Boeing CEO sees no bubble risk

Boeing Co Chief Executive Officer Jim McNerney said aircraft demand can grow twice as fast as the global economy without risking a bubble because many new jets are being used for replacements, not fleet growth. Orders will rise 4 per cent to 5 per cent in 2012 even in a sluggish world economy as airlines retire older, less- fuel-efficient planes, McNerney said on Wednesday. Global gross domestic product is expected to expand 2.26 per cent this year and 2.83 per cent in 2013, according to data compiled by Bloomberg. “We appear disconnected from the GDP, so I get where the questions come from,” McNerney said in an interview at the Farnborough air show outside London. “Remember half the planes we sell are replacement. These are airplanes that pay back in two years because they’re that much more sufficient than the plane they replace.” Airlines will take 34,000 new planes valued at $4.5 trillion (Dh16.52 trillion) through 2031, the Chicago-based company said on July 3 in a market forecast. The replacement market is being driven by models such as the 787 Dreamliner and the 737 Max, which promises 13 percent fuel savings over the current 737 variant. “You would be selling those planes at zero GDP,” said McNerney, 62. “Then you add another couple of points of GDP growth on top of it. So, that’s how you get to 4 or 5 per cent. We have seen no data that says it’s not going to last.” McNerney said the surprise retirement of Jim Albaugh, 62, who ran Boeing Commercial Airplanes until he stepped down on June 26, wasn’t over strategy or any dispute. Albaugh had been set to participate at the Farnborough International Air Show, the year’s highest-profile event for the aerospace industry. “It was a personal call,” McNerney said. “It was a personal decision.” From gulfnews