Fewer superjumbos leads Boeing to cut forecast for Middle East pilots

The Middle East will need 58,000 pilots over the two decades, about 2,000 fewer than Boeing forecast a year ago, as flying within the region shifts to smaller models from very large aircraft such as Airbus A380 superjumbos.

The US plane maker said globally, airlines will need to hire 30,850 pilots a year for the next two decades to keep pace with new planes on order and surging demand for air travel.

Carriers will need to recruit and train about 617,000 pilots to fly the 39,620 aircraft, valued at US$5.9 trillion, that Boeing expects to be added to the global fleet through 2035. The Asia-Pacific region will account for about 40 per cent of total new hires as China eclipses North American as the largest travel market.

US carriers will need to accelerate recruiting to replace pilots who are retiring, comply with stricter federal limits on duty hours and staff new routes to Cuba and Latin America, said Sherry Carbary, the vice president of Boeing Flight Services.

The Chicago-based company predicts a need for 112,000 new pilots in North America over the next 20 years. Boeing sees 104,000 aviators required for Europe as travel continues to grow between countries on the continent, Ms Carbary said.

The aircraft builder’s predictions came as it was accused of being “delinquent” on some payments to the avionics supplier Rockwell Collins as Boeing lengthens the time it pays large suppliers to better manage cash.

Rockwell Collins said it is still waiting to collect $30 million to $40m owed by Boeing, the world’s largest aerospace company, for goods and services.

The shortfall clipped Rockwell Collins’ cash flow during the quarter ended June 30 and breached contractual agreements between the two companies, said Kelly Ortberg, the chief executive of the Iowa-based equipment-maker. His company supplies cockpit displays for Boeing’s 787 Dreamliner, tanker and 737 Max along with other avionics equipment.

“In general, this is catching the supply chain off guard and it’s inconsistent with our contract,” Mr Ortberg said. While Boeing notified Rockwell Collins it was slowing supplier payments, “they’re delinquent for payments they had for the quarter”.

The Boeing spokeswoman Jessica Kowal declined to discuss the specifics of the plane maker’s payment terms with Rockwell Collins, citing proprietary information. “Boeing adheres to all signed contracts with its suppliers and pays those contracts according to the terms negotiated,” she said.

The US jet maker is in the process of changing its payments terms for large suppliers “to align with industry norms and support our competitive position”, Ms Kowal said. “In most, if not all, cases, our new payment terms are in line with our suppliers’ payment schedules to their own [sub-tier] suppliers.”

While Rockwell Collins’s third-quarter profit of $1.63 a share beat estimates, analysts focused on its disappointing cash receipts. The $138m generated in the quarter was short of estimates, and the supplier’s earnings release predicted free cash flow would total about $750m for 2016, the low end of its previous guided range.

Mr Ortberg said slower payments from Boeing, the company’s third-largest source of revenue, were a factor. The two companies are in talks and he said he expected the matter to be cleared up this quarter, Rockwell Collins’s fourth reporting period for fiscal 2016.

“We have contracts that we have to uphold, they have to uphold going forward,” Mr Ortberg said. “At this point we’re working to get it all resolved.”


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