Presentation on theme: "Aircraft Markets: Outperforming The Economy Presentation To Mazak Regional Open House Windsor Locks, CT By Richard Aboulafia Vice President, Analysis Teal."— Presentation transcript:
Aircraft Markets: Outperforming The Economy Presentation To Mazak Regional Open House Windsor Locks, CT By Richard Aboulafia Vice President, Analysis Teal Group Corporation www.tealgroup.com May 2012
What’s Different With This “Cycle” High fuel prices. Stronger emerging markets. Government export credit finance. – From 15% to ~35%. Other government support (sovereign funds, government banks and airlines). Global flight to safe assets (“excessive demand”?). Build to forestall emerging competition? The primes really need cash. – Persistently high IR&D – With declining defense, everyone needs a growth story.
Single Aisles: The Next Generation Bombardier: first engine adapter. – Serious execution risk. – Needed: airlines to reassure lessors. Lessors to reassure airlines. Seeking one good hit… – Pioneer or martyr? Airbus: doing the right thing, aggressively and successfully. Boeing: belatedly but correctly following. Probably. – The 68 inch question. Emerging players: more smoke than fire. Embraer: less of a wild card than thought.
Defense Budget: The Sky’s Not Falling. But Keep An Eye On It Anyway.
Sequestration: Like A Game Of Chicken For Adults…Of A Kind. Sequestration will add another $492 bn in cuts to the planned $487 bn in cuts. There’s no way at all to stop it…except for a large “off” switch, located in Congress. A majority in both parties would like to push this switch, but on their own terms. – Most Democrats want to raise revenue to pay for it, at least by letting some of the Bush tax cuts expire. – Most Republicans want to pay for it by cutting other parts of the budget. A lot can happen November 6 – January 20… – Republicans: no reason to make Obama look bad after election. Last chance to make a tax increase happen while Democrats control the Senate and White House. – Democrats: last chance to leverage their final days of controlling the Senate.