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The aircraft giants’ demand forecasts for the next two decades see little damage from the pandemic, underlining the risk that they overproduce.  Amid widespread shortages, one thing in overabundance may be planes.

On Saturday, on the eve of this week’s Dubai Air Show, Airbus  unveiled its latest projections for global aircraft demand. The European plane maker expects the commercial aircraft market—which it shares with its American rival Boeing BA -1.97% —to require 39,020 new planes from 2021 to 2040. This is only 0.5% smaller than the 20-year figure it predicted in 2019, even though many airlines fear Covid-19 will have a permanent impact on business travel. By contrast, Airbus believes jet deliveries will return to their pre-Covid trend with a two-year lag, thanks in part to more freighter sales.

The outlook was more conservative than some analysts expected, but it was hardly conservative. Last month, Boeing similarly trimmed its 20-year delivery forecast by 1%. This seems modest, especially since the U.S. plane maker’s projections are always higher, coming in this time at 43,610 aircraft.

Boeing and Airbus both trust that replacement of older jets will offset lower fleet growth following the pandemic. Replacement demand makes up 46% and 40% of their estimated future deliveries, respectively, compared with 44% and 36% in their 2019 outlooks. This makes sense, as carriers will want younger planes to cut carbon emissions and entice premium passengers back. This battle arguably began in June, when United Airlines announced its largest aircraft order ever.

Excerpt from WSJ
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