Airbus and Boeing agree commercial market is robust

It is rare for Airbus and Boeing to speak in unison, but during a panel discussion at the ISTAT 2014 Americas conference in San Diego, Airbus SVP-leasing markets Andrew Shankland and Boeing VP-marketing Randy Tinseth both identified

improvements in 2014 in world GDP, passenger traffic, cargo traffic and airline profitability as main drivers for a boom market for new aircraft deliveries.

Each executive also dismissed an earlier warning at the ISTAT conference by AVITAS SVP Adam Pilarski that the commercial aircraft industry may be in a bubble environment. Both cited the current stability in oil prices and low interest rates as top reasons.

“Stability is the key, no matter the price,” Shankland said regarding fuel rates. He added that even if interest rates, which are at historical lows, increase to “regular levels,” the net cost of $2-$4 per seat could be easily absorbed by the airlines.

Tinseth agreed, and noted that Boeing carefully monitors capacity growth, world currency, geopolitical issues and world GDP. He said airlines are managing capacity quite well and have removed over 1,600 aircraft from the fleet over the last several years in favor of more efficient new-generation aircraft.

Both OEMs are increasing monthly production with Airbus projecting 630 deliveries in 2014 and Boeing expecting to deliver 715-725 aircraft this year. “We are cautiously optimistic,” Tinseth said about the future of the market.

That is where Shankland and Tinseth ended their agreement, however, diverging over market share, market needs, product development and aircraft economics.

“We all do our homework,” Tinseth said. “We all analyze the same data. It is just how you present that data.”