Boeing at Bank of America Conference Notes

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Randy Tinseth – VP, Marketing, Boeing Commercial Airplanes

Passenger market has been strong over the last six years

“On the passenger side, we have seen a very strong and robust market. Passenger traffic over the last six years has grown in excess of 6% per year. That has been helping to drive the top line of our customers in terms of revenue. It has also created a market where our customers have been very successful.”

Cargo market has not been as strong

“ow on the other side of that we look at the cargo market. This is a market that came back very strongly in 2010, really struggled in 2011 and 2012. We started to see some improvements in 2013 and 2014 and last year we saw the market grow only about 2%. This is a market that has seen its ups and downs and, clearly, the cargo market grows when trade grows. ”

On pace to deliver 745 aircraft this year

“So our backlog is several times the size of the aircraft that we have been able to build and deliver. And as we look at this year, we continue to be on track to deliver somewhere between 740 and 745 aircraft this year.”

Passenger traffic has grown faster than capacity growth

“. The other thing I wanted to say about passenger traffic, over the last six years, as traffic has grown, it has actually grown faster than capacity growth. So the available seat kilometers in the market has been growing at a slower rate than the revenue passenger kilometers in the market. And you see this when you fly. It means that load factors are going up and up and up over time which means that our customers are able to use their assets in ways and at utilizations they haven’t been able to do before which helps with their bottom line.”

Lots of growth for us still in China

” The other thing about China is their new visa policies that are now in place has also allowed them to grow internationally. So if you think about this, last year, for the first time, Chinese carriers carried more passengers to the United States than U.S. airlines did. They have been able to expand and take significant advantage of the new visa policy. The other thing I would say about China, it is a market today that is underserved. We see hundreds of potential airplanes — I should say it is being underserved by several hundred aircraft at this time, so we do have growth moving into the future and then I want to just say a little bit about the competitive environment and pricing. ”

I don’t think there’s a question that we will see a successful third party in the market

“I don’t think there is any question that we will see a successful third-party in the market. I think it is a question of when and I think it will probably be later, rather than sooner that we see. I think at this point Embraer is choosing to compete just below us. The CSeries is trying to take Boeing and Airbus head on and that is not working too well for them. But I think China and some of those other countries have great potential because of the demand in those markets and the fact is that I think they will invest over the long term to be successful. So we know that new competition is coming. We know that there will be a successful third competitor. I look at it there is room for us to grow, there is room for Airbus to grow there is room for that third competitor.”

Future airplanes will look a lot like airplanes today

“I think airplanes in the future will look a lot like airplanes today, but they will be more capable. And by more capable I mean that they will generate more available seat kilometers; they will generate more revenue seat kilometers. They will fly further; they will fly more hours per day.”