Marketing man

So I like to come and visit customers as often as I can to share with them our view of the market.

The other thing we do in developing a forecast is where developing a database

The interesting thing about strategy is clearly you have many directions you could take. I think (the key to) a successful product strategy is you keep as many of those options open and then as the market unfolds you can better pick your path.

I’m not out here to fool everyone, we’re going to talk about the challenges of the marketplace. But one thing that is especially lost in a time like this is we’re in a market that long term is a growth market. There’s a great deal of resiliency to air travel, and sometimes we have remind the bankers that finance aircraft, we have to remind some of our airline cusomters, we have to remind some of our major constituencies that yes, this market will turn, that it will be a long term growth business, and that it has grown for the last 30 or 40 years, and we expect it to grow for the next 20.

There’s no question that today’s market is very very difficult, the world’s in recession, we’re seeing both passenger and cargo in decline, fuel prices continue to be high and continue to be volatile, and we see no change in that in the next 12 or 18 months. Financing is difficult. Airlines are finding financing but they have to look harder and the financing they are finding is a bit more expensive.

The good news is that interest rates are low. So we’re in a market where airlines are losing money, losing money in every part of the world. Now to balance that though, I have been in this business 28 years, and one of the things

In terms of where we are, we’re starting to see some encouraging signs on the economic front, and the economy is so important because when we look at travel out the next 20 years, about 80 per cent of the travel growth is driven by economic growth.

So we’re starting to see signs the economy has bottomed. We expect the world economy to start to pick up in the last part of this year. 2010 then will be a year of economic recovery. Once the economy starts to recover passengers will come back, that means 2011 will be a year when many airlines will recover themselves, and then finally for us at Boeing and the other manufacturers, it means that 2012 will probably be a year that we see increased demand for airplanes.”

With Boeing’s new order intake then likely to be modest over the next few years, maintaining the strong order backlog it currently holds remains a key priority.

“Our focus today has to be delivering that backlog that we’ve been able to build up. Today the backlog is over 3400 airplanes and it’s valued at over $250 billion, so we need to keep close to our customers, we need to continue to work with them, and we need to be able to deliver on that backlog.”

“The backlog has been more durable than in past cycles, simple because we have a morediversified market that we’re selling into. And it’s more diversified in a number of ways too, its more diversified by its regional split, but also you have a number of airlines that are operating in different business models than they were a few years ago.”

The rise of the low cost carrier has been particularly important says Tinseth, who notes that low cost carriers are currently growing in every major region of the world bar the US. But airlines in China, Latin America.

“They’re clearly helping us as we go through this cycle.”

Fuel prices too have helped to keep the backlog stable, says Tinseth. “Aurlines, in this push to become more efficient, have taken their older, less efficient airplanes and replaced them with new aircraft.

Boeing has been producing its annual Current Market Forecast since the mid 1950s.

“We do a forecast for about 150 different airline and airline groups, we look at 40 different traffic flows. Fundamentally a forecast should be seen as a rather simple process, you forecast traffic growth, you try look at your customers and see how they’ll develop their networks…

You have to look at fuel prices, economic growth, you have to consider liberalisation, what will happen in emerging and developing markets, will the infrastructure be there, how much more productive will airplanes be in 20 years compared to they are today we have to do some things in terms of (modeling) airplane development and capabilities. It’s a rather complex process.”

25 min or so design criteria

There’s no question that these delays are hurting our customers, and impacting our customers has been very very difficult for all of us at Boeing, recognizing its probably more difficult for our cusomters.

So there’s no question in my mind that our credibility has been hurt, and the fact is you don’t regain your credibility overnight. It’s a slow process taken step by step, showing and demonstrating performance over a long period of time. So the best way for us to gain that credibility is to fly the airplane, to get through a successful flight test program, begin delivering and then slowly but consistently raise your production rates to meet the requirements that your customers require.

Frankly, now they’ve been selling the A380 for nine, almost 10 years, and they’ve sold 200 airplanes, so I think the market size (question) has really been answered.