Airbus predicts $5.3 trillion jet demand, trims traffic outlook

[June 09, 2017]  By Tim Hepher and Cyril Altmeyer

TOULOUSE, France (Reuters) - Airbus <AIR.PA> raised its forecast for deliveries by 6 percent to 34,899 aircraft worth $5.3 trillion over the next 20 years, creating jobs for more than a million pilots and technicians as China surges past the United States to dominate air travel.

The number of people taking a plane is expected to triple over the same period as the size of the world's middle class doubles to 5 billion people, Airbus sales chief John Leahy said.

But Airbus trimmed its forecast for air traffic growth to 4.4 percent a year from 4.5 percent on Friday, taking a more cautious view on the Americas while boosting the Middle East, despite political disruptions in the Gulf.

Even at the lower growth rates, Airbus said its forecasts contained more traffic and deliveries thanks to more tourism, liberalization and a surge in private consumption.

"It's the tyranny of large numbers," Leahy said of the lower growth forecast, adding the estimate might be conservative.

The world's second largest planemaker after Boeing also predicted a surge in repairs, training and upgrade work for manufacturers as the world's fleet tops 40,000 jets by 2036.

The 20-year rolling forecast for airplane deliveries, which includes 733 freighters, was up from 33,070 aircraft a year ago as a further year of strong deliveries gets swept in.

Demand will be led by narrow jets like the Airbus A320neo family or the Boeing 737 MAX, for which Airbus expects 24,807 deliveries worth $2.4 trillion, buoyed by low-cost airlines.

Leahy said that budget carriers could reach half of the market, and supported their long-haul drive.

"Low-cost long-haul will work," he told a media briefing at the planemaker's Toulouse headquarters.

TWIN-AISLE DEMAND

Airbus sharply revised up its estimate for demand for small twin-aisle aircraft but lowered its forecast for very large planes like its A380 superjumbo, where demand is weak.

The logo of Airbus group is pictured in Colomiers near Toulouse, France, January 11, 2017. REUTERS/Regis Duvignau

A battle is looming in the 220-270-seat market as Boeing fine-tunes plans for a mid-market wide-body jet, which Leahy dismissed a re-run of a poor-selling early Airbus model.

Airbus is pushing its hot-selling A321neo narrowbody for many missions targeted by Boeing's proposed new mid-market jet.

For the A380, Leahy acknowledged that a reduced forecast for 1,184 very large passenger planes contradicted a gap in sales, but insisted the mammoth jet would come into its own as traffic and congestion make bulk travel unavoidable.

Rival Boeing says that segment is on the way out as airlines switch to smaller and efficient twin-engined planes.

Chief Operating Officer Fabrice Bregier said Airbus is considering improving the A380 with vertical wingtips to make it cheaper to fly, as reported by Reuters in March.

The boom in aircraft demand and a step-up in engine technology has led to some bottlenecks and delays and Bregier warned suppliers that they risk a group-wide boycott if they fail to come up to standard.

Airbus officials reaffirmed a target for more than 700 deliveries in 2017, but said a higher target of more than 720 given by the company's finance chief was also achievable.

(Editing by Leigh Thomas and Alexander Smith)

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