Asia's crisis will hurt but won't ground jet output
By Staff -- Purchasing, 8/13/1998 2:00:00 AM
Boeing Corp. says it could lose as many as 90 orders for new aircraft over the next five years due to the financial crisis in Asia.
The Seattle-based aerospace giant reports that Asian airlines are delaying deliveries of new planes and could soon begin canceling orders. One example: Phillipines Airlines Inc. cancelled orders for Boeing and Airbus Industries jets.
Boeing, which commands nearly 60% of the global aircraft market, predicts that Asia's financial woes could result in 150 lost orders for all commercial jet manufacturers by 2003. That could be quite a blow to aerospace companies, which were expecting the Asia and Pac Rim markets to produce the biggest increase in aircraft demand of any region.
According to this year's edition of Boeing's "Current Market Outlook," a handful of Asian economies will enter a recessionary period lasting 12 to 18 months. While Boeing doesn't expect financial crisis to spread to other regions of the world, these Asian countries won't see their economies return to "normal" for another four or five years.
However, Boeing says the decrease in aircraft orders from Asian countries will be offset by strong demand from airlines in Europe and North America, at least for the next two years. All told, the worldwide fleet of passenger and cargo jets will double over the next 20 years to 26,200 aircraft. Airlines will order 17,650 new planes, valued at about $1.25 trillion, during that same time frame.
New orders will be fueled by a nearly 5% annual increase in passenger traffic growth and a 6.4% annual uptick in cargo traffic over the next 20 years, according to the report.
Boeing predicts a shift in the type of aircraft ordered, with single-aisle planes accounting for 70% of the aircraft and 43% of the dollars spent. Intermediate-size planes will comprise 24% of new jets brought online and 44% of the money spent. Jumbo jets, including 747-size or larger airplanes, will account for just 6% of new airplanes and 13% of the dollars.
Such figures have prompted Boeing to predict that there won't be much of a market for planes larger than 747 jumbo jets. As a result, Boeing plans to up production of its 737 model to as many as 30 a month.
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