Demand for new airplanes is rising despite global economic turbulence sparked by events such as the UK’s EU referendum, industry figures showed on Monday.
Airlines and freight carriers are set to order 39,620 aircraft worth US$5.9trillion in the next 20 years, up 4.1 % from last year, airplane giant Boeing (NYSE:BA) said during the first day of Britain's Farnborough Air Show.
Boeing said it expected passenger traffic to rise by 4.8% a year in the next two decades.
The Asia market, including China, will continue to lead the way in total airplane deliveries in the next two decades.
Vice-president of marketing at Boeing Commercial Airplanes, Randy Tinseth, said: “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.”
Tax and accountancy firm KPMG fuelled the upbeat sentiment with a report claiming that two-thirds of aerospace and defence (A&D) Senior executives around the world were confident or very confident of their company’s growth prospects in the next two years.
But analysts at Barclays were more downbeat, saying investor sentiment towards commercial aerospace was “as negative as we can recall for any summer air show since 2009”.
They said in a note: “With the volatility and uncertainty introduced into the macro backdrop by the UK referendum, we're reluctant to believe anyone is looking to buy potential dips (without) some sort of near-to-medium term clarity on the implications for travel.”
Boeing's order forecast is likely to be good news for smaller industry suppliers such as UK-based advanced materials group Versarien plc (LON:VRS).
It will also be a welcome boost for bigger companies such as GKN PLC (LON:GKN), Senior PLC (LON:SNR), Cobham PLC (LON:COB) and Meggitt plc (LON:MGGT), particularly in the face of uncertainty caused by the UK vote to leave the EU.
Chicago-based manufacturer Boeing said demand for single-aisle aircraft is expected to drive the increase as budget carriers and emerging market airlines order an expected 28,140 aircraft in the period, up more than against last year.
On the wide-body side, 9,100 airplanes are in the forecast, with a large wave of potential replacement demand in the 2021- 2028 time frame.
Boeing projects a continued shift from very large airplanes to small and medium wide-bodies such as its 787 Dreamliner, 777 and 777X.
European arch-rival Airbus has struggled of late with orders for its A380 super-jumbo but is offering the wide-bodied A350 in the mid-sized market.
Boeing expects cargo traffic to rise 4.2% per year, driven by expected orders for 930 new freighters and 1,440 converted freighters.
Meanwhile, Boeing announced an order from Chinese carrier Xiamen Airlines for up to 30 of its 737 Max 200 jets worth up to US$3.4bn at catalogue prices.
In conjunction with aircraft lessor Standard Chartered Bank PLC (LON:STAN), Boeing also announced a US$960mln order for 10 next-generation 737-800s.