Aircraft deliveries up through 2022 on demand: BAML

Total commercial and regional aircraft deliveries are projected to rise by 21pc between 2018 and 2022, reflecting production ramp ups, strong air traffic growth and order backlogs.

Combined deliveries will rise to 2,095 aircraft in 2022, up from estimates of 1,736 in 2018, according to Ronald Epstein, managing director aerospace and defense for Bank of America Merrill Lynch (BAML)yesterday at the TITANIUM USA 2018 conference in Las Vegas.

Deliveries of large civil aircraft are expected to rise by 15pc to 1,835. Boeing's deliveries will increase to 942 large aircraft from 815 in 2018, while Airbus will climb to 893 by 2022 from 779 aircraft in 2018. Regional jet deliveries will increase by 83pc to 260 aircraft, owing to an almost tripling in Bombardier deliveries.

Narrow body deliveries are expected to rise as demand outpaces aircraft availability. Demand has been strong as airlines cannot find new used B737s in good condition, Epstein said. As a result, airlines have been forced in many cases to wait for deliveries into 2022. The supply situation for Airbus aircraft such as the A320 is little better, with some stock of used A319s available.

Global air traffic growth has remained strong between 6.5-7pc so far in 2018, according to Epstein. This falls within similar rates to the last 10 years but beats previous long-term estimates of 4.8pc. As a result, airlines are expected to maintain strong order books to meet the sustained demand growth.

Aircraft retirement peaked in 2013 at 3.5pc of the total fleet. High oil prices and low interest rates drove airlines to retire more aircraft during that year, according to Epstein. This in turn injected serviceable use spare parts into the market, competing with new parts for aftermarket sales. Lower oil prices brought the retirement rate below 2pc in 2017.

Spending on defense is also projected to be strong over the same period. Total defense spending will rise by 22pc to $784bn by 2022, Epstein said. With the average age of tactical fighters at 22 years old, there will be a push to replace old equipment from previous decades.