ATW 2008 Forecast PDF
ATW 2008 Forecast PDF
ATW 2008 Forecast PDF
Sponsored by
Aaron Karp
Aaron Karp, an Air Transport World senior
editor, has covered aviation for more than eight
years. He previously was a reporter for Flight
International, managing editor of Air Cargo
World, and editor of World Airport Week. He is
a frequent contributor to ATWOnline's Daily
News and wrote the 2008 cargo forecast
feature in the January issue of ATW.
Agenda
Introduction
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2007 In Review
A Year of Strong Recovery
1/22/2008
2007 In Review
Main factor: World economy much
stronger than expected
Stronger demand for air travel meant
airlines able to raise fares to offset
rising fuel prices
World airline earnings totaled $5.6
billion compared to a loss of $500
million in 2006
1/22/2008
2007 In Review
1/22/2008
2007 In Review
Global air cargo traffic growth rate
remained at the 4%-5% level in 2007,
marking the third straight year of below
average growth. IATA cites "modal shift"
to sea shipping and points to poor
"airfreight indicators" such as slowing
semiconductor shipments and waning
manufacturing business confidence.
1/22/2008
Outlook for 2008
Softening economy in the US affecting
world. World GDP growth forecast to
slow to 3.1% from 3.7%
US Recession is a real possibility
Credit crunch caused by US subprime
mortgage mess could begin to affect
aircraft financings; hasn't happened yet
1/22/2008
Outlook for 2008
1/22/2008
Biggest hit in North America
1/22/2008
Biggest hit in North America
NY State passenger bill of rights; Will it
spread to other states? What will
DOT/FAA propose in guidelines on
airline responsibility in delays?
How will JFK capacity agreement affect
airlines? DOT recently proposed new
rates and charges rules.
1/22/2008
Europe: "A soft landing"
Earnings down 5% to $2 billion
Environmental politics is biggest
immediate challenge
LCCs continue to grow marketshare but
Europe flag carriers have much larger
base of longhaul intercontinental traffic
from which to draw
1/22/2008
Europe: "A soft landing"
1/22/2008
Asia/Pacific
1/22/2008
Asia/Pacific
Merger/Consolidation could help
stability:
Air India/Indian
Jet Airways/Air Sahara (Jet Lite)
Kingfisher/Air Deccan
1/22/2008
China
Domestic: lot of traffic growth but not
much money
International: Chinese airlines are losing
share to foreign counterparts.
Transition from point-to-point to hub and
spoke should help them
1/22/2008
China
Also, entry into alliances, equity
partnerships:
Air China, Shanghai Airlines entered
Star
China Southern in SkyTeam
China Eastern/Singapore Airlines
transaction up in the air; new CAAC
head suspicious of foreign investment
1/22/2008
Cargo
1/22/2008
Cargo
1/22/2008
Cargo
1/22/2008
Key Issues/
Trends for World Airlines
#1 Environment: EU will continue to
push for bringing all airlines into ETS;
continue to add taxes and other
measures on a state-by-state basis
Movement in Congress and states to
regulate US aircraft emissions
1/22/2008
Key Issues/
Trends for World Airlines
1/22/2008
Chuck Evans
Chuck Evans
Director Airline Industry
Analysis and Strategy
Bombardier Aerospace
This presentation includes forward-looking statements. Forward-looking statements generally can be identified by the use of
forward-looking terminology such as may, will, expect, intend, estimate, anticipate, plan, foresee, believe or
continue or the negatives of these terms or variations of them or similar terminology. By their nature, forward-looking statements
require Bombardier Inc. (the Corporation) to make assumptions and are subject to important known and unknown risks and
uncertainties, which may cause the Corporations actual results in future periods to differ materially from forecasted results. While
the Corporation considers its assumptions to be reasonable and appropriate based on current information available, there is a risk
that they may not be accurate. For additional information with respect to the assumptions underlying the forward-looking statements
made in this presentation, please refer to the respective sections of the Corporations aerospace segment (Aerospace) and the
Corporations transportation segment (Transportation) in the F07 MD&A.
Certain factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, include
risks associated with general economic conditions, risks associated with the Corporations business environment (such as the
financial condition of the airline industry, government policies and priorities and competition from other businesses), operational risks
(such as regulatory risks and dependence on key personnel, risks associated with doing business with partners, risks involved with
developing new products and services, warranty and casualty claim losses, legal risks from legal proceedings, risks relating to the
Corporations dependence on certain key customers and key suppliers, risks resulting from fixed-term commitments, human
resource risk, and environmental risk), financing risks (such as risks resulting from reliance on government support, risks relating to
financing support provided on behalf of certain customers, risks relating to liquidity and access to capital markets, risks relating to
the terms of certain restrictive debt covenants and market risks (including currency, interest rate and commodity pricing risk). - see
the Risks and Uncertainties section in the F07 MD&A. Readers are cautioned that the foregoing list of factors that may affect future
growth, results and performance is not exhaustive and undue reliance should not be placed on forward-looking statements. The
forward-looking statements set forth herein reflect the Corporations expectations as at the date of the F07 MD&A and are subject to
change after such date. Unless otherwise required by applicable securities laws, the Corporation expressly disclaims any intention,
and assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events
or otherwise.
