Feb. 10, 2016: Large commercial aircraft deliveries hit just under $104bn in 2015, a 4.9% gain over 2014. Regional aircraft values, however, were just $7.1bn, a decline of 10.5% year-over-year, said Richard Aboulafia, a consultant with the Teal Group.
Deliveries of all aircraft types, including military, rotocraft, etc., saw only a 0.6% increase YOY. Jetliners account for 60% of the total values.
Aboulafia projects, based on supplier data, sees a 13.1% compound annual growth in single aisle deliveries and a 9.4% growth in twin aisle deliveries through 2019.
“If the rest of the world did not exist, I would feel comfortable with that” he said. Aboulafia points to world economic growth as a cautionary data point. Oil prices are categorizewd as red. Product line transitions and supply chain constraints are yellow. Interest rates and exongenous shocks (terrorism, etc.) are other areas of concern.
The fundamentals of the industry are “fine,” and “really solid,” but Aboulafia is worried about the outside factors.
Aboulafia concluded the Boeing has to build the 787 for $91m, including engines, in order to recover its nearly $30bn in deferred production costs and that the Airbus A380 program will be concluded in 2020 absent a reengining program.
He said Boeing’s R&D spending precludes a new middle of the market (MOM) airplane until the next decade (some that is not inconsistent with what Boeing has been saying).
Airbus, on the other hand, has spent more R&D than Boeing (setting aside the extraordinary 787 R&D) and has more cash to spend on developing a MOM than Boeing.
Re-engining has become the preferred choice of customers, Aboulafia said, than the more risky, all-new, high-tech platforms. He thinks new re-engine programs will emerge in 15 years.
The Bombardier CSeries is a good airplane, a welcome addition a a market sector that’s been ignored, he said, but going up against Airbus and Boeing was “an act of extreme foolishness.”
“This is Justin Trudeau’s first crisis, deciding whether to give Bombardier $1bn,” Aboulafia said. Trudeau is the new premier of Canada. “The new management team [at BBD] is infinitely better than what was in place.”
But the CSeries is not in Teal Group’s market forecast, he said.
Aboulafia criticized Rolls-Royce for existing the single aisle market when it sold its share of International Aero Engines to Pratt & Whitney. Hew thought merging the two companies would create a powerhouse competitive with GE Aviation, but questioned whether such merger could take place.