FIDAE: Boeing seeks to make up lost sales ground

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Boeing has brought a Sky Interior-equipped 737-800 to the show in partnership with Brazilian carrier Gol, as it gears up to launch a major sales drive with the latest iteration of its top-selling narrowbody twinjet.

The re-engined and upgraded 737 Max is spearheading Boeing’s ongoing effort to reverse the Latin American market share decline it suffered from the late 1990s, which the US manufacturer attributes primarily to finance-related issues.

“We were not as flexible as we are right now on a number of issues,” says Van Rex Gallard, Boeing Commercial Airplanes vice-president of sales for Latin America, Africa and the Caribbean.

“It had to do with backstop financing – we said we were not going to do that because we didn’t need to,” says Gallard. As it turned out, such finance guarantees were “hardly used”, he adds.

Looking to the future, “we want to get at least 50% of the orders in Latin America,” says Gallard. “In the last few years we were coming from behind. There are going to be some decisive campaigns in 2014.

“This is the year of the Max. Now we have an airplane that is even better than we had before. We see Latin America as one of the fastest growing regions in the world – it’s almost the same growth [rate] as China.”

Boeing forecasts that Latin American airlines will need 2,900 new aircraft worth $300 billion over the next 20 years, of which 84% will be narrowbodies. The overall fleet is expected to triple in size to 3,790 airplanes by 2032.

Airport and air traffic management capacity constraints remain a concern, however, particularly at the continent’s largest hubs, such as Mexico City and São Paulo.

“Those are congested cities,” says Gallard. “There are some infrastructure limitations, but we see the governments taking some actions.”

While the first couple of years of Max production are effectively sold out, deliveries in 2019 “shouldn’t be an issue, and there are plenty of positions with lessors”, says Gallard.

Avianca – which has issued a request for proposals to manufacturers as it looks to further expand its fleet – is set to join the 787 operators’ club later this year, when it introduces the first of 15 Dreamliners on firm order.

“They are looking to new markets like London, which they will now be able to operate profitably,” says Gallard, adding that he expects to sign up several more 787 customers in Latin America.

“You’re going to see more 787s flying out of Brazil,” he says.

Further up the capacity scale, Gallard says the recently launched 777X widebody twin will be particularly attractive to carriers serving markets in Mexico and Colombia, due to the superior “hot and high” performance of the -8X variant. The ultra long-range -8X also opens up new market opportunities for point-to-point services.

“I think they have the traffic demand to venture into those markets,” says Gallard, who is also attending the Wings of Change conference during FIDAE.

Boeing’s largest airliner offering – the 747-8 – is yet to gain a foothold in Latin America, largely due to the proliferation of point-to-point services utilising smaller types.

“We don’t forecast a large number of these airplanes in Latin America. But in the past, 747s were doing very well – anything can happen,” says Gallard.

The market for pure freighters in Latin America remains sluggish, but there are signs of a possible recovery, he says, adding: “There are some concerns about growth right now.

"The view [of Latin American carriers] is that the [belly] capacity of widebody aircraft is competing with pure freighters. But they expect this to change in the next year or so.”

Although the first 737 with a Sky Interior was delivered to Flydubai in 2010, the Gol example is being exhibited at FIDAE because the cabin design “hasn’t been widely shown in the region”, says Gallard.

Boeing Defense, Space and Security, meanwhile, will be promoting its CH-47 Chinook transport and AH-6i light attack/reconnaissance helicopters, in addition to a range of unmanned air vehicles, weapons and communication systems.