Boeing may raise plane orders forecast

By Kyle Peterson

FARNBOROUGH, England (BestGrowthStock) – Boeing Co (BA.N: ) sees “pent-up demand” for planes in the airline industry and may raise its internal orders forecast this year, the chief executive of its commercial airplane division said on Wednesday.

“We’ve raised our orders forecast twice. We might do it a third time,” Jim Albaugh told Reuters in an interview at the Farnborough Airshow. Albaugh was referring to Boeing’s non-public forecast that has been updated twice since January 1.

Boeing, the world’s second-largest commercial airplane manufacturer after Airbus (EAD.PA: ), has taken several large orders this week at the air show.

On Tuesday Air Lease Corp. ordered up to 60 Boeing 737-800 aircraft. On Monday, Emirates (EMIRA.UL: ) ordered 30 777s – a deal potentially worth $9 billion.

The new orders reflect renewed demand among airlines for planes after an economic downturn that drained travel demand and jeopardized the stability of many top airlines. The outlook is improving for airlines, Albaugh said.

“We think that they’re going to be very profitable next year,” he said. “And there is real pent-up demand.”

He said mergers of major U.S. airlines like UAL Corp.’s (UAUA.O: ) United Airlines and Continental Airlines (CAL.N: ) could mean a short-term rationalizing of fleets. But in the long term, consolidation will mean airline stability and airplane orders.

“Yeah they’re going to rationalize their fleets and there could be some near-term impacts,” Albaugh said. “But profitability is what allows them to operate and allows them to buy airplanes.”


Boeing, meanwhile, is deciding whether to design a new version of its 737 or simply put a new engine in the old design, a move that would bring the aircraft to market faster.

The company has said it may make the decision by fall. Airbus is also considering a redesign or re-engining of its competing A320 in the same timeframe. Albaugh said that while Boeing would like to know what its top rival is doing, the company can make the decision without knowing.

“I would like to think that what we do is market-driven and not in response to what the competition might be doing,” he said.

Separately on Wednesday, the European Union appealed a World Trade Organization ruling condemning its subsidies for Airbus.

The widely expected appeal followed a decision by another WTO panel, examining the EU’ s countersuit against U.S. aid for Boeing, to postpone an initial confidential ruling until mid-September.

“All we want is a level playing field,” Albaugh said. “And the WTO is pretty clear in their ruling that the playing field hasn’t been level.”

“If they find that we have violated some of the WTO rules, we’ll remedy that,” he said. “And I would expect that the EU would remedy the violations that they’ve had as well.”

Albaugh, 60, took over as CEO of Boeing Commercial Airplanes last year, replacing Scott Carson, after a string of delays that postponed the first test flight and delivery of the long-awaited lightweight 787 Dreamliner.

Albaugh repeated that Boeing hopes to make its first delivery to Japan’s All Nippon Airways (9202.T: ) by the end of this year but that the delivery may slip to early 2011.

The new carbon-composite plane landed at Farnborough on Sunday to the delight of aviation enthusiasts around the world after completing its first international flight.


(Reporting by Kyle Peterson, editing by Ben Berkowitz)

Boeing may raise plane orders forecast