Seattle: The chief executive of Boeing Co., James McNerney, said that a third commercial-airline maker will emerge, possibly from China.
“A third competitor, I think it’s inevitable, but we all have different bets on who it will be,” McNerney said during a presentation to analysts.
“A lot of people think the Chinese have the combination of market size, technical capability and aerospace experience from military and commercial to pull it off.”
Chinese Prime Minister Wen Jiabao approved a plan in February to set up a company to build the country’s own commercial passenger airplanes. That was a first step as China seeks to take on Airbus and Boeing, the world’s two largest commercial plane makers.
Boeing’s total order backlog, which rose to $262 billion (Rs10.74 lakh crore) in the first quarter, has largely been driven by Asian airline customers, McNerney said.
McNerney cited demand from airlines in China, India, Japan, Indonesia and other Asian countries as leading a “sea change” in the sales of commercial planes.
China is working to develop a domestic aerospace industry with companies including state-owned China Aviation Industry Corp. I, which is known as AVIC-I. “If it is the Chinese, we aren’t going to run from China and stop dealing with them just because 20 years from now they may compete with us,” McNerney said. “We will continue to engage with them, partner with them and see where it all goes. It’s a huge market over there.”
Boeing also affirmed its profit forecasts for this year and next. Earnings will be $4.55-4.75 a share in 2007 and $5.55-5.75 in 2008, the company said. Analysts, on average, estimate $4.88 and $6.08, respectively. “I have an upward bias on what our guidance is today,” the company’s chief financial officer, James Bell, said at the meeting in Chicago. “And we’ll update you in July. I’m not concerned that your consensus is over our current guidance.”
Boeing, which plans to raise airliner deliveries to as many as 445 planes this year, is increasing production to reap the profit on a record order backlog. Airlines are signing for new planes to expand and replace older, less fuel-efficient aircraft. At the same meeting, Scott Carson, the chief executive of Boeing Commercial Airplanes, said he expected to see five competitors emerging for aircraft seating 100 passengers or less. Participants in the industry include manufacturers from Russia, Canada, China and Brazil. A plane that size would go up against Boeing’s 737.
Boeing would consider entering partnerships with regional-jet makers on an aircraft seating fewer than Boeing’s so-called narrow-body 737, Carson said.
“I think it’s a 15- to 20-year run before we see an entry —probably in the narrow-body side,” McNerney said of a third player in the commercial market. “If you run the numbers there, the market just may be big enough for three of us and still have growth for Boeing.”