Boeing, the world’s second-biggest airplane manufacturer, sees global passenger jet demand improving but it could be a while before rival Bombardier sees its aerospace business pick up, according to analysts.
Boeing said Friday it will ramp up production of its 777 and 747 models and forecast sunnier skies ahead.
"We see 2010 as the year of overall economic recovery within the industry and 2011 a year where airlines return to profitability," said Randy Tinseth, vice president of marketing for Boeing Commercial Airplanes.
"As a result, we anticipate an increase in demand for airplanes in 2012 and beyond."
Boeing’s announcement adds to evidence the global airline industry is recovering after the recession caused travel and airplane demand to plummet.
Last week, the International Air Transport Association cut its 2009 industry loss estimate by $1.6 billion and said airlines are seeing passengers, freight and pricing power return.
Raymond James analyst Steve Hansen said Bombardier should also see its aerospace business pick up as the global economy recovers but the uptick could be a little slow for the Montreal-based company.
“The outlook for 2010 is more somber in a macro sense,” Hansen said.
Bombardier expects new deliveries of commercial airliners to fall 20% this year and deliveries of business jets to fall by 15%.
But beyond that new orders should improve, Hansen said.
Global equity research firm UBS sees renewed aircraft demand and aerospace profitability at Bombardier a little further off as well due to the company’s significant excess inventory of used business jets.
Bombardier is engaged in a constant tug-of-war between improving long-term fundamentals and battling against shorter-term disruptions, Hansen said.
Bombardier too sees business picking up steam over the long term especially in the business jet category.
“Business jets will be used by corporations as globalization trends continue to increase in the future,” the company said in its latest outlook, which put business jet deliveries at 11,500 aircraft worth $256 billion in revenues between 2009-2018.
“In particular, we expect significant demand to come from U.S. customers replacing their current aircraft and international customers from regions such as the Middle East & Africa, Latin America, and Eastern Europe entering the market.
Boeing's rosy outlook proved too little against Friday's slumping New York Stock Exchange. Boeing shares fell 0.21% to close at $70.72 US. Meanwhile in Toronto, Bombardier beat the overall S&P/TSX index with its stock closing 1.56% higher at $5.87.
Raymond James has set a “neutral” rating on Bombardier shares with a target price of $6.25.
