Betting that rising wealth in Asia would continue to boost air travel and offset any short-term hits to the global economy, Airbus and Boeing raised their long-term forecasts for new aircraft demand on Monday.

At the biennial Farnborough Airshow, which opened on Monday 45 miles (72 km) southwest of London, the world’s two biggest planemakers also announced a flurry of multi-billion dollar jet deals.

The industry’s order backlog is raised to a record 13,500 planes at the end of 2015, or near 10 years of production at current rates with rise in air travel and demand for new fuel-efficient planes raising and Airbus and Boeing have enjoyed years of strong sales due to these factors.

Orders could start to dry up or be canceled, particularly for larger twin-aisle jets, due to economic risks from slowing growth in China to Britain’s decision to leave the European Union, some analysts have cautioned.

However the planemakers maintain a bullish attitude.

Up 4.1 percent from its estimate last year, airlines will need 39,620 new aircraft worth $5.9 trillion over the next 20 years, forecasts Boeing.

“Despite recent events that have impacted the financial markets, the aviation sector will continue to see long-term growth with the commercial fleet doubling in size,” said Randy Tinseth, vice president of marketing at Boeing Commercial Airplanes.

Over the next two decades airline passenger traffic would increase by 4.8 percent per year, Boeing forecasts.

Airbus saw passenger traffic rising by an average 4.5 percent per year and raised its 20-year demand forecast to 30,070 new aircraft, up 500 from its previous estimate.

“Middle classes in emerging markets will double to 3.5 billion people by 2035,” Airbus said in a statement which predicts a particularly strong demand in China and India.

However a word of caution was sounded by some industry executives.

As both Airbus and Boeing strive to meet their order backlogs and considers the need for planned airliner production, David Joyce, chief executive of aero engines maker GE Aviation said he did not see any need for further increases in this regards.

A deal to buy nine P-8A Poseidon maritime patrol planes and to upgrading of 50 Apache helicopters was signed by British Prime Minister David Cameron who finalised the multi-billion dollar deals after opening the Farnborough event.

The latest jolt to the global economy is being provided by Britain’s shock decision in a referendum last month to leave the EU.

However Britain’s ties with the U.S. military or weapons-related trade would not be fundamentally altered by the Brexit decision, feels the Pentagon’s chief arms buyer.

In a deal worth $4.4 billion at list prices Virgin Atlantic ordered 12 of Airbus’s biggest twin-engined plane, the A350-1000 among the civil aircraft deals announced at Farnborough.

For the 366-seat jet whose sales have slowed as Boeing develops a larger version of its 777 model, that was a shot in the arm.

Behind the increases in their 20-year forecasts is the role of demand for single-aisle jets, rather than twin-aisled planes or four-engined superjumbos, said both Airbus and Boeing.

Boeing said it would redesign the smallest version of its 737 MAX plane, increasing seating to 150 by adding 12 seats, in a sign of mounting competition in the single-aisle market.

(Adapted from Reuters)

Categories: Economy & Finance