Saturday, November 07, 2015

Boeing seeks to tough out cheap-oil impact on jet sales

DUBAI --   Boeing sought on Saturday to downplay industry concerns about a slowdown in demand for the latest generation of fuel-saving jets, but acknowledged some airlines are keeping old planes in their fleets for longer due to weak oil prices.

Pressure on airlines to reduce their biggest single cost has triggered record orders for next-generation planes that offer fuel savings in recent years, but the outlook has been clouded by a sharp fall in oil prices, undermining aerospace stocks.

Boeing sales chief John Wojick said any slowdown in demand to replace existing jets would be more than compensated for by growth elsewhere on the back of higher airline profits and the economic stimulus from cheaper oil.

"We are seeing strong growth in many regions of the world which definitely offsets some of the lack of replacement demand because with lower fuel prices there is interest in continuing to fly some of the older airplanes a little while longer," Wojick told reporters.

There has been a pickup in demand for used smaller, single-aisle airplanes, like the Boeing 737-700 or Airbus A319, from airlines that might otherwise be buying new, Wojick said.

He expected larger jets to be absorbed in the same way. Investors are worried about a slide in prices of second-hand wide-body jets. Resale prices underpin values across the market.

Boeing is lagging behind its European competitor in orders this year, but is expected to remain ahead on deliveries.

Wojick said it expects to sell "about" as many as planes as it delivers in 2015, leaving it about 200 aircraft to sell in under two months.

"We have got some work to do but we have got some folks out there working pretty hard," he said on the eve of the Dubai Airshow.

Boeing and Airbus are expected to announce some orders at the Nov. 8-12 event but nothing on the scale of the 2013 edition, which saw purchases of more than 400 jets from Gulf super-carriers.

Boeing predicts 755-760 commercial deliveries in 2015. It has sold 566 aircraft this year, or 489 after cancellations. The Airbus tally stands at 910 gross orders and 850 net.

Boeing has said it is thinking of cutting output of its large 777 model by 15 percent to seven a month as it switches to a new version. Some analysts say it may have to go further.

Wojick said 777 output was secure through 2017 and that Boeing did not see a reason to drop below seven a month based on current demand, but any decision would be made in 2016. 

- Source:  http://www.reuters.com

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