1 near pandemic (SARS) 9/11 RPKs = Revenue Passenger Kilometers Sources: ICAO Scheduled Traffic
20-year forecast: strong long-term growth 2010 to 2030 World economy (GDP) Number of airline passengers Airline traffic (RPK) Cargo traffic (RTK) 3.3% 4.2% 5.1% 5.6%
Air travel growth has been met by increased frequencies and nonstops 2.5 Index 1990=1.00 World Air Travel Growth 2.0 Frequency Growth Nonstop Markets 1.5 1.0 Average Airplane Size 0.5 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 August OAG All routes
Airlines will need 33,500 new airplanes valued at $4.0 trillion Airplane deliveries: 33,500 2011-2030 25,000 Market value: $4.0T 2011-2030 2,500 Airplane units 20,000 2,000 15,000 10,000 5,000 Market value, $ billions 1,500 1,000 500 0 1,980 regional jets 6% 23,370 single-aisle 70% 7,330 twin-aisle 22% 820 large 2% 0 $70B regional jets 2% $1,950B single-aisle 48% $1,770B twin-aisle 43% $270B large 7%
Older, less efficient airplanes will be replaced with more efficient, newer generation airplanes Units 40,000 39,530 30,000 20,000 19,410 10,000 20,120 Growth 60% 13,380 Replacement 40% 33,500 0 2010 6,030 Retained fleet 2030
Aircraft will continue to be long-lived assets Age at Leaving Service (5-year moving average) 30 History CMO Forecast 25 Single-aisle pax Twin-aisle pax 20 Regional Jet 15 10 1995 2000 2005 2010 2015 2020 2025 2030 Source: Ascend as of 5/10/2011, CMO 2011 Western commercial jets permanently removed from services
Fleet composition is changing 1990 7% 13% 15% 10,850 airplanes 19% 2010 4% 15% 19,410 airplanes 22% 2030 3% 5% 39,530 airplanes 65% 62% 70% Large Twin-aisle Single-aisle Regional jet Data Source: Ascend & Boeing CMO
New, more capable airplanes help drive growth 1,000,000 Frequencies for all flights over 3,000 miles 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 Average Annual Growth: 4.8% Other A340 A330 0 1990 1995 2000 2005 2010 767 747 777 A380 Data source: August OAG
Emerging markets are driving the economic growth Annual GDP growth 2011 2030 South Asia China 7.1 7.0 Asia Pacific Africa Southeast Asia Latin America Middle East 4.7 4.4 4.4 4.2 4.1 CIS World 3.4 3.3 Oceania North America 2.8 2.7 Europe Northeast Asia 1.3 2.0 Source: IHS Global Insight
Air travel growth varies by market Asia Pacific* 2010 traffic Added traffic 2011-2030 Annual growth% 7.0% Within North America 2.3% Within Europe 4.0% Within China 7.5% Europe Asia Pacific 5.9% North Atlantic 3.6% Middle East Asia Pacific Transpacific Within Latin America North America Latin America 7.2% 4.9% 6.7% 5.4% World Average Growth: 5.1% Europe Latin America 4.8% Within / to CIS 4.2% Africa Europe 4.6% *includes within China 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 RPKs, billions
The landscape of aviation continues to change Air traffic, RPKs (billions) 14,000 12,000 10,000 8,000 6,000 Other Middle East China Asia Pacific (excl. China) 4,000 Europe 2,000 0 1990 72% 2010 55% 2030 North America 41%
Market for new airplanes set to become considerably more geographically balanced New airplane deliveries by region 2011 2030 Market value by region 2011 2030 Region Airplanes Asia Pacific 11,450 Europe 7,550 North America 7,530 Latin America 2,570 Middle East 2,520 C.I.S. 1,080 Africa 800 World Total 33,500 Region $B 3% 3% 2% Asia Pacific 1,510 2% 8% 11% Europe 880 8% 34% North America 760 6% 33,500 Latin America 250 $4.0T 22% Middle East 450 19% C.I.S. 110 23% Africa 100 22% World Total $4,060B 37%
World air cargo traffic has grown 5.7% per year since 1980 250 200 150 100 50 0 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 RTKs (billions) * Revenue tonne-kilometers
Future freighter deliveries will be led by demand for large widebodies New freighter deliveries: 970 2011 2030 700 600 500 400 300 200 100 Airplane units 71% 29% Market value: $250 billion 2011 2030 Market value 250 200 150 100 50 80% 20% 0 690 Large More than 80 tonnes 280 Medium 40 to 80 tonnes 0 Standard Less than 45 tonnes 0 $200B Large More than 80 tonnes $50B Medium 40 to 80 tonnes $0B Standard Less than 45 tonnes
