Boeing Co. will work through its backlog of 787 Dreamliner orders through the end of this decade before another surge in sales of the wide-body commercial jets begins, according to the aerospace giant’s latest market outlook.
Boeing’s forecast, released on the first day of the rain-soaked Farnborough International Airshow in England, calls for 9,100 deliveries of wide-body airplanes over the next 20 years. The company predicts “a large wave of potential replacement demand” from 2021 to 2028 for Dreamliners that will take the place of aging planes in fleets worldwide.
“Demand for the 787 will certainly start to climb again toward the end of this decade and the start of the next,” said Saj Ahmad, chief analyst with StrategicAero Research in London. Ahmad said there are plenty of gas-guzzling Airbus A340s and older model Boeing 777-200s and 777-200ERs that will need to be replaced by the fuel-efficient Dreamliner.
Boeing employs about 8,000 workers in North Charleston, one of two sites where it assembles the 787. The other is Everett, Wash.
Overall, Boeing projects total demand for 39,620 new airplanes of all kinds costing $5.9 trillion over the next 20 years, with Asia accounting for nearly 40 percent of orders. Single-aisle planes are expected to drive most of the demand, accounting for 71 percent of new sales.
Airbus is slightly less optimistic, projecting the need for 33,070 new planes — totaling $5.2 trillion — through 2036.
The Boeing report shows passenger traffic will grow at a 4.5 percent annual clip, due in large part to increasing wealth and a growing middle class in emerging markets such as China and India.
“Despite recent events that have impacted the financial markets, the aviation sector will continue to see long-term growth with the commercial fleet doubling in size,” Randy Tinseth, Boeing Commercial Airplanes vice president of marketing, said in a statement.
There have been 1,155 orders for Boeing’s composite-made Dreamliner, but sales have stalled so far in 2016 at 17 net orders. China’s Donghai Airlines is the latest buyer, announcing Monday that it will order five 787-9 models, which have a list price of $264.6 million each, although airlines typically negotiate steep discounts.
The slowdown in sales has some questioning whether Boeing, which is producing Dreamliners at the rate of 12 a month, will follow through with a planned production increase to 14 monthly by the end of this decade. Production rose to a dozen a month earlier this year.
Dhieren Bechai, a contributor to the Aero Analysis website, said “the planned rate increases to 14 per month might be a bit too high,” adding that the current production level is healthier.
“Additional rate increases for the Dreamliner only make sense if fuel prices continue to climb,” Bechai said.
There are roughly 725 Dreamliner orders in backlog, enough to fill about five years of production. Some airlines have held off on buying Dreamliners because low oil prices have reduced the need for a new fuel-efficient plane. Also, there are no delivery slots available until the next decade, so some airlines are waiting until the Dreamliner backlog clears to place their orders.
Ahmad said the projected 14-per-month rate “eats into the backlog and shrinks it rapidly,” adding there would be pressure to slow production “if demand/orders for the 787 didn’t start rolling in.”
That’s unlikely, he said, especially as the 777 production rate will decrease during Boeing’s transition to the 777X, Boeing’s largest twin-engine plane expected to enter service in late 2019. In the meantime, the biggest demand in the wide-body sector will be for small- to medium-sized twin-aisle models including the 787-8, 787-9 and 787-10, which will be built exclusively in North Charleston.
The replacement demand for wide-body planes is expected to decline beginning in 2017 before rebounding sharply in the next decade, peaking at more than 200 orders in 2024, according to Boeing. After that, replacement demand is expected to top 150 planes during eight of the next 11 years.
Replacement demand in the single-aisle market will be even stronger, with between 300 and 700 new planes — such as the 737 MAX — needed each year between 2022 and 2035.
Low-cost carriers and emerging markets will drive single-aisle growth, Boeing said, with 28,140 new airplanes needed to meet demand — an increase of more than 5 percent over last year’s prediction.
“There’s no question the heart of the single-aisle market is around the new Boeing MAX 8 and the current 737-800,” Tinseth said. “Airplanes that size already account for 76 percent of the global single-aisle backlog, and our products have the clear advantage in that space.”
Reach David Wren at 843-937-5550 or on Twitter at @David_Wren_