global market performance since 2010the anticipated benefits of mergers, acquisitions, joint...

Copyright © 2016 Boeing. All rights reserved.

Randy TinsethVice President, Marketing

Boeing Commercial AirplanesMarch 2016


The statements contained herein are based on good faith assumptions are to be used for general information purposes only.These statements do not constitute an offer, promise, warranty or guarantee of performance.

MarketUpdate


Certain statements we make during this conference are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “may,” “should,” “expects,” “intends,” “projects,” “plans,” “believes,” “estimates,” “targets,” “anticipates,” and similar expressions are used to identify these forward-looking statements. Examples of forward-looking statements include statements relating to our future financial condition and operating results, as well as any other statement that does not directly relate to any historical or current fact. Forward-looking statements are based on our current expectations and assumptions, which may not prove to be accurate. These statements are not guarantees and are subject to risks, uncertainties, and changes in circumstances that are difficult to predict. Many factors could cause actual results to differ materially and adversely from these forward-looking statements. Among these factors are risks related to: (1) general conditions in the economy and our industry, including those due to regulatory changes; (2) our reliance on our commercial airline customers; (3) the overall health of our aircraft production system, planned production rate increases across multiple commercial airline programs, our commercial development and derivative aircraft programs, and our aircraft being subject to stringent performance and reliability standards; (4) changing budget and appropriation levels and acquisition priorities of the U.S. government; (5) our dependence on U.S. government contracts; (6) our reliance on fixed-price contracts; (7) our reliance on cost-type contracts; (8) uncertainties concerning contracts that include in-orbit incentive payments; (9) our dependence on our subcontractors and suppliers, as well as the availability of raw materials, (10) changes in accounting estimates; (11) changes in the competitive landscape in our markets; (12) our non-U.S. operations, including sales to non-U.S. customers; (13) potential adverse developments in new or pending litigation and/or government investigations; (14) customer and aircraft concentration in Boeing Capital’s customer financing portfolio; (15) changes in our ability to obtain debt on commercially reasonable terms and at competitive rates in order to fund our operations and contractual commitments; (16) realizing the anticipated benefits of mergers, acquisitions, joint ventures/strategic alliances or divestitures; (17) the adequacy of our insurance coverage to cover significant risk exposures; (18) potential business disruptions, including those related to physical security threats, information technology or cyber-attacks, epidemics, sanctions or natural disasters; (19) work stoppages or other labor disruptions; (20) significant changes in discount rates and actual investment return on pension assets; (21) potential environmental liabilities; and (22) threats to the security of our or our customers’ information.

Additional information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Any forward-looking statement speaks only as of the date on which it is made, and we assume no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.


NOTE: Annual growth rates (%) and cumulative profit ($B)

Cargo market weak, challenging

Passenger market resilient, growing

Global economic growth rate below average

Airlines managing better than ever before


Backlog and deliveries growing near same rate over the last 10 years

0

500

1000

1500

2000

0

1000

2000

3000

4000

5000

6000

7000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Del

iver

ies

Bac

klog

Backlog DeliveriesSource: Flightglobal Ascend Year-end 2015

CAGR 2005 – 2015Backlog – 10.1%

Deliveries – 12.5%


Backlog movement at a historical low

0

1000

2000

3000

4000

5000

6000

7000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Backlog Net Deferals/Accelerations Debookings/Cancelations

9%3%

9% 7%2% 1%

# of

airp

lane

s

(Total change as a % of backlog)

30%20% 6% 0% 1% 2% 4% 2% 1%


0%

5%

10%

2010 2011 2012 2013 2014 2015 2016

Healthy consumer economy supports travel

Emerging markets middle class growth

New airline business models

Demographics support leisure travel

Air travel relative affordability

Business travel – revenue focus, travel intensive sectors outperforming

Annual Growth (RPKs)

Source: ICAO, BCA

above trendgrowth

Traffic growth continues at above-average levels

Copyright © 2016 Boeing. All rights reserved.Sources: IATA Carrier Tracker (industry international scheduled freight) and A4A US domestic cargo traffic.

