Was Goldman Right About The Boeing 777?

The Boeing 777 gap has been subject to some of articles written by AeroAnalysis. In a previous article A Negative Trend For The Boeing 777, AeroAnalysis concluded that order inflow has been trailing the multi-year average and order inflow in 2015 was below AeroAnalysis’ expectations.

777In a bearish note analysts from Goldman Sachs explained why they see a further drop in production rates in 2018 and 2019.

In this article AeroAnalysis has a look at the annual order inflow and based on that we will look whether closing the gap can be achieved with the current negative trend of lower order inflow.

Two methods are used to get an estimate on order inflow:

  1. Using the annual trend
  2. Using the trend of the bi-annual average

First of all, it is important to explain why the long term trend is not used: The long term trend was impacted by the 9/11 attacks that put the airline industry in a deep crisis and it took about 5 years before order inflow picked up pace again. We are not actually interested in this impact and therefore it is better not to look at the long term trend. If you wish to read about the long term trend and the various factors that impact order inflow, we can recommend you reading our series of articles covering each subject extensively. Besides that, the global financial crisis resulted in lower order inflow as well. The lower oil prices do have impacted order inflow for the Boeing 777, but there is no way to cut out that impact by chopping off another piece of the dataset. In the end, AeroAnalysis do expect oil prices to rise again in the years to come.

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