international boeing
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International Landscape for Boeing -- ResearchTRANSCRIPT
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International Market AnalysisDeep-dive: Brazil and China
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Objectives
• Analyze the Aerospace and Defense outlook globally.
• Investigate opportunities for Boeing the emerging nations of China and
Brazil.
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Agenda
• Global trends and considerations > Commercial industry> Defense Industry > Countries to target
• Deep Dive Brazil/China > Country Overview> Competition and Boeing> Defense Strategy > Commercial outlook > Insight> SWOT summary
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GLOBAL TRENDS AND CONSIDERATIONS
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Commercial IndustryOverall outlook…
Good!
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Commercial IndustryAir Resiliency
+45%
In the past 10 years. This is despite 3 major world crises.
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Commercial IndustryWhat this means in profits:
+45%
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Commercial IndustryJust in the past couple of years:
+45%
Notable Purchases
Paris Show 2011: Airbus receives a record number of orders. 74 Billion won.
Singapore Airshow 2012: Lion Air has largest single order in aviation history:
$22.4 Billion. 380 Boeing planes.Farnsborough 2012: Boeing finishes with
$37 Billion won.
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CommercialWhat drives Air Demand?
>GDP growth>International Trade
and Deregulation>Government Support
and Subsidies >Fuel prices
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CommercialBuying Trends and Forecast
1. Single Aisle planes still leading the way!
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CommercialBuying Trends and Forecast
Single Aisle Planes Represent:
87% of all routes traveled today71% of all deliveries through
2030
1. Single Aisle planes still leading the way!
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CommercialBuying Trends and Forecast
2. BRIC and Developing nations generating most traffic
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CommercialBuying Trends and Forecast
3. New Generation Engines making up most of the world's fleets!
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CommercialInsight> Commercial Air is still a growing market > Commercial aircraft market is looking for fuel efficiency- Improved Air Traffic- Bio fuels- Fuel efficient aircraft
• 787, 737MAX
> Single Aisle plane demand is not decreasing
• 737, best selling jet
The good news: Boeing has all of these solutions already.
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Defense Industry
BRIC Nations growing
US Recession and Eurocrisis
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Defense Industry
US Exporting more and more military equipment
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Defense Industry
BRIC Nations growing
US Recession and Eurocrisis
Defense budget growth is dependent on GDP Growth. Who’s growing?
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Defense Insight• >US and Europe defense budget declining.
Capitalize on growing economies with rising defense demands, and bigger GDP allotment.
• >The BRIC nations, (especially Brazil, India and China) have growing needs for defense aircraft but are still only beginning to create domestic military aircraft technology.
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A & D INSIGHT: MARKETS TO TARGET
A& D continues to globalize to every corner of the world, such as:
BrazilChina
• Mexico• India/Russia
• USA
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BRAZIL DEEP DIVE
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Country Overview
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Country Overview
• Before 2010• Emerging Market
> 35 Million Brazilians climbed to the middle class in recent years
• Oil Reserves found, increasing country value
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Country Overview
• Today’s Market Slowed economic growth
> Projections around 3.0% yearly for the next decade
> “I don’t see how Brazil can ever grow 5% per year unless you change the Brazilian people.” – Brazilian National Development Bank and the country's communications minister Carlos Mendonca de Barros
• Expensive Nation> Big taxes, especially on imports
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Competitive Landscape
Airbus• 33% of
Brazilian Fleet in 2011
Dassault• Candidate in
fighter plane contract.
• Currently use Dassault fighter plane.
Embraer•Cooperating with Boeing in KC-390 transport
•3rd commercial manufacturer in the world
•43% market share of regional jets
SAAB• Swedish-
Brazilian Research and Innovation Centre
• Financially investing in domestic engineer Akaer
Boeing• Working with
Embraer on KC-390
• Fighter Jet contract fight
• Research center in Sao Paulo
• 34% of Brazilian fleet
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Commercial Air Market
Expected to
Rise
Why? x3 Air Demand in the past decade
x1.5 Revenue for airlines since 2003
x2 Domestic tourism since 2006
2 of the biggest world events happening in the next 4 years
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Commercial Air Market
Expected to
Rise
Why? x3 Air Demand in the past decade
x1.5 Revenue for airlines since 2003
x2 Domestic tourism since 2006
2 of the biggest world events happening in the next 4 years
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Defense Strategy
• Want to independize from GPS system• Integrate all aerospace monitoring
Prioritize Amazon Region
• Substitute current fighter plane
Airforce Development
Prioritize Air Surveillance
Develop Satellite technology
Acquire new presidential plane
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Country SWOT
Strengths• Strongest Economy in Latin
America • Becoming a center for World
Events• Increasing defense budget as it
becomes a bigger world power.
