Boeing Stock Falls As The Aeropace Giant Lowers Aircraft Demand Outlook On Covid-19 – Investor's Business Daily

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Boeing (BA) lowered its 10-year outlook for industrywide aircraft demand by 11% vs. last year due to the coronavirus. Boeing stock fell.

The aerospace giant now sees deliveries of 18,350 commercial jets, including those from rival Airbus (EADSY), in the next decade as the Covid-19 pandemic hits travel.

This is the first year that Boeing has provided a 10-year forecast. Its new 20-year forecast sees 43,110 deliveries of new aircraft through 2039, down from a prior view of 44,040 planes by 2038.

The replacement of older planes will drive most near-term demand as airlines hold off on expanding service. The International Air Transport Association, a trade group, doesn’t see air travel rebounding to 2019 levels until 2024.

But air cargo demand will be a relatively bright spot. It should grow 4% annually and generate demand for 930 new widebody freighters and 1,500 converted freighters, Boeing said.


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Boeing Stock, 737 Max Outlook

Shares fell 3% to 165.87 on the stock market today. Boeing stock is back below the 50-day average, where it has been hitting resistance for months. Top suppliers Spirit AeroSystems (SPR) and General Electric (GE) both added 1%.

Boeing sees single-aisle aircraft like the Boeing 737 Max accounting for the largest market segment, with 32,270 new aircraft needed over the next 20 years.

“Single-aisle demand will recover sooner due to its key role in short-haul routes and domestic markets as well as passenger preference for point-to-point service,” the report said.

The Boeing 737 Max has been grounded for over a year following two deadly crashes, and customers have canceled over 800 737 Max orders in 2020.

Production will remain constrained. Boeing doesn’t expect to increase 737 production to 31 per month until the beginning of 2022, later than a prior estimate of 31 per month in 2021.


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Boeing 777, 787 Production Rates To Fall

Meanwhile, widebody production will fall as demand for long-haul commercial flights take the hardest hits. Lower sales of the higher-margin planes will add another headwind to Boeing stock and earnings.

The 787 production rate will be reduced to six per month in 2021 vs. 10 now and a prior estimate of seven per month by 2022. The company is also consolidating 787 production into one plant in South Carolina next year.

The 777/777X combined production rate will drop to two per month in 2021, down from a prior view of three, with 777X first delivery targeted for a year later than planned, at 2022.

Follow Gillian Rich on Twitter @IBD_GRich for aviation news and more. 

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