Aircraft
Boeing: Replacement Market Unfazed by Falling Oil Prices
Company CEO sees decade-long trend toward more replacement demand.
Boeing expects new engines and composite wings to account for most of a 20-percent improvement in fuel-burn efficiency on the 777X. (Image: Boeing)
Boeing expects new engines and composite wings to account for most of a 20-percent improvement in fuel-burn efficiency on the 777X. (Image: Boeing)

Oil prices would have to drop far below $70 a barrel before OEMs feel any effect on demand for airliners, notwithstanding speculation that precipitous price declines could discourage airlines from committing to more efficient jets at a time when replacement demand accounts for half of all orders for new airplanes, according to Boeing analysis. Speaking during his company’s third-quarter earnings call on Wednesday, Boeing CEO Jim McNerney asserted that record order volume has resulted not only from historically low interest rates and a desire to offset high fuel prices with more efficient new airplanes, but also from the airplanes’ ability to deliver higher passenger and cargo revenue, higher residual values, more range “and a better overall passenger experience.”


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