still the world’s strongest industry… for now - cedbr · still the world’s strongest...
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Still The World’s Strongest Industry…
For Now Aviation/Defense Overview And Forecast
Presentation To Kansas Economic Outlook ConferenceWichita, KSBy Richard AboulafiaVice President, AnalysisTeal Group Corporationwww.tealgroup.comSeptember 2016
Civil And Military Aircraft DeliveriesAggregate 2006-2015: 53% Growth (4.8% CAGR)
'89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '150
20
40
60
80
100
120
140(Market Value in 2016 $ Bns)
Civi l Mil i tary
‘06-‘15: 25.1% Growth(2.4% CAGR)
‘06-‘15: 63.9% Growth (5.5% CAGR)
Aircraft Markets, Through Good And Bad Years
World New Deliveries CAGR CAGR Change ChangeIn 2015 (2016 $) ’03-‘08 ’08-‘13 ’13-14 ’14-‘15
Large Jetliners ($103.6 b) 7.5% 10.3% 7.9% 4.9%Business Aircraft ($22.9 b) 17.1% -3.7% 5.1% -6.3%Regionals ($7.1 b) 4.6% -6.5% 17.7% -10.5%Civil Rotorcraft ($5.4 b) 18.2% -1.5% -2.6% -9.4%Military Rotorcraft($13.6 b) 10.3% 8.9% 15.0% -16.7%Military Transports ($5.9b) 3.2% -1.2% -4.9% 9.0%Fighters ($18.2 b) 1.8% 1.1% 1.8% 6.4%All Civil ($139.2 b) 10.0% 5.0% 7.4% 1.4%All Military ($41.4 b) 3.9% 3.2% 7.1% -1.7%Total ($180.6 b) 8.2% 4.6% 7.3% 0.6%
Business Aircraft History (W/Jetliners+RJs+Turboprops)
'64 '66 '68 '70 '72 '74 '76 '78 '80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16f0
300
600
900
1,200
1,500
1,800 (Units Delivered)
0
4
8
12
16
20
24
28
32(Market Value in '16$ Bns)
Units Value
Post-2003 boom
9/11, tech and coms downturn
The Great Expansion: strong economic growth, fractionals, new models, etc
Smaller plane boom; some military Learj et market distortion
Market creation, exhaustion of initial demand
Static period. Limited growth in late 1980s, limited downturn after First Iraq War
The Great Bi-furcation
Bottom Half Bizjet Segment V. Top Half
'89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '150
4
8
12
16
(Market Value in '16 $ Bns)
Bottom Half (<$26M) Top Half (>$26M)
‘03-‘08 CAGR: 19.7% Bottom, 15.3% Top ‘10-‘15:
2.9% Bottom, 2.2% Top
‘08-‘10: -56.8% Bottom, 3.5% Top
Total Business Aircraft Market V. Wichita
'89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '150
5
10
15
20
25
30(Market Value in 2016 $ Bns)
Total Market Wichita
‘03-‘08 CAGR: 17.1% Total, 16% ICT
‘08-‘10 Drop: -26.9% Total, -59.1% ICTPeak: >50% of
market in 1992-1995 (from 39% in 1989 14.1% of
market in 2015
Oil Prices And Top Half Jet Deliveries
US Energy Information Administration (Annual Average Imported Crude Oil Price in 2012 $); Teal Group research
'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '160
20
40
60
80
100
120(Oil Prices/bbl in '12$)
0
5
10
15
(Value of Deliveries in '16$ Bns)
Oil Prices Value
Business Aircraft Market By ClassA Gradual Shift Towards Larger Aircraft
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 '25$0
$5
$10
$15
$20
$25
$30
$35('16$ Billions)
Very Light Entry Level Mid-Sized Super Mid-Sized LargeVery Large Ultra Jetliners+RJs Turboprops
Business Jet Manufacturer Market SharesBy Deliveries Value, 2016-2025 Vs 2006-2015
Excludes jetliners, RJs, turboprops
32.5%
5.1%
16.1%
13.5%
29.9%
2.5%0.3%
28.1%
0%
16% 15%
31.9%
8.2%
0.8%
Bombardier Hawker Dassault Cessna Gulfstream Embraer Other0%
5%
10%
15%
20%
25%
30%
35%
'06-15 '16-25
Our Forgotten Nemesis...CyclicalityLarge Jetliner Deliveries By Value
'58 '60 '62 '64 '66 '68 '70 '72 '74 '76 '78 '80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14'15$0
$20
$40
$60
$80
$100
(Value in '16 $Bns)
‘01-‘03 -10.7% CAGR; -28.8% peak-trough‘91-‘95 -12.5%
CAGR; -41% peak-trough‘80-‘84 -13.9%
CAGR; -45% peak-trough
‘68-‘77 -11% CAGR; -65% peak-trough
‘84-‘9116.1% CAGR
‘95-‘9920.8% CAGR
‘04-‘159.2% CAGR; A 12-Year Supercycle
OR‘99-‘03 -11% CAGR; -37.3% peak-trough
Y/Y Traffic: Respectably Strong Numbers2015 Totals: RPKs 6.5%, ASKs 5.6%, FTKs 2.2%; 2014 Totals: RPKs 5.9%, ASKs 5.6%, FTKs 4.5%; 2013 Totals: RPKs 5.2%, ASKs 4.8%, FTKs 1.4%
Source: IATA
Jul '0
8SepNov
Jan '0
9MarMayJu
lSepNov
Jan '1
0MarMayJu
lSepNov
Jan '1
1MarMayJu
lSepNov
Jan '1
2MarMayJu
lSepNov
Jan '1
3MarMayJu
lSepNov
Jan '1
4MarMayJu
lSepNov
Jan '1
5Apr
Jul
OctDec
Feb '1
6Apr
Jul
0%
10%
20%
30%
-10%
-20%
RPKs ASKs FTKs
Historical Jetliner Orders And Deliveries
