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Monday, June 23, 2003

Regionals To Take 16% Of World Market By 2022

Regional jets will comprise 16 percent of the world's commercial jet airline fleet by 2022, up from the current 11 percent, according to the latest Boeing [NYSE:BA] forecast.

In its Current Market Outlook 2003, released last week at the Paris Air Show, Boeing said that over the next 20 years the worldwide commercial fleet will grow to 34,000 passenger and cargo jets, of which 5,470 will be RJs up to 90 seats. Airlines will invest an estimated $1.9 trillion in 24,275 new airplanes, of which 18 percent, or over 4,300, will be regional jets up. Total regional jets at year-end 2002 was 1,752, of which 585 will be removed from service by year-end 2022. New deliveries of 4,303 account for the year-end 2022 total of 5,470, Boeing said.

A total of 13,645 deliveries, or 56 percent, will be for "larger regional jets and single aisle airplanes," Boeing said.

The growth in regional jets is resulting from fragmentation of the market, according to Randy Baseler, Boeing Commercial Airplanes' vice president of marketing. A liberalizing market is increasing competition, forcing airlines "to operate at much higher levels of efficiency to remain profitable. Passenger preference for more frequent, nonstop flights with shorter trip times will continue to drive market evolution and airline strategies. Air travel growth is being met by more non-stops and frequencies rather than an increase in airplane size."

The report also noted that short-haul markets now dominate the world's departures, accounting for more than 90 percent of the total. "Domestic flying in Europe and North America alone will constitute almost 43 percent of the world's added ASKs (available seat kilometers) and will absorb a majority of the deliveries of single-aisle airplanes."

Air travel in general is expected to increase at an annual rate of 5.1 percent, while regional growth will vary between 4 and 7.3 percent. The Latin American market is expected to be the fastest-growing region. However, a manufacturer's representative who asked not to be named told C/R News that Latin America is very economically unstable, with a growing number of aircraft being repossessed. This, in turn, is making financing difficult for the Latin American carriers. Boeing said that regional jet service in North American will increase "substantially" to extend the geographic reach of the major carriers' hubs, augment larger jet operations in off-peak hours, replace larger major airlines' jets on thin routes and substitute for prop aircraft. European are also expected to operate a large numbers of RJs, "particularly in hub bypass and point-to-point markets," with approximately three-quarters of deliveries being single-aisle and RJs. Other regions, such as China will also increase their use of RJs "although not at the high absolute numbers experienced in Europe and North America."

>>For the full Current Market Outlook 2003, go to http://www.boeing.com/commercial/cmo/. Contact: Tom Brabant; tel: 206-766-2924<<

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