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Stability ahead for manufacturers' market shares? June 1999 Download PDF

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The US–based Teal Group has just released its latest forecast for the 100+ seat jet market (excluding the former Soviet jetliners, which are the only jet competitors to Airbus and Boeing but which hold less than 1% of the market). Despite the ongoing battle between Airbus and Boeing (see pages 14–17 this issue and Aviation Strategy, May 1999), Teal believes that their respective market shares will remain stable in the medium–term.

Teal’s forecast to the year 2008 (see tables, below and right) can be summarised as follows:

  • It forecasts production of 5,859 jet aircraft worth $398bn over the next 10 years. This total includes 3,843 narrowbodies worth $153bn and 2,016 widebodies worth $245bn. (All figures used by Teal are in 1999 dollars.)
  • The market’s inherent cyclicality has been exacerbated by a vicious market share war between Boeing and Airbus. This will lead to a massive drop in narrowbody deliveries. Meanwhile, the Asia crisis will hurt widebody demand. Total deliveries will decline sharply, from 873 aircraft worth $53.3bn in 1999 to a forecast 388 aircraft worth $28bn in 2002.
  • This market share war is slashing profitability at Airbus and Boeing. It has been particularly traumatic to Boeing, which has been haemorrhaging cash through the present “up” cycle. The battle could also force fundamental changes at Airbus.
  • Despite these traumas, remarkably little will change in terms of respective market share. Airbus’s share will advance only slightly, averaging 36.7% through the forecast period.
  • Still, this is an impressive achievement for the Airbus consortium, which held less than one–fifth of the market before 1993. Airbus seems to be winning the battle for McDonnell Douglas’s market share.
  • There will be no all–new jet programmes introduced in the next ten years. Boeing is likely to cancel the 717, and the A3XX will not arrive during Teal’s forecast period. The A318 and A340–500 and -600 variants, however, will prove reasonably successful.

Prospects for the really large aircraft

Teal also considers the large aircraft market, and believes it is just a matter of time before the 747–X/Y concept is revived. The forecast calls for some kind of low–cost update to arrive around 2005. All–new aircraft are too expensive, and the 747 needs to grow.

Concerning the A3XX, Teal believes that finding the $10–15bn necessary to develop an all–new aircraft is highly problematic, especially since Airbus has no history of generating money for new aircraft via cash flow. Teal believes that as Aérospatiale follows Daimler Benz Aerospace/DASA and British Aerospace, becoming privatised and responsive to equities markets, Airbus will find it increasingly difficult to convince its member companies to deprive their shareholders of dividends by spending heavily on independent R&D. Teal’s view is in marked contrast to Airbus’s stated strategy (see pages 14–17).

