During today’s earnings call to discuss 4Q 2018 results, Boeing President and CEO Dennis Muilenburg said that following the strong showing of freighter orders in 2018 – a record of eighty-three production and forty-one conversion orders – the manufacturer “expects to see new order intake to be moderated, but still at a healthy pace” for 2019, thanks to balanced demand between new orders for fleet growth and replacement of aging freighters.
During 2019, Muilenburg said the first quarter is likely to be slowest from both a revenue and aircraft delivery standpoint, consistent with prior-year trends, with January likely to be the slowest month overall during the year. In a separate call, Darren Hulst, Managing Director, Market Analysis & Sales Support, told Cargo Facts that despite economic uncertainty that contributed to moderating air freight demand during the second half of 2018, order momentum in 2018 has continued into 2019 thanks to balanced demand supported by both market growth and replacement demand, with 200-250 freighters likely needing replacement over the next decade. Additionally, Hulst emphasized strong yields and revenue among carriers, with 2018 yields up 10% over 2017, and added that “now it’s just a matter of how we sustain that long-term trend of about 4% growth per year, based on the trade trajectory globally.”
During today’s call, Boeing provided little guidance on the future of the 747 freighter, but Hulst mentioned that near-term availability is constrained due to the current order backlog. As we noted in our own analysis of production freighter orders and deliveries for 2018, the past year saw a resurgence in 777 freighter orders, with forty-five orders placed – the most orders ever placed for the freighter in one year, ahead of the previous record of forty-two in 2011.
On the conversion front, Boeing inked orders for a record forty-one Boeing-converted-freighter sales; twenty-nine 737-800BCFs, and twelve 767-300BCFs. The aerospace giant also bested its redelivery record for freighter conversions with a total of nineteen redeliveries in 2018.
Looking ahead to redeliveries of the next few years, Hulst was optimistic that the currently strained trade relationship between the United States and China is unlikely to have an impact on expected demand for 737 passenger-to-freighter conversions in China, despite delays in redeliveries for next-generation conversions. The Civil Aviation Administration of China certified the 737-800 Boeing-converted freighter for operation by Chinese airlines late last year, and according to Hulst, redeliveries of converted freighters going forward will depend more on feedstock availability and customer need due to air freight demand, which he noted is continuing to strengthen.
For the full year 2018, Boeing reported a 7.6% year-over-year increase in total revenue to US$101.1 billion. Earnings from operations (EBIT) for the year rose 16.5% to $12 billion, and net earnings were up 23.5% to $10.5 billion. Following the strong performance, Boeing replaced its earlier share repurchase program with a new authorization for $20 billion.
Those interested in learning more about widebody freighters and the forecasted growth of the global freighter fleet in the coming years are invited to join us at Cargo Facts Asia 2019, to be held 15-17 at the Langham Shanghai. For more information, or to register, visit www.cargofactsasia.com.Like This Post