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Boeing Lines up $87 Billion in Mideast Orders for 777X

October 31, 2013

Pretoria News

Boeing was in talks with four airlines on orders for its redesigned 777X jetliner valued at as much as $87 billion (R860bn) ahead of next month's Dubai Airshow, people familiar with the matter said yesterday.

The 255 planes under discussion included as many as 100 to 150 for Dubai-based Emirates, about 50 for Qatar Airways and as many as 30 for Etihad Airways, said the people, who asked not to be identified as the negotiations were private.

Cathay Pacific Airways was weighing a purchase of as many as 25 of the aircraft in a transaction that would probably come before the Dubai event, one of the people added. The expo runs from November 17 to 21 and is often a showcase for long-haul jets like the 777.

An order haul in Dubai for the 777X would be a boost for Boeing years ahead of the jet's commercial debut, now targeted for decade's end. Boeing is betting that it can keep Airbus at bay in the market for the biggest twin-engine jets by upgrading the current 777, not by building an all-new plane as its French rival is doing with the A350.

"This kind of order would definitely be a huge vote of confidence in the aircraft," said Siyi Lim, an analyst at OCBC Investment Research. "The 777 is already a proven aircraft and most airlines already fly them."

A purchase of 100 or more of the new 777s by Emirates would be Boeing's largest-ever initial tally, surpassing the 50-jet order valued at $6bn from Japan's ANA Holdings to introduce the 787 Dreamliner in 2004, when the plane was still known as the 7E7.

Success with the 777X comes after Boeing's troubles earlier this year with the Dreamliner. The global fleet of 787s, Boeing's most modern aircraft, was grounded for more than three months following the melting of lithium-ion batteries. The grounding was the longest on a large commercial aircraft by US and Japanese regulators since jets were introduced in the 1950s.

"Boeing sucked up a lot of costs associated with the 787, having significant delays, cost over-runs and teething problem," said Timothy Ross, a transportation analyst at Credit Suisse. "They are probably keener to develop on an existing and successful variants rather than start from a complete blank piece of paper."

Boeing shares fell 0.2 percent to $129.66 in New York on Tuesday. The stock has surged 72 percent this year.

"We don't comment on possible negotiations," Marc Birtel, a spokesman for Chicago-based Boeing, said.

Marco Larsen, a Qatar Airways spokesman, said he could not comment. Etihad said it had no comment, and Arielle Himy, an Emirates spokeswoman at MSL Group, said she could not immediately comment on the orders.

"We do not comment on market rumours," Elin Wong, a spokeswoman for Hong Kong-based Cathay Pacific, said. "We will continue to evaluate all available aircraft models for our fleet needs."

For the 777X, Boeing is adding 50 seats to the largest current 777 variant so it can seat as many as 400 people. The redesigned plane will feature the biggest engines ever mounted on a commercial jet and a wider, fuel-saving wingspan that can be narrowed by having the tips fold up after landing.

Fresh 777X sales would build on Boeing's momentum after Deutsche Lufthansa agreed last month to buy 34 of the planes.

While the 777X's list price has not been made public, the Lufthansa order implied a retail price of about $340m, said Peter Arment, a New York-based analyst with Sterne, Agee & Leach. Commercial buyers typically get a discount.

Earlier this month, Boeing's decades-long dominance in jetliner sales to Japan cracked as Airbus won its first order from Japan Airlines, a deal for A350-type aircraft worth $9.5bn.

"Boeing is banking on the new variant of the 777 to defend its market share from Airbus's A350 series," said Kelvin Lau, an analyst at Daiwa Securities.

Airbus plans to hand over its first A350 to Qatar Airways towards the end of 2014. The aircraft had won 756 orders by the end of September from 38 customers. Emirates was likely to be the launch customer, Robert Stallard, an RBC Capital Markets analyst, said on Monday. The term refers to the first buyer to fly a new plane.

Emirates has a history of unveiling eye-popping deals at the marquee aerospace event hosted during odd-numbered years in its home city.

During the 2011 show, Emirates unveiled an order for 50 of the 777-300ER model, valued at about $18bn at list prices, and options for 20 more. At the time, it was the largest order by dollar value in Boeing's history.

Indonesia's Lion Air surpassed it days later with a $22.4bn agreement to buy 230 Boeing narrow-bodies.

Some descriptions of the new 777X orders have begun circulating ahead of the show. The Financial Times reported this week that Emirates was considering an order valued at $30bn or more. People familiar with the Etihad sale discussed that transaction last week.

The 777X will boast the biggest engines from General Electric, and the first model, the 777-9X, will be able to fly as far as 14 800km with more than 400 passengers while burning 20 percent less fuel than the current 777. - Bloomberg

Pretoria News

(c) 2013 Independent Newspapers (Pty) Limited. All rights strictly reserved. Provided by an company

Original headline: Boeing lines up $87bn orders for redesigned 777X

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Source: (c) 2013 Independent Newspapers (Pty) Limited. All rights strictly reserved. Provided by an company

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