Thursday, January 29, 2015

McNerney: Drop in fuel prices not affecting demand for Boeing aircraft

Boeing chairman and CEO Jim McNerney said the steep drop in fuel prices in recent months is not hurting the demand environment for new commercial aircraft.

“Lower oil prices have not substantially changed [airlines’] views on fleet planning,” McNerney told analysts and reporters Wednesday while discussing Boeing’s 2014 earnings. “Replacement demand remains an important market driver, with airlines continuing to introduce newer, more efficient airplanes with superior economics and a rapid return on investment in place of older, less efficient models. Notwithstanding a fuel price environment today that is well below the 15-year average, the value proposition for our airplanes remains a compelling one.”

McNerney said that commercial aircraft orders are “more correlated to airline profits” than fuel prices. He added that airlines are not buying aircraft such as the 787 only because of fuel efficiency, but also for “lower maintenance costs, [the ability to generate] higher passenger and cargo revenue, increased residual values, a better overall passenger experience and greater range.”

McNerney said the 787 in particular is “opening up demand between city pairs that wasn’t available before.”

When announcing last month that Air Canada would launch flights in 2015 from Toronto to Delhi and Dubai, CEO Calin Rovinescu said, “The operating economics of [the 787] make this service feasible.”

McNerney estimated that about “20% of the demand for [the 787 is driven by] opening up capacity between city pairs that was not available before because of the performance of the airplane.”

(Aaron Karp - ATWOnline News)

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