TEAL GROUP JET AIRCRAFT DELIVERY FORECAST
TEAL GROUP JET AIRCRAFT DELIVERY FORECAST
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Total
Airbus A300 5 7 8 8 8 6 6 6 4 4 62
Airbus A310 1 1 1 - - - - - - - 3
Airbus A319/320/321 235 228 184 104 87 105 198 209 190 165 1,705
Airbus A330 44 36 26 22 22 29 36 37 26 24 302
Airbus A340 23 25 16 12 14 16 16 16 12 12 162
Airbus A340-500/600 - 1 3 18 22 23 28 30 25 26 176
Total Airbus 308 298 238 164 153 179 284 298 257 231 2,410
Boeing 717 6 - - - - - - - - - 6
Boeing 737-300/400/500 44 2 - - - - - - - - 46
Boeing 737-600/700/800/900 260 206 148 96 85 101 179 202 180 144 1,601
Boeing 747-400 45 22 20 22 24 19 8 - - - 160
Boeing 747-400X - - - - 1 2 24 48 42 40 157
Boeing 757 55 39 30 30 31 43 54 60 56 48 446
Boeing 767 34 44 36 32 35 41 44 42 46 38 392
Boeing 777 77 63 44 44 48 60 68 70 64 50 588
Boeing MD-11 8 6 - - - - - - - - 14
Boeing MD-80 18 3 - - - - - - - - 21
Boeing MD-90 18 - - - - - - - - - 18
Total Boeing 565 385 278 224 224 266 377 422 388 320 3,449
TOTAL UNITS 873 683 516 388 377 445 661 720 645 551 5,859
TEAL GROUP JET AIRCRAFT DELIVERY VALUE FORECAST (1999 $bn)
TEAL GROUP JET AIRCRAFT DELIVERY VALUE FORECAST (1999 $bn)
  1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Total
Airbus A300 0.39 0.54 0.62 0.62 0.62 0.46 0.46 0.46 0.31 0.31 4.77
Airbus A310 0.07 0.07 0.07 - - - - - - - 0.21
Airbus A319/320/321 9.17 8.89 7.18 4.06 3.39 4.10 7.72 8.15 7.41 6.44 66.50
Airbus A330 4.71 3.85 2.78 2.35 2.35 3.10 3.85 3.96 2.78 2.57 32.31
Airbus A340 2.62 2.85 1.82 1.37 1.60 1.82 1.82 1.82 1.37 1.37 18.47
Airbus A340-500/600 - 0.14 0.41 2.47 3.01 3.15 3.84 4.11 3.43 3.56 24.11
Total Airbus 16.95 16.34 12.88 10.86 10.97 12.64 17.70 18.51 15.29 14.24 146.37
Boeing 717 0.15 - - - - - - - - - 0.15
Boeing 737-300/400/500 1.36 0.06 - - - - - - - - 1.43
Boeing 737-600/700/800/900 9.88 7.83 5.62 3.65 3.23 3.84 6.80 7.68 6.84 5.47 60.84
Boeing 747-400 6.98 3.41 3.10 3.41 3.72 2.95 1.24 - - - 24.80
Boeing 747-400X - - - - 0.18 0.36 4.30 8.59 7.52 7.16 28.10
Boeing 757 2.92 2.07 1.59 1.59 1.64 2.28 2.86 3.18 2.97 2.54 23.64
Boeing 767 2.79 3.61 2.95 2.62 2.87 3.36 3.61 3.44 3.77 3.12 32.14
Boeing 777 10.24 8.38 5.85 5.85 6.38 7.98 9.04 9.31 8.51 6.65 78.20
Boeing MD-11 0.79 0.59 - - - - - - - - 1.39
Boeing MD-80 0.56 0.09 - - - - - - - - 0.65
Boeing MD-90 0.65 - - - - - - - - - 0.65
Total Boeing 36.31 26.04 19.12 17.12 18.03 20.76 27.85 32.20 29.61 24.94 251.99
TOTAL UNITS 53.26 42.38 32.00 27.98 29.00 33.40 45.55 50.71 44.90 39.18 398.36
TEAL GROUP JET AIRCRAFT DELIVERY VALUE SHARE FORECAST
TEAL GROUP JET AIRCRAFT DELIVERY VALUE SHARE FORECAST
  1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Total
Airbus A300 0.7% 1.3% 1.9% 2.2% 2.1% 1.4% 1.0% 0.9% 0.7% 0.8% 1.2%
Airbus A310 0.1% 0.2% 0.2% - - - - - - - 0.1%
Airbus A319/320/321 17.2% 21.0% 22.4% 14.5% 11.7% 12.3% 17.0% 16.1% 16.5% 16.4% 16.7%
Airbus A330 8.8% 9.1% 8.7% 8.4% 8.1% 9.3% 8.5% 7.8% 6.2% 6.6% 8.1%
Airbus A340 4.9% 6.7% 5.7% 4.9% 5.5% 5.5% 4.0% 3.6% 3.1% 3.5% 4.6%
Airbus A340-500/600 - 0.3% 1.3% 8.8% 10.4% 9.4% 8.4% 8.1% 7.6% 9.1% 6.1%
Total Airbus 31.8% 38.5% 40.3% 38.8% 37.8% 37.8% 38.9% 36.5% 34.1% 36.3% 36.7%
Boeing 717 0.3% - - - - - - - - - 0.0%
Boeing 737-300/400/500 2.6% 0.2% - - - - - - - - 0.4%
Boeing 737-600/700/800/90018.6% 18.5% 17.6% 13.0% 11.1% 11.5% 14.9% 15.1% 15.2% 14.0% 15.3%
Boeing 747-400 13.1% 8.1% 9.7% 12.2% 12.8% 8.8% 2.7% - - - 6.2%
Boeing 747-400X - - - - 0.6% 1.1% 9.4% 16.9% 16.7% 18.3% 7.1%
Boeing 757 5.5% 4.9% 5.0% 5.7% 5.7% 6.8% 6.3% 6.3% 6.6% 6.5% 5.9%
Boeing 767 5.2% 8.5% 9.2% 9.4% 9.9% 10.1% 7.9% 6.8% 8.4% 8.0% 8.1%
Boeing 777 19.2% 19.8% 18.3% 20.9% 22.0% 23.9% 19.9% 18.4% 19.0% 17.0% 19.6%
Boeing MD-11 1.5% 1.4% - - - - - - - - 0.4%
Boeing MD-80 1.1% 0.2% - - - - - - - - 0.2%
Boeing MD-90 1.2% - - - - - - - - - 0.2%
Total Boeing 68.2% 61.5% 59.8% 61.2% 62.2% 62.2% 61.2% 63.5% 65.9% 63.7% 63.3%
TOTAL UNITS 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

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