CAIRO: Boeing officials held meetings in Cairo yesterday aimed at shoring up public confidence, announcing its long-term strategy, and touting the imminent arrival of its new aircraft the 787 Dreamliner.
The meetings come amid some encouraging numbers, though the leading aircraft manufacturer’s stock continues to struggle and significant layoffs are pending.
Boeing officials may have also chosen to visit Egypt because the Middle East and North Africa will likely represent a bright spot in generally discouraging 2009 travel figures.
Officials expect to see a 5-5.5 percent growth in the industry regionally this year.
Boeing currently works with 47 airlines regionally, with 357 planes in place and 275 on order.
“Boeing has had a long and successful relationship with the carriers of the Middle East, said Randy Tinseth, Boeing Commercial Airplanes division Vice President for Marketing.
Tinseth and his colleague Brian Walker, from Boeing’s International and Sales Communications for the Middle East and Africa, met the press at the Conrad Hotel Sunday.
Tinseth noted that the airline industry supports 8 percent of annual global GDP. But the recession has meant that they expect passenger travel to decline by about 3-5 percent and the cargo industry to lose 5 percent of business this year.
Critical to evaluating Boeing’s growth plans is its annual 20-year forecast, which gives indication of the firm’s mindset as it begins planning new products and market strategies.
“Our forecast will help shape our product strategy, said Tinseth, explaining that as part of formulating the forecast the Boeing team had to calculate industry growth going forward and postulate how the airlines will accommodate this growth.
The team announced it believes that airlines will purchase 29,400 airplanes for a total of $3.2 trillion in the coming 20 years. The Middle East, it believes, will account for 1,590 of them.
Tinseth explained that he expects to see major growth globally in the single aisle planes, whereas the Middle East/North Africa market will see significant growth in the larger twin aisle planes.
He added the caveat, though, that plane purchases in the Middle East market will be more heavily slanted towards replacement planes versus growth-oriented planes.
Despite corporate setbacks, Boeing is hopeful that the near future will provide stable growth because two-thirds of the company’s sales forecast is already on order.
Also, the company, according to Tinseth, has built a fairly substantial backlog of planes, so one of the priorities has become clearing this backlog.
Though Boeing has a number of aircraft on the market, Tinseth said that the 737, 777, and 787 were the most appropriate products to discuss based on the needs of a market like Egypt’s.
Improvements in the 737, he argued, has given the plane added range, allowing it to access all European markets from Cairo or Sharm El Sheikh.
Tinseth called the 737 “the world’s most successful airplane of all time.
The new 777-200ER (Extended Range), Tinseth argued, will allow carriers in Egypt to reach almost any airport in the world.
Egypt Air has a flourishing relationship with Boeing, which expects to deliver the airline eight more airplanes this year.
Tinseth also heralded the soon-to-be released 787 Dreamliner, which, with a “very strong value proposition, he believes will give an “unmatched experience for passengers.
The airplane is expected to make its maiden flight during the second quarter of this year and Boeing says it will begin delivering the planes for commercial use during the first quarter of 2010.
Boeing has come under fire over the past year and a half for delaying numerous times the airplanes first flight, which was originally scheduled for September 2007.
This has been one reason for the company’s floundering stock price. The price reached a high of over 105 at the beginning of October, 2007. 6 months later, by April 1, 2008, the stock closed under $76.
And that was before the onset of the global economic crisis which has further depressed the price of the stock, which closed at $31.44 on Friday. Furthermore, the company has announced its intention to cut 10,000 jobs this year, 4,500 of which will be on the commercial airline side.
Despite these setbacks, Tinseth remains optimistic. The challenges facing Boeing now, he said, are considerably less that they were in the months following the terrorist attacks of September 11, 2001.
Plus, he continued, Boeing has continued to gain market share in the Middle East and, to date, has cornered over 40 percent of the business.
Even the broader business is looking alright this year, Tinseth claims. They’re expecting $34-35 billion in revenue on the commercial side.
“We’re looking to be profitable in 2009, he said.