It is unlikely that the global air cargo industry will experience growth this year because of the struggles in the Chinese market due to the coronavirus, a senior executive at Boeing Co. said on Wednesday.
Dimmed hopes of Rebound
The biggest manufacturer of freighter aircraft in the world had previously predicted that air freight would increase by 1% to 2% this year because of the United States and China making an interim trade deal, stated Randy Tinseth, vice-president of marketing at Boeing Commercial Airplanes, which is the commercial division of Boeing.
“That is going to see pressure as well,” he said to reporters at the Singapore Airshow, indicating towards the U.S.-China deal. The deal to put a halt on an elongated trade dispute was expected to terminate a drought in sales of Boeing jets to China, a crucial market.
“If we are not seeing goods travel and airplanes fly that is under pressure. I think it is going to be really tough to see the cargo market grow this year.”
The coronavirus catastrophe has faded the hopes of a rebound for air cargo following its worst year in the decade since the financial crisis, a group of 280 global airlines, the International Air Transport Association said last week. Boeing also warned that the virus is going to land a blow on airline revenues and profits.
Travel restrains to and from China and over a two-thirds decrease in capacity offered by Chinese airlines is going to hit revenues of the airline, said Ihssane Mounir, the planemaker’s senior vice president of commercial sales & marketing.
Slow start for Boeing
“China has reduced capacity by 70%; that is money, that is revenue,” he said to reporters at the Singapore Airshow, whose attendance has been significantly decreased as dozens of companies stayed clear of it due to tension about the virus.
He explained it was too soon to comment whether the flow of orders from China would be disturbed as a result of the epidemic, however, pointed out that some deliveries of 777 and 787 aircraft from Seattle to Chinese airlines had been delayed.
Boeing begins the year with zero overall sales in January, which has happened for the first time in decades, whereas its rival Airbus experienced its strongest showing in at least 15 years. January, however, is not always a decisive indicator for the whole year, analysts said. Mounir stated Boeing was in between talks with many potential customers for its wide-body aircraft.
“It was a slow Jan but it doesn’t mean it is going to be a slow Feb or slow March so watch this space.”
Industry sources pointed out that most airlines are hesitant to sign deals for the latest 737 MAX until the plane is certified safe after the narrowbody aircraft was grounded after two lethal crashes.
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