• Traffic growth > long-term average

• Load factors at/near record highs

• Parked fleet - typical seasonal trends

• Utilization at historic peaks

Year-over-year growth – 12 month rolling avg

0%

1%

2%

3%

4%

5%

6%

7%

Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15

Available Seat Kilometers (capacity)Revenue Passenger Kilometers (traffic)

Airline traffic growth exceeding airline capacity growth


60%

65%

70%

75%

80%

85%

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Aver

age

Ann

ual P

asse

nger

Load

Fac

tor

Source: ICAO

Airplane load factors indicate that assets are fully utilized…. no overcapacity


Airplane Utilization

7.0

7.5

8.0

8.5

9.0

9.5

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Hours/Day

Airline Productivity RisingAssets are being efficiently utilized

Sources: Utilization – BCA RMT; Load Factors – ICAO

World Load Factors

70%

72%

74%

76%

78%

80%

82%

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015


high

oil

lo

w o

il

Airlines adjust fleet to market conditionsFlexibility adds to industry stability

~50% growth~50% replacement

(2003)


(2008)


(2011)


(2004-07)

low growth high growth


Growth vs replacement fluctuates over timeReplacement of 2.5-3% annually, plus Growth of 3.5-4% makes up delivery mix

11

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Growth Replacement

Source: Ascend


Deliveries tracking with historical ratiosReplacement of 2.5-3% plus Growth of 3.5-4%

12

Annual deliveries Deliveries as % of fleet

Source: Ascend

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

0

200

400

600

800

1000

1200

1400

1600

1800

2000


Single Aisle replacement demand increasingSome replacements delayed, others accelerated

0

100

200

300

400

500

600

700

800

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

Airp

lane

s tu

rnin

g 25

yrs

old

SOURCE: Flightglobal Ascend Online database & BCA Analysis

Excludes over 700 airplanes that are older than 25 years


Widebody replacement demand increasingSome replacements delayed, others accelerated

0

50

100

150

200

250

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

Airp

lane

s tu

rnin

g 25

yrs

old

SOURCE: Flightglobal Ascend Online database & BCA Analysis

Excludes over 300 airplanes that are older than 25 years


30

35

40

45

50

55

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

Service driven economy emerging

Shar

e of

GD

P in

%

services

industry

4

6

8

10

12

14

16

2011

2012

2013

2014

2015

Year

-ove

r-ye

ar g

row

th ra

te

RPKs

GDP

forecast

China’s economic transition supports air travel

Heavy industry growth slowdown

Service sector continuing growth

Air passenger travel strong

Cargo impact from weak industryRisks:

• Weakness spills into consumption• Large exchange rate devaluation• Financial market / debt crisis• Geopolitical (South China Sea)


$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

1st-half2011

1st-half2012

1st-half2013

1st-half2014

1st-half2015

Then

yea

r dol

lars

(mill

ions

)

Market Value of 3-year old 737-800

$0.00

$0.05

$0.10

$0.15

$0.20

$0.25

$0.30

$0.35

$0.40

$0.45

2011 2012 2013 2014 2015

Aver

age

leas

e ra

tes (

mill

ions

)

New 737-800 lease rates

Lease Rate Source:, IBA, ASG, AVAC, CV, MBA, ASCENDData through 12/7/15Lease Rate data tends to lag by a few monthsLease Rates exclude Maintenance Reserves

Market Value Source: Average bluebook values fromAscendAVITASIBA


$0

$20

$40

$60

$80

$100

$120

$140

$160

1st-half2011

1st-half2012

1st-half2013

1st-half2014

1st-half2015

Then

yea

r dol

lars

(mill

ions

)

Market Value 3 year old 777-300ER

$0.0

$0.2

$0.4

$0.6

$0.8

$1.0

$1.2

$1.4

$1.6

2011 2012 2013 2014 2015

Aver

age

leas

e ra

tes (

mill

ions

)

New 777-300ER lease rates

Lease Rate Source:, IBA, ASG, AVAC, CV, MBA, ASCENDData through 12/7/15Lease Rate data tends to lag by a few monthsLease Rates exclude Maintenance Reserves

Market Value Source: Average bluebook values fromAscendAVITASIBA


Improving airline profitability is the primary driver of aircraft order peaksSource: FG Ascend, ICAO, World Bank, St. Louis Fed, Boeing analysis

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

0

500

1000

1500

2000

2500

3000

3500

4000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Airli

ne N

et M

argi

n

Net

Ord

ers

• Stronger passenger traffic demand

• Fuel efficient airplanes operating hedge against price volatility (near-term deliveries)

• Airlines planning for higher fuel prices (longer-term orders)

• Deferred retirements provide only marginal, short-term capacity

• Incremental capacity from low utilization airplanes, for peak demand periods

• Heavy check capex limits longer-term prospects

• Airline orders more closely track airline profitability

global market performance since 2010the anticipated benefits of mergers, acquisitions, joint...

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