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Originally published February 7, 2012 at 12:01 PM | Page modified February 8, 2012 at 1:30 PM
Boeing's outlook is robust but risky, analyst tells suppliers
Aviation analyst Richard Aboulafia offered a projection of market-busting success for Boeing in the decade ahead, but cautioned that "there's an enormous amount of risk baked into that road map."
Seattle Times aerospace reporter
At an aerospace-industry conference in Lynnwood Tuesday, aviation analyst Richard Aboulafia offered a projection of market-busting success for Boeing in the decade ahead.
Aboulafia, industry analyst with the Teal Group, told local suppliers that the production boom ahead could leave Boeing with 56 percent market share to Airbus's 44 percent in 10 years, instead of the roughly even split today.
But speaking at the annual conference of the Pacific Northwest Aerospace Alliance, Aboulafia warned that his forecast assumes that Boeing gets everything right with the 787, the 737 MAX and the 777 upgrade that's coming later.
"There's an enormous amount of risk baked into that road map," Aboulafia said. "Boeing has greater opportunities (than Airbus) but more risk."
He listed his rosy assumptions for Boeing:
• The 787 Dreamliner "becomes all it's cracked up to be."
• Boeing and engine-maker CFM International jointly get the 737 MAX right, and maintain Boeing's 50 percent market share in single-aisle jets against the A320neo.
• The upgrade planned for the 777 by the end of the decade, with a new wing and new engines, is successful.
On the 787, Aboulafia said it's too early to tell if it will perform as advertised.
"We don't know that much about the 787 at this point," he said.
Aboulafia said he sees a slow ramp-up for the Dreamliner and doesn't expect Boeing to achieve its planned production rate of 10 a month by the end of next year.
He projects no more than 45 deliveries this year, and 65 next year.
But in his longer term 787 assumptions, he said, "I'm keeping the faith."
In the single-aisle market, airlines that previously favored Boeing, such as American and Norwegian, recently have split orders down the middle between the Airbus A320neo and the 737 MAX.
But Aboulafia suggested they are hedging their bets in case one manufacturer falters.
Although Boeing faces risk because the MAX depends on just one engine, he said, it's likely CFM can deliver the necessary increase in fuel savings to make the MAX a match for the A320neo and preserve the 50:50 split in the smaller jet market.
As for Boeing's proposed upgrade to the 777, he said "there's a good chance it's going to be great."
He said Airbus must be worried about the potential impact on the prospects of its A350.
Aboulafia largely dismissed the emerging contenders to challenge Boeing and Airbus in the single-aisle market.
He said Bombardier, while on paper offering a solid design with its CSeries plane, can't match the marketing heft and support services network of the 737 and the A320.
"I don't think it looks very promising," he said.
As for the forthcoming Russian and Chinese entrants to the single-aisle market — the Irkut MS-21 and the Comac C919 — Aboulafia pretty well dismissed them.
"These look more like science-fair projects more than anything else," he said.
Overall, Aboulafia gave local aerospace suppliers every reason to be optimistic. He projects a great sales year in 2012 with the 737 MAX leading the way, then a brief dip as airlines wait for the new MAX and neo jets to actually enter the market.
After that brief lull, he said, "We grow again. It's a fantastic market outlook."
Dominic Gates: 206-464-2963 or dgates@seattletimes.com