The 20-149 seat regional and small narrowbody fleet will grow
with increasing geographical diversity
6,000
4,000 5,100 Aircrft
Regional
retained Jets
2,000 Small NBs
30%
53%
0
2006
2009
2012
2015
2018
2021
2024
Turboprops
17%
Africa/Middle
East
7%
Latin America
7%
North America
Asia/Pacific 40%
12%
China
15%
Europe
19%
450 240
70
270 420
250
60 120
60
1,197
1200
1000
887
Total Deliveries (CY)
794
800 698 736
668
20 yr forecast Avg. 585
600 560 yrly. deliveries
443
362 387
400
267
200
0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: Back Aviation (Airbus, ATR, Boeing, Bombardier, Embraer), Bombardier Commercial Aircraft Market Forecast 2007
Key Variables In Bombardiers 20 Year Forecast Drive
Growth And Gauge Of Aircraft
Short term
$80 EIA Data North America 3%
*Jan. 2008 $72
$70
$60 Latin America 4%
$50 Russia/CIS 4%
$40 History
Middle East 4%
$30
$20 2007 Forecast Africa 5%
2006 Forecast
$10
India 6%
$0
1990
1994
1998
2002
2006
2010
2014
2018
2022
2026
2030
China 7%
40
70% 6
68% CASM
66% 4
64%
62% 2
60% 18% 19% 20% 22% 22% 22% 23% 23%
58% 0
2000
2001
2002
2003
2004
2005
2006
2007
1990
1992
1994
1996
1998
2000
2002
2004
2006
1990
1992
1994
1996
1998
2000
2002
2004
2006
Airline industry High fuel prices and
Record load factors
margins have low yields are
in 2006
been squeezed driving capacity
Sources: Airline Monitor Jan/Feb 2007, Air Transport Association of America, BACK Aviation, OAG
Environmental Issues Will Further Influence Engine Type
And Technology
+51%
12 12
000s of lbs/hour
000s of lbs/hour
8 8
+51%
4 4
0 0
Q400 70-seat Q400 70-seat
Source: Bombardier
RJ RJ
Fuel Prices And Turboprop Orders Show Strong
Correlation
200 225
180 177 205
25 23.2
20 18.4
16.9 16.5 17.1
16.1 15.3
TOC/ASM
15
12.1
11.1 11.1 11.1 10.6
10.0 10.0 9.4
10 8.1
CRJ100/200
CRJ100/200
CRJ100/200
737-300
CRJ700
CRJ900
737-500
737-800
737-900
CRJ700
United 737-300
737-800
5 Northwest DC9-30
A319
A320
A319
0
Wisconsin
ASA
Alaska
Mesa
USAirways
Skywest
Frontier
Southwest
Comair
JetBlue
Delta
American
American
Continental
Eagle
Air
Large
4,000 Turboprops
Up to 80 seats
1,000
Old Gen Small Jet
Up to 70 seats
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
Latest CFD
Technology
2013 Engine Technology
Superior Field
Performance &
Range Flexibility
Bombardiers Current And Potential Product Portfolio
Surpass The Needs Of The 20-149 Seat Market
CRJ1000
Q400
Q SERIES Family C 130
CRJ900
CRJ Family
Q200 CRJ200
37 76 50 99 100 149
# of Seats
Information contained in this document is proprietary
to Bombardier Inc., Bombardier Aerospace, Regional
Aircraft (Bombardier). This document must not be
reproduced or shared with, or distributed to, any third
party in whole or in part without Bombardiers prior
written consent.
Douglas Abbey
Aviation Industry Consultant
ATW Webinar
23 January 2008
Major Airlines Have Been Losing
Market Share Since Deregulation
100%
22.8%
Share of Domestic Traffic
80%
23.9%
60%
40%
53.3%
20%
0%
1980 1985 1990 1995 2000 2006
160
Annual Passenger Enplanements (millions)
80
60 9 Years
40 5 Years
20
0
1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
250
Index: 1981 = 100
200
150
100
50
-69%
0
1981 1985 1989 1993 1997 2001 2005
26 22
PRASM (Cents)
18
Yield (Cents)
22
16
20
14
18 12
J/03 J/04 J/05 J/06 J/07
Source: ATA.
Does Diversification Help?
(Not Very Much)
How do Code-Sharing Programs
Compare? (the Acid Test)
Delta 573
US Airways 342
United 314
American 336
Continental 323
Northwest 264
Alaska 68
In-Service RJs
Frontier 27 On Order RJs
In-Service T/P's
21 Figures = number of aircraft
Midwest On Order T/P's
0 3,000 6,000 9,000 12,000 15,000 18,000 21,000 24,000 27,000 30,000 33,000
LCCs
Q400
(Frontier)
JetBlues Growing E-190 Network
Offers a Catalyst for Change
LCC JetBlue
(11.8%) Monopoly
(19.6%)
The Embraer 190 is a pathfinder for markets in Northern, Southern and Central America, as well
as Mexico and for further expansion into the Caribbean from Florida.
120
E-195
C-110 B737-600
110
Nominal Capacity (Seats)
60
40,000 50,000 60,000 70,000 80,000 90,000
Operating Empty Weight (Lbs.)
Source: Manufacturer data and Velocity Group estimates..
37 to 50-Seat RJs are Aging
With no Replacements in Sight
450
400 ERJ-145
ERJ-135/-140
Units Currently In-Service
350 CRJ-100/-200/-440
300
250
200
150
100
50
0
16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 <1
Average Age (Years)
Source: Velocity Group.
Is the Current Turboprop
Resurgence Sustainable?
We Forecast 2,800 Small Jet
Aircraft Deliveries in North America
Chuck Evans
Director, Airline Industry Analysis and
Aaron Karp Strategy
Senior Editor Bombardier Aerospace
Air Transport World Magazine [email protected]
[email protected]
Doug Abbey
Industry Consultant
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