How Will Oil Drive The Next Narrowbody Wave?
The drilling world may finally be facing its “peak oil” climax, but the rising price of oil is set to spur at least one more surge of new narrowbody deliveries, according to recent financial analyses.
The next five years could see a perfect storm of conditions driving demand for new single-aisle large commercial aircraft, thanks to rising oil prices and related factors, say new reports from financial and energy analysts. Leading OEMs and their suppliers will benefit—and in some cases, potentially more so than during the heydays before the COVID-19 pandemic.
“Airlines looking to save on fuel expenses can do so by ordering the newest, most fuel-efficient aircraft,” Liwag and her team write. The oil-price-driven opportunity could drive 555 gross orders in the 737 family and 630 in A320s, according to Morgan Stanley.
At least 3,219 aircraft, or 18% of the global narrowbody fleet, was built before 2000, meaning they are older than 20 years, around the classic lifespan for an airliner, according to Jefferies. “All of these aircraft that are over 20 years could be candidates for potential accelerated replacement by the airlines,” Kahyaoglu’s team writes.
Indeed, the acceleration of worldwide sustainability trends may mean that oil’s days as the energy dictator are numbered, the IEA notes. “The forecast for global oil demand has shifted lower, and demand could peak earlier than previously thought if a rising focus by governments on clean energy turns into stronger policies and behavioral changes induced by the pandemic become deeply rooted.”
Read the full AWST article - Forget Sustainable Fuels: How Oil Will Drive The Next Narrowbody Wave