Alexander Cornwell, Tim Hepher

DUBAI (Reuters – Airbus has slashed its prediction for aircraft demand by 0.5% compared to pre-pandemic projections. However, there is a better outlook for freighters because the largest jetmakers in the world are competing for first sales of large cargo planes.

Airbus released new long-term forecasts for demand on the eve Dubai Airshow. A battered industry in aviation is still reeling after two years of decline to COVID-19. It also tries to protect its environment plans against increasing climate pressure.

Airbus forecasts that there will be 39,020 deliveries of jetliners in the market over the next 20-years, a small decrease from the 39,213 predicted in its last rolling prediction.

Small planes like A320 were essentially flat at 29,690 units. However, outlooks for the big jets which have dominated the region for decades fell 3.1%. This was due to long-haul travel falling on top of an increase in such aircraft.

This view is similar to that of Boeing (NYSE : ), which cut its 20 year delivery forecast in September by 1%, compared with 2019. Boeing’s pessimism was lessened by this decision, which came as the crisis reached its peak in 2020.

Airbus provided slightly lower forecasts regarding medium jets. This is a critical battleground, which includes its long-range narrrowbody aircraft, the A321XLR. Boeing has been struggling to sell it at the highest end of its troubled 737 MAX range.

Airbus cuts its prediction for passenger traffic’s average annual growth to 3.9% in 2020 from 4.3% before the pandemic.

Airbus declared that Asia would see the greatest traffic growth, with China domestically becoming the largest market. The move is consistent after China temporarily seized the number one spot for domestic passenger traffic in the United States under COVID.

Airbus has increased its 20-year forecast for new freighters from 880 to 2.9%. According to industry sources, Airbus is currently in negotiations with Singapore Airlines for the first purchaser of a A350 freighter.

Boeing earlier stated that they are in advance talks with potential buyers to purchase a new Boeing 787X freighter. Sources in the market have indicated that FedEx (NYSE) and Qatar Airways were main contenders.

Airbus stated that a growing share of all total aircraft deliveries will be used to replace existing jets on the market, rather than to support the recent curbed growth plans many airlines have.

This emphasis is based on the expectation that airlines will retire more efficient aircraft sooner following COVID-19. However, it also// targets a sensitive issue for the industry since some environmental groups are targeting what they consider excessive expansion.

Suppliers and lessors worry about faster retirements, as they fear that the average economic lifespan of jets may fall. This could lead to them losing service revenue or pushing up depreciation prices.

Christian Scherer, Chief Commercial Officer at Airbus said that as economies mature and air travel becomes more efficient, the demand will be driven increasingly by replacement than growth.