All Airbus and Boeing aircraft
'69 '71 '73 '75 '77 '79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '160
500
1000
1500
2000
2500
3000(Number of aircraft)
Deliveries Net orders
BRIC Market Large Jet Deliveries
31 25 28 40 5894 106 107 104
151 156 167200
248 268301
98
7 9 6
25 718
20
1824
5
2 4 43
1519
7024
4221
17
30
4032 4
5 9 20
5
32
34
24
2122
17
19
2923
18
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
0
50
100
150
200
250
300
350Number of Aircraft Delivered
China Russia India Brazil
Single And Twin Aisle DeliveriesPowered By...Hubris
'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '190
20
40
60
80
(Market Value in '15 $ Bns)
Single Aisles Twin Aisles
‘05-‘14 CAGR: 8.1% Single, 11.6% Twin
‘09-‘14 CAGR: 6.5% Single, 17.8% Twin
‘15-‘19 Plan: 13.1% Single, 9.4% Twin
Commercial Jetliners History And ForecastAn Inevitable Correction Looms
Airbus, Boeing, CSeries, C919, MS-21; includes KC-30, KC-46, P-8
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 '250
500
1,000
1,500
(Units Delivered)
0
20
40
60
80
100
120(Market Value in '16$ Bns)
Units Value
Comparative Backlog Values
130.03 107.75
79.53
199.11
300.42
269.97
300.11 316.81
365.33
421.92 413.8 402
48.55
112.93 115.48
173.03
281.81 277.58
309.53 321.6
397.42
436.27 456.7 452
3.51 5.19 5.8 7.1 9.5 9.5 9.5
Mid '97
Mid '01
End '04
End '06
End '08
End '10
End '11
End '12
End '13
End '14
End '15
1H '1
6 0
50
100
150
200
250
300
350
400
450
500(Value in '16 $Bns)
Boeing Airbus Bombardier
Large Jetliner Market Shares By Deliveries Value
'75 '77 '79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 '21 '23 '250
20
40
60
80
100
120(Value in '16 $Bns)
Boeing Middle Market Airbus DouglasLockheed BBD/COMAC/Irkut
DoD Investment, O&M Funding
Then-year dollars
115
140
173190
179
214
239 237
271
293 285 284
256 260247 250
240 235 235 240245
424657 65 69 73 78 77 80 80 81 72 64 63 64 70 72 70 70 6869
546178 83
97 105
134
165
135 138 134121
104 101 103 111 112 115 118 119122
FY01 FY03 FY05 FY07 FY09 FY11 FY13 FY15 FY17 FY19 FY210
50
100
150
200
250
300($ bns)
Procurement RDT&E O&M
World Fighter Production Shares
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 '250
5
10
15
20
25
30(Deliveries in '16 $bns Value)
F-35 US F-35 International Undetermined EuropeRussia RoW Non-F-35 US
The US Military Fixed Wing WaterfallMuch Riding On The F-35...But There’s A New Wave Coming
Excludes jetliner deriv atives
'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 '250
5
10
15
20
25(Value in '16$ Bns)
C-17 AV-8B F/A-18 F-15 F-16 F-22T-45 T-6 C-130 F-35 T-X LRS-B
Boeing Military Fixed Wing Deliveries
'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 '250
2
4
6
8
10
(Value in '16$ Bns)
C-17 AV-8B F/A-18 F-15 P-8 KC-46
Trainer/Light Attack Aircraft Market Outlook
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 '250
1
2
3
4
(Share By '16 $bns Value)
Props Jets T-X
US Military Rotorcraft Market Falling; International Military Growing; Civil Falling
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 '250
2
4
6
8
10
12(Market Value in '16 $ Bns)
Civi l Mil i tary (US) Mil i tary (International)
Aircraft Production 2006-2025Still Growing, For Now....
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 '250
30
60
90
120
150
180
210
(Market Value in '16 $ Bns)
Fighters Business Aircraft RotorcraftMil i taryTransports/Trainers/Other Jetl iners/Regional AC
Global Aircraft Market Outlook In One Page
Market 2016 Risk Elevator CommentLarge Jetliners 0.1% Tough to de-rail the ramp, but fuel prices and China
are big concerns. Execution too.
Business Aircraft -8.5% Weak emerging markets and resource-extraction country/company demand.
Regionals -1.1% Scope clause is only big risk.
Civil Rotorcraft -32.5% Getting ugly. Too many new models aimed at a weak Segment (oil).
Military Rotorcraft 3.7% Will trend down as programs of record end/slow; no risk of accelerated downturn.
Military Transports 24.6% Last of C-17s/A400M ramp; Only risk is A400M execution; C130J benefits if it’s a problem.
Fighters 0.1% I like this market.
All Civil -2.7% Jetliner growth not compensating for weakness in other segments; more risk from emerging markets, oil.
All Military 4.5% Global insecurity, Tension, Malice.
Total Industry -1.0% Downshifting, with more risk