New freighter demand-- 970 new and 1,990 converted Share of fleet Delivery units Size category Large More than 80 tonnes Medium 40 to 80 tonnes Standard Less than 45 tonnes 310 690 2,960 280 440 1,240 2010 Freighters 1,760 2030 Freighters 3,500 2011 to 2030 Freighters
The Europe region Europe
European airlines business model shifts ASKs 2000 15% 2010 13% 2020 3% 16% 22% 59% 14% 15% 56% 18% 15% 54% LCC Charter/IT Broad Network Other Networks Source: Boeing CMOs
Europe air traffic growth varies by market Within Europe 2010 traffic Added traffic 2011-2030 Annual growth % 4.0% To / from North America 3.6% To / from Middle East 5.4% To / from China 7.4% To / from Africa To / from Southeast Asia To / from South America To / from South Asia 4.6% 5.2% 5.1% 6.8% Europe Average Growth: 4.3% Region s Average GDP Growth: 2.0% To / from Central America 4.4% To / from Northeast Asia 3.4% 0 200 400 600 800 1,000 1,200 1,400 1,600 RPKs, billions
European airlines will need 7,550 new airplanes valued at $880 billion 38% Airplane deliveries: 7,550 2011 to 2030 6,000 Market value: $880 billion 2011 to 2030 600 Airplane units 4,800 3,600 2,400 1,200 Market value, $ billions 500 400 300 200 100 0 310 Regional jets 4% 5,660 Single-aisle 75% 1,400 Twin-aisle 19% 180 Large 2% 1 2 3 4 0 10 Regional jets 1% 480 Single-aisle 55% 330 Twin-aisle 37% 60 Large 7%
A large demand for replacing older, lessefficient aircraft in Europe Units 9,000 8,000 8,010 7,000 6,000 3,630 Growth 48% 5,000 4,380 4,000 7,550 3,000 2,000 3,920 Replacement 52% 1,000 0 460 Retained fleet 2010 2030
European airlines environmental strategy means more new airplanes 100% Share of fleet 94% New airplanes 75% 50% Better for: Environment Passengers Airlines 25% 0% 2030 Airplane fleet 8,010 6% Remaining airplanes
European air travel market Strong 2010 traffic despite volcanoes and weather AEA members traffic up 2.7% ELFAA members traffic up 6.1% Travel and tourism Provide 7.7% of total employment; expected to grow to 8.1% by 2021 Contribute $1,535B to GDP or 7.7%; will be 7.8% of GDP in 2021
Boeing product forecast in-line with the realities of the market 100% Large 5% Large 3% Twin-aisle 21% Twin-aisle 20% 75% Size category Large Twin-aisle Single-aisle Regional jet 50% Single-aisle 55% Single-aisle 63% 25% 0% Regional Jet 19% Boeing forecast 2000 2019 22,315 units Regional Jet 14% Airplane demand 2000 Present* 19,320 units *Deliveries 2000 thru May 2011 plus backlog
Agenda Current Market Outlook (CMO) 20-year traffic and airplane forecast Boeing product strategy and development
Providing more value to our customers in all markets Environmentally progressive Operational commonality Long-range, fast, reliable Passenger experience Low operating cost Lifecycle solutions Standardization
Substantial, balanced backlog validates Boeing s product strategy Backlog ($B) Model 747 300 250 255 279 250 256 263 777 Large 7% Single- Aisle 34% 737 200 150 Twin- Aisle 59% 787 Region 767 100 50 ME, Central & S. Asia Leasing, Gov't & BBJ North America L. America & Africa Asia Pacific 0 2007 2008 2009 2010 1Q 2011 Europe & Russia China, East & SE Asia
2011 CMO by the numbers The average percentage rate at which global passenger traffic will grow per year over the next 20 years (RPKs) The number of new airplanes to be delivered to the airlines of the world between now and 2030 The value in trillions of US dollars of those 33,500 new airplanes to be delivered The average percentage rate at which South Asia s GDP will grow per year over the next 20 years unseating China at number 1 The percentage of our 2011 forecast already in backlog The number of downloads made from the CMO web site over the past 12 months
Things to remember Five decades of Current Market Outlook Aviation industry resilient; long-term market outlook is strong Boeing s market-driving products and services provide more value to our customers in all markets
For more information, please visit our CMO website: http://www.boeing.com/cmo You can also visit my blog, Randy s Journal: http://boeingblogs.com/randy/ BOEING is a trademark of Boeing Management Company. Copyright 2011 Boeing. All rights reserved.