Opportunities
Weaknesses• Economy is finally reaching a
slump in growth. • Difficult to tell if air travel will
grow after world events in Brazil plateau in 2016.
Threats• If economy continues to slump, so
will defense budget. • SAAB and Dassault already
established in the country • Controversial situation involving
Bio-Fuels in Amazon. • With growing Aerospace industry,
domestic aircraft is a possibility
Domestic and
International Tourism
Biofuel Research Presidential
Plane Fighter Plane
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Opportunity
Domestic and
International Tourism
Biofuel Research Presidential
PlaneFighter Plane
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CHINA DEEP DIVE
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Country Overview
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Country Overview
Region/Country Average Growth (%)2006-2011
Contribution to Global Growth
World growth 3.7 3.7
Developing world 6.7 3.3
China 11 1.7
US .9 .2
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Country Overview
>High tax on import and leasing of aircraft.
>Widely known for “Renovating” other countries’ technologies
> Pollution costs china 10% of its GDP
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Competitive Landscape
Airbus• 40% of market
share in commercial air.
• A380 is the biggest competition for Boeing.
Comac• Will be among
3 largest manufacturer.
• Plans to build regional jet as well as twin aisle planes
Northrop Grumman •Awarded with contract in ‘10 to provide ATC equipment
Boeing• 48% of market
share in commercial air
• Boeing and COMAC Create Energy Technology Center in Beijing
• China’s military currently using 737
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Defense Strategy
Preserving Communist Party
Stop Taiwan from gaining independence as a nation
Prevent US intervention from helping china
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Defense Strategy
Preserving Communist Party
Stop Taiwan from gaining independence as a nation
Prevent US intervention from helping china
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Defense Insight
• > While relations with China are growing, it is noteworthy to point out that even in their national defense strategy they are weary of the US.
• > Increase of defense budget, the political environment for Boeing to target China as a client does not seem promising.
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Expected to
Rise
Commercial Aircraft
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Expected to
Rise
Commercial Aircraft
Why? 2nd Largest market for new airplanes
x2.5 Air Traffic since 2010
55 New airports being built
5-7% Forecasted growth per year
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Commercial Aircraft
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Expected to
Rise
Commercial Aircraft
China is increasing Twin Aisles and Large Aircraft. Maintaining Regional Jets stagnant.
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Commercial Aircraft
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Commercial Aircraft Insight
• >With 55 new airports, air traffic increasing, and an emerging middle class the possibilities are growing for Boeing in China.
• >The threat of new domestic entrants, like Comac is likely. Capitalize on products China lacks domestically > Twin Aisle, Large Aircraft, and Regional Jets
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Country SWOT
Strengths• 2nd Biggest economy in the
world and growing.• 2nd Biggest aerospace market
in the world• Growing defense budget
Opportunities
Weaknesses• Communist nation and taxes on
imports • Far wider support for domestic
companies and technologies than foreign
• Weary of US government• Known to copy technology
Threats• Comac forecasted as 3rd most
competitive aircraft manufacturer.
• Airbus owns large percent of the marketshare. Pollution Air Traffic
Delays Biofuel Testing
Regional Jets and
Twin Aisle Planes
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Opportunities
Pollution Air Traffic Delays Biofuel
Testing
Regional Jets and
Twin Aisle Planes
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Overall…Globally•Commercial air industry rising•Defense industry reorganizing and changing
Brazil •Economic growth slowing•Room to grow in domestic and international flights
•Prioritizing defense more
China•Becoming extremely powerful in the world
•Are not looking for international help in defense
•Are becoming competitive with local commercial air company
